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Providence Service Corporation Reports Fourth Quarter and Full Year 2017 Results


Highlights for the Fourth Quarter of 2017:

  • Revenue from continuing operations of $406.9 million, a 5.5% increase from the fourth quarter of 2016
  • Income from continuing operations, net of tax, of $39.1 million, or $2.41 per diluted common share, compared to a loss of $25.7 million, or $1.77 per diluted common share, in the fourth quarter of 2016
  • Benefit from the Tax Reform Act of $29.6 million or $1.89 per diluted common share
  • Adjusted Net Income of $11.5 million, a 77.6% improvement on the fourth quarter of 2016; Adjusted EPS of $0.66, a 100.0% improvement on prior year
  • Adjusted EBITDA of $26.4 million, a 36.7% increase from the fourth quarter of 2016
  • Cash provided by operating activities of $18.1 million
  • Repurchased 708.1 thousand shares from November 3, 2017 through March 5, 2018

Highlights for the Full Year 2017:

  • Revenue from continuing operations of $1.62 billion, a 2.9% increase from 2016
  • Income from continuing operations, net of tax, of $59.8 million, or $3.50 per diluted common share, compared to a loss of $18.9 million, or $1.45 per diluted common share, in 2016
  • Adjusted Net Income of $30.3 million; Adjusted EPS of $1.65, an 8.6% improvement on prior year 
  • Adjusted EBITDA of $72.4 million 
  • Cash provided by operating activities of $55.0 million 
  • At year-end, cash balance of $95.3 million, no long-term debt, and $170 million book carrying value of interest in Matrix.  $33.3 million of year-end cash deployed for share repurchases in Q1 2018

STAMFORD, Conn., March 08, 2018 (GLOBE NEWSWIRE) -- The Providence Service Corporation (the “Company” or “Providence”) (Nasdaq:PRSC), today reported financial results for the three and twelve months ended December 31, 2017.

“I am very pleased with our fourth quarter results,” stated Carter Pate, Interim Chief Executive Officer.  “NET Services continued to make substantial progress on value enhancement activities, especially in regards to transportation cost reductions, and added to its successful 2017 renewal year, which already included New Jersey and Philadelphia, by securing the Virginia contract for another three years.  Within WD Services, in addition to being awarded a third Work and Health Program contract, bringing total secured contract value under the program to approximately $195 million over five years, profitability continued to improve as a result of a lower corporate and shared services cost structure.  Lastly our Matrix Investment continued to successfully convert its sales pipeline into new signed logos, positioning Matrix for another year of strong revenue growth in 2018.  Matrix also  announced and subsequently closed its acquisition of HealthFair.  This positive momentum across all of our segments positions us well in 2018 for improved profitability and continued long-term value creation."

Fourth Quarter 2017 Results

For the fourth quarter of 2017, the Company reported revenue from continuing operations of $406.9 million, an increase of 5.5% from $385.8 million in the fourth quarter of 2016.  Excluding the effects of changes in currency exchange rates, revenue from continuing operations increased 4.4%.

Income from continuing operations, net of tax, in the fourth quarter of 2017 was $39.1 million, or $2.41 per diluted common share, compared to losses of $25.7 million, or $1.77 per diluted common share, in the fourth quarter of 2016.  Income from continuing operations, net of tax, in the fourth quarter of 2017 includes a $29.6 million benefit due to the impact of the Tax Cuts and Jobs Act (the “Tax Reform Act”).  Income from continuing operations, net of tax, in the fourth quarter of 2016 includes impairment charges of $21.0 million. Income from continuing operations, net of tax, in the fourth quarters of 2017 and 2016 includes restructuring and related charges of $4.6 million and $7.4 million, respectively. Adjusted Net Income in the fourth quarter of 2017 was $11.5 million,  or $0.66 per diluted common share, compared to $6.4 million, or $0.33 per diluted common share, in the fourth quarter of 2016.

Segment-level Adjusted EBITDA was $34.3 million in the fourth quarter of 2017, compared to $24.2 million in the fourth quarter of 2016.  Adjusted EBITDA was $26.4 million in the fourth quarter of 2017, compared to $19.3 million in the fourth quarter of 2016. 

Full Year 2017 Results

For the twelve months of 2017, the Company reported revenue from continuing operations of $1.62 billion, an increase of 2.9% from $1.58 billion in 2016.  Excluding the effects of changes in currency exchange rates, revenue from continuing operations increased 3.4%. 

Income from continuing operations, net of tax, for the twelve months of 2017 was $59.8 million, or $3.50 per diluted common share, compared to losses of $18.9 million, or $1.45 per diluted common share, in the twelve months of 2016.  Income from continuing operations, net of tax, for the twelve months of 2017 includes a $29.6 million benefit due to the impact of the Tax Reform Act.  Income from continuing operations, net of tax, for the twelve months of 2016 includes impairment charges of $21.0 million.  Income from continuing operations, net of tax, for the twelve months of 2017 and 2016 includes restructuring and related charges of $11.6 million and $14.4 million, respectively.  Adjusted Net Income in the twelve months of 2017 was $30.3 million, or $1.65 per diluted common share, compared to $29.9 million, or $1.52 per diluted common share, in the twelve months of 2016.

Segment-level Adjusted EBITDA was $101.7 million in the twelve months of 2017, compared to $97.8 million in the comparable period of 2016.  Adjusted EBITDA was $72.4 million in the twelve months of 2017, compared to $72.2 million in the twelve months of 2016.

Share Repurchases

As previously announced, on November 2, 2017, the Board approved the extension of the Company’s stock repurchase program, authorizing the Company to repurchase up to $69.6 million (the amount remaining from the $100.0 million repurchase amount authorized on October 26, 2016) of the Company’s common stock through December 31, 2018. 

From November 3, 2017 through March 5, 2018 the Company repurchased 708,095 shares of common stock for $43.8 million, or for an average price of $61.90 per share.  Since beginning to repurchase shares in the fourth quarter of 2015 through March 5, 2018, the Company has repurchased 3.5 million shares of common stock, or approximately 22% of the Company’s common stock outstanding at the beginning of the fourth quarter of 2015, for $166.2 million, or for an average price of $46.86 per share.  As of March 5, 2018, $25.8 million of additional share repurchase capacity existed under this program.

Segment Results

For analysis purposes, the Company provides revenue, expenses, operating income (loss), income (loss) from continuing operations, net of taxes, and Adjusted EBITDA on a segment basis.  Segment results include revenue and expenses incurred by each segment, as well as an allocation of certain direct expenses incurred by Corporate on behalf of the segment.  No direct expenses were incurred by Corporate on behalf of the Matrix Investment segment.  The activities reflected in Corporate and Other include executive, accounting, finance, internal audit, tax, legal, public reporting, certain strategic and corporate development functions, the results of the Company’s captive insurance company and elimination entries recorded in consolidation.

NET Services

NET Services revenue was $330.6 million for the fourth quarter of 2017, an increase of 4.4% from $316.6 million in the fourth quarter of 2016.  Operating income was $23.8 million, or 7.2% of revenue, in the fourth quarter of 2017, compared to $23.6 million, or 7.4% of revenue, in the fourth quarter of 2016.  Included in NET Services operating income in the fourth quarters of 2017 and 2016 were $1.4 million and $1.7 million, respectively, of restructuring and related charges.  NET Services Adjusted EBITDA was $28.7 million, or 8.7% of revenue, in the fourth quarter of 2017, compared to $28.8 million, or 9.1% of revenue, in the fourth quarter of 2016.

NET Services revenue was $1.32 billion for the twelve months of 2017, an increase of 6.8% from $1.23 billion for the twelve months of 2016.  Operating income was $65.7 million, or 5.0% of revenue, in the twelve months of 2017, compared to $77.1 million, or 6.2% of revenue, in the comparable period of 2016.  Included in NET Services operating income in the twelve months of 2017 and 2016 were $6.3 million and $2.9 million, respectively, of restructuring and related charges.  NET Services Adjusted EBITDA was $85.3 million, or 6.5% of revenue, in the twelve months of 2017, compared to $92.4 million, or 7.5% of revenue, in the comparable period of 2016.

The year-over-year increase in NET Services revenue in the fourth quarter of 2017 was primarily due to increased revenue from new contracts including new MCO contracts in New York and new state regional contracts in Texas. Additionally, NET Services benefited from membership growth and rate increases on a number of existing contracts as well as retroactive rate increases to compensate for increased utilization experienced throughout the year on multiple MCO contracts.  The year-over-year revenue increase was partially offset by reductions in revenue from contracts we no longer serve, including a contract with the state of New York.  Adjusted EBITDA as a percentage of revenue was in line with the fourth quarter of 2016; benefiting from an expense reserve released upon the finalization of a contract amendment with a state customer, while being negatively impacted by the loss of the contract with the state of New York.

WD Services

WD Services revenue was $76.3 million for the fourth quarter of 2017, an increase of 10.4% from $69.1 million in the fourth quarter of 2016.  Excluding the effects of changes in currency exchange rates, revenue increased 4.5% in the fourth quarter of 2017 versus the fourth quarter of 2016. Operating income was $2.9 million in the fourth quarter of 2017 including a $2.0 million benefit from a favorable resolution of a contingency related to the acquisition of Ingeus, compared to a $32.8 million loss in the fourth quarter of 2016.  WD Services operating loss in the fourth quarter of 2016 included impairment charges of $19.6 million.  Included within WD Services operating income / loss in the fourth quarters of 2017 and 2016 were restructuring and related costs of $1.5 million and $5.8 million, respectively.  WD Services Adjusted EBITDA was $5.6 million, or 7.3% of revenue, in the fourth quarter of 2017 compared to a negative Adjusted EBITDA of $4.5 million, or negative 6.6% of revenue, in the fourth quarter of 2016. 

WD Services revenue was $305.7 million for the twelve months of 2017, a decrease of 11.2% from $344.4 million in the twelve months of 2016.  Excluding the effects of changes in currency exchange rates, revenue declined 8.9% in the twelve months of 2017 versus the twelve months of 2016.  Operating income was $2.0 million in the twelve months of 2017, compared to an operating loss of $39.5 million in the comparable period of 2016.  WD Services operating loss in the twelve months of 2016 included impairment charges of $19.6 million.  Included within WD Services operating income / loss in the twelve months of 2017 and 2016 were restructuring and related costs of $3.6 million and $11.5 million, respectively.  WD Services Adjusted EBITDA was $16.3 million, or 5.3% of revenue, in the twelve months of 2017 compared to $5.5 million, or 1.6% of revenue, in the comparable period of 2016. 

The year-over-year increase in WD Services revenue in the fourth quarter of 2017 was primarily related to increases in the offender rehabilitation contract together with growth in UK Health and Youth Services programs and increases from various employability programs outside of the UK, including in Australia, France and Canada. This was partially offset by the anticipated ending of referrals under the Work Programme contract in the UK.  While WD Services has successfully secured contracts under the UK's Work and Health Programme with a combined total value of approximately $195 million over 5 years, revenues under these contracts were minimal in the fourth quarter of 2017.   Adjusted EBITDA was significantly higher in the fourth quarter of 2017 compared to 2016 due to the benefits from the reduced headcount related to the start of the Ingeus Futures program at the end of 2016 as well as a reduction in IT and facility costs.

Corporate and Other

Corporate and Other incurred a $9.8 million operating loss in the fourth quarter of 2017 compared to an operating loss of $7.0 million in the fourth quarter of 2016.  Included within Corporate and Other operating loss in the fourth quarter of 2017 were restructuring and related costs of $1.7 million. Included within operating loss in the fourth quarter of 2016 was an impairment charge of $1.4 million related to the sale of certain real estate assets. Corporate and Other Adjusted EBITDA was negative $7.9 million in the fourth quarter of 2017 compared to negative $4.9 million in the fourth quarter of 2016.

Corporate and Other incurred a $31.7 million operating loss in the twelve months of 2017, compared to a $29.0 million operating loss in the twelve months of 2016.  Included within Corporate and Other operating loss in the twelve months of 2017 were restructuring and related costs of $1.7 million as well as $3.4 million of professional costs associated with focused strategic initiatives. Included within operating loss in the twelve months of 2016 was an impairment charge of $1.4 million related to the sale of certain real estate assets. Corporate and Other Adjusted EBITDA was negative $29.2 million in the twelve months of 2017 compared to negative $25.6 million in the comparable period of 2016.

The year-over-year increase in the  Corporate and Other Adjusted EBITDA loss in the fourth quarter of 2017 was primarily due to a $2.3 million increase in cash settled stock-based compensation as a result of an increase in the Company’s stock price in the fourth quarter of 2017 as compared to a decrease in the fourth quarter of 2016 as well as a decrease in the benefits associated with favorable claims experiences on our reinsurance and self-insured programs. Included within Corporate and Other Adjusted EBITDA for the fourth quarter of 2017 and the fourth quarter of 2016 is $1.6 million and $0.9 million, respectively, of expense related to a share-based long-term incentive plan. No shares were distributed under this plan as the performance hurdles were not met. As such, as of December 31, 2017, we accelerated all remaining unrecognized compensation expense for the Holding Company long-term incentive plan.

Corporate and Other included other income in the fourth quarter of 2017 of $5.4 million related to the settlement of a previously disclosed  litigation related to a putative stockholder class action derivative complaint.

Matrix Investment (Equity Investment)

For the three and twelve months ended December 31, 2017, Providence recorded a gain in equity earnings of $13.0 million and $13.4 million, respectively, related to its Matrix Investment.  Included within the equity income is the impact on Matrix of the Tax Reform Act.

As Providence’s interest in Matrix is accounted for as an equity method investment, the following numbers are not included within the Company’s consolidated results of operations. For the fourth quarter of 2017, Matrix’s revenue was $52.5 million, an increase of 0.4% from $52.3 million in the fourth quarter of 2016.  Matrix’s operating income was $1.8 million, or 3.4% of revenue, for the fourth quarter of 2017, compared to a $0.2 million operating loss, or negative 0.4% of revenue, for the fourth quarter of 2016.  Included within Matrix’s operating income in the fourth quarter of 2017 were $0.5 million of management fees paid to Matrix shareholders and acquisition costs of $0.4 million.  Included within Matrix's operating income in the fourth quarter of 2016 were $4.0 million of expense related to transaction bonuses paid to the Matrix management team as well as $2.4 million of other transaction related expenses.  Matrix’s Adjusted EBITDA was $11.6 million, or 22.1% of revenue, for the fourth quarter of 2017, compared to $11.7 million, or 22.5% of revenue, in the fourth quarter of 2016. 

For the twelve months of 2017, Matrix’s revenue was $227.9 million, an increase of 9.7% from $207.7 million in the twelve months of 2016.  Matrix’s operating income was $11.9 million, or 5.2% of revenue, for the twelve months of 2017, compared to $17.8 million, or 8.6% of revenue, for the comparable period of 2016.  Included within Matrix’s operating income in the twelve months of 2017 was $2.7 million of transaction bonuses paid to the Matrix management team, $2.3 million of management fees paid to Matrix’s shareholders, $0.9 million of other transaction related expenses and acquisition costs of $1.3 million.  Matrix’s Adjusted EBITDA was $51.7 million, or 22.7% of revenue, for the twelve months of 2017, compared to $51.7 million, or 24.9% of revenue, in the twelve months of 2016. 

Matrix had moderate year-over-year revenue growth for the fourth quarter of 2017 with Adjusted EBITDA margins impacted by lower prices.

As of December 31, 2017, Matrix had cash of $15.0 million and $193.1 million of term loan debt outstanding under its credit facility.

On February 16, 2018 Matrix completed its acquisition of HealthFair for $160 million plus an earn-out payment contingent upon HealthFair’s 2018 performance.  The transaction combines Matrix’s expansive in-home capabilities with HealthFair’s national fleet of mobile health clinics equipped with advanced diagnostic capabilities.  With the addition of HealthFair, Matrix’s network increases to more than 6,000 community-based providers across all 50 states, including over 1,700 nurse practitioners.

HealthFair’s 2017 revenue was approximately $45 million.  HealthFair expects significant growth in 2018 supported by several recently awarded national contracts with major health plans.   The acquisition was funded through an increase in Matrix's outstanding debt and rollover equity from the seller of HealthFair.  Providence and Frazier did not contribute additional equity to fund the acquisition.  Following the transaction, Matrix had net debt of approximately $310 million with Providence retaining an ownership percentage of 43.6%.

Tax Reform

On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Reform Act”) was enacted which reduces the U.S. federal corporate income tax rate to 21% commencing in 2018.  As a result of the decrease in rate, the Company remeasured its deferred tax liabilities as of December 31, 2017, and recorded a provisional net tax benefit of $19.4 million in the fourth quarter of 2017.  In addition, Matrix remeasured its deferred tax liabilities in connection with the Tax Reform Act, which resulted in additional equity income to Providence of $13.6 million.  The Providence tax provision reflects tax expense of $3.4 million on this additional equity income.  Thus, the total impact of tax reform is $29.6 million.

Investor Presentation and Conference Call

Providence will hold a conference call to discuss its financial results on Friday, March 9, 2018 at 8:00 a.m. ET.  An investor presentation has been prepared to accompany the conference call and can be found on the Company’s website (investor.prscholdings.com.). To access the call, please dial:

US toll-free: 1 (844) 244 3865
International: 1 (518) 444 0681
Passcode: 8798476

Replay (available until March 16, 2018):
US toll-free: 1 (855) 859 2056
International: 1 (404) 537 3406
Passcode: 8798476

You may also access the conference call via webcast at investor.prscholdings.com, where the call also will be archived.

About Providence

The Providence Service Corporation owns subsidiaries and investments primarily engaged in the provision of healthcare services in the United States and workforce development services internationally. For more information, please visit prscholdings.com.

Non-GAAP Financial Measures and Adjustments

In addition to the financial results prepared in accordance with U.S. generally accepted accounting principles (GAAP), this press release includes EBITDA, Adjusted EBITDA and Segment-level Adjusted EBITDA for the Company and its operating segments, and Adjusted Net Income and Adjusted EPS for the Company, which are performance measures that are not recognized under GAAP.  EBITDA is defined as income (loss) from continuing operations, net of taxes, before: (1) interest expense, net, (2) provision (benefit) for income taxes and (3) depreciation and amortization. Adjusted EBITDA is calculated as EBITDA before certain items, including (as applicable): (1) restructuring and related charges, (2) foreign currency transactions, (3) equity in net earnings or losses of investees, (4) certain litigation related expenses or settlement income, (5) gain or loss on sale of equity investments, (6) management fees and (7) certain transaction and related costs.  Segment-level Adjusted EBITDA is calculated as Adjusted EBITDA for the company excluding the Adjusted EBITDA associated with corporate and holding company costs reported as our Corporate and Other Segment.  Adjusted Net Income is defined as income (loss) from continuing operations, net of tax, before certain items, including (1) restructuring and related charges, (2) foreign currency transactions, (3) equity in net earnings or losses of investees, (4) certain litigation related expenses or settlement income, (5) intangible amortization expense, (6) gain or loss on sale of equity investments, (7) the impact of the Tax Reform Act, (8) excess tax charges associated with long term incentive plans, (9) the impact of adjustments on non-controlling interests, (10) transaction and related costs and (11) the income tax impact of such adjustments.  Adjusted EPS is calculated as Adjusted Net Income less (as applicable): (1) dividends on convertible preferred stock, (2) accretion of convertible preferred stock discount, and (3) income allocated to participating stockholders, divided by the diluted weighted-average number of common shares outstanding.  We utilize these non-GAAP performance measures, which exclude certain expenses and amounts, because we believe the timing of such expenses is unpredictable and not driven by our core operating results, and therefore render comparisons with prior periods as well as with other companies in our industry less meaningful.  We believe such measures allow investors to gain a better understanding of the factors and trends affecting the ongoing operations of our business.  We consider our core operations to be the ongoing activities to provide services from which we earn revenue, including direct operating costs and indirect costs to support these activities.  In addition, our net earnings in equity investees are excluded from these measures, as we do not have the ability to manage these ventures, allocate resources within the ventures, or directly control their operations or performance.

Our non-GAAP financial measures may not provide information that is directly comparable to that provided by other companies in our industry, as other companies in our industry may calculate non-GAAP financial results differently. In addition, there are limitations in using non-GAAP financial measures because they are not prepared in accordance with GAAP, may be different from non-GAAP financial measures used by other companies, and exclude expenses that may have a material impact on our reported financial results. The presentation of non-GAAP financial information is not meant to be considered in isolation from or as a substitute for the directly comparable financial measures prepared in accordance with GAAP.  We urge you to review the reconciliations of our non-GAAP financial measures to the comparable GAAP financial measures included below, and not to rely on any single financial measure to evaluate our business.

Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “believe,” “demonstrate,” “expect,” “estimate,” “forecast,” “anticipate,” “should” and “likely” and similar expressions identify forward-looking statements. In addition, statements that are not historical should also be considered forward-looking statements. Readers are cautioned not to place undue reliance on those forward-looking statements, which speak only as of the date the statement was made. Such forward-looking statements are based on current expectations that involve a number of known and unknown risks, uncertainties and other factors which may cause actual events to be materially different from those expressed or implied by such forward-looking statements. These factors include, but are not limited to, our continuing relationship with government entities and our ability to procure business from them, our ability to manage growing and changing operations, the implementation of healthcare reform law, government budget changes and legislation related to the services that we provide, our ability to renew or replace existing contracts that have expired or are scheduled to expire with significant clients, and other risks detailed in Providence’s filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K.  Providence is under no obligation to (and expressly disclaims any such obligation to) update any of the information in this press release if any forward-looking statement later turns out to be inaccurate whether as a result of new information, future events or otherwise.

Investor Relations Contact                                                                                                                              
Laurence Orton  – VP Finance & Corporate Controller               
(203) 307-2800

--financial tables to follow--



The Providence Service Corporation
Unaudited Condensed Consolidated Statements of Income
(in thousands except share and per share data)
                 
    Three months ended December 31,   Twelve months ended December 31,
    2017   2016   2017   2016
                 
Service revenue, net   $ 406,888     $ 385,819     $ 1,623,882     $ 1,578,245  
                 
Operating expenses:                
  Service expense   364,566     357,099     1,489,044     1,452,110  
  General and administrative expense   18,632     17,363     72,336     69,911  
  Asset impairment charge       21,003         21,003  
  Depreciation and amortization   6,753     6,546     26,469     26,604  
Total operating expenses   389,951     402,011     1,587,849     1,569,628  
Operating income (loss)   16,937     (16,192 )   36,033     8,617  
                 
Other expenses:                
  Interest expense, net   296     344     1,278     1,583  
  Other income   (5,363 )       (5,363 )    
  Equity in net (gain) loss of investees   (13,044 )   4,593     (12,054 )   10,287  
  (Gain) loss on sale of equity investment   229         (12,377 )    
  Loss (gain) on foreign currency transactions   (256 )   (42 )   345     (1,375 )
Income (loss) from continuing operations before income taxes   35,075     (21,087 )   64,204     (1,878 )
Provision (benefit) for income taxes   (3,991 )   4,570     4,401     17,036  
Income (loss) from continuing operations, net of tax   39,066     (25,657 )   59,803     (18,914 )
Discontinued operations, net of tax   16     108,428     (5,983 )   108,760  
Net income (loss)   39,082     82,771     53,820     89,846  
Net loss (income) attributable to noncontrolling interests   (156 )   1,649     (451 )   2,082  
Net income (loss) attributable to Providence   $ 38,926     $ 84,420     $ 53,369     $ 91,928  
                 
Net income (loss) available to common                
  stockholders   $ 32,929     $ 69,838     $ 41,865     $ 74,374  
                 
Basic earnings (loss) per common share:                
Continuing operations   $ 2.43     $ (1.77 )   $ 3.52     $ (1.45 )
Discontinued operations       6.69     (0.44 )   6.52  
Basic earnings (loss) per common share   $ 2.43     $ 4.92     $ 3.08     $ 5.07  
                 
Diluted earnings (loss) per common share:                
Continuing operations   $ 2.41     $ (1.77 )   $ 3.50     $ (1.45 )
Discontinued operations       6.69     (0.44 )   6.52  
Diluted earnings (loss) per common share   $ 2.41     $ 4.92     $ 3.06     $ 5.07  
                 
Weighted-average number of common                
  shares outstanding:                
  Basic   13,570,615     14,199,722     13,602,140     14,666,896  
  Diluted   13,664,727     14,199,722     13,673,314     14,666,896  


The Providence Service Corporation
Condensed Consolidated Balance Sheets
(in thousands)
         
    December 31, 2017   December 31, 2016
    (Unaudited)    
Assets        
Current assets:        
  Cash and cash equivalents   $ 95,310     $ 72,262  
  Accounts receivable, net of allowance   158,926     162,115  
  Other current assets (1)   42,093     53,726  
Total current assets   296,329     288,103  
Property and equipment, net   50,377     46,220  
Goodwill and intangible assets, net   165,607     168,748  
Equity investments   169,912     161,363  
Other long-term assets (2)   21,865     20,845  
Total assets   $ 704,090     $ 685,279  
         
Liabilities, redeemable convertible preferred stock  and stockholders' equity
Current liabilities:        
  Current portion of long-term obligations   $ 2,400     $ 1,721  
  Other current liabilities (3)   224,530     226,075  
Total current liabilities   226,930     227,796  
Long-term obligations, less current portion   584     1,890  
Other long-term liabilities (4)   63,013     80,353  
Total liabilities   290,527     310,039  
         
Mezzanine and stockholder's equity        
Convertible preferred stock, net   77,546     77,565  
Stockholders' equity   336,017     297,675  
Total liabilities, redeemable convertible preferred stock and stockholders' equity   $ 704,090     $ 685,279  

(1) Comprised of other receivables, restricted cash and prepaid expenses and other.
(2) Comprised of restricted cash, less current portion, deferred tax assets and other assets.
(3) Comprised of accounts payable, accrued expenses, accrued transportation costs, deferred revenue and reinsurance and related liability reserves.
(4) Includes deferred tax liabilities and other long-term liabilities.


The Providence Service Corporation
Unaudited Condensed Consolidated Statements of Cash Flows
(in thousands) (1)
         
    Twelve months ended December 31,
    2017   2016
Operating activities        
Net income   $ 53,820     $ 89,846  
  Depreciation and amortization   26,469     47,725  
  Stock-based compensation   7,543     5,136  
  Asset impairment charge       21,003  
  Equity in net (gain) loss of investees   (12,054 )   10,287  
  Gain on sale of equity investment   (12,377 )    
  Other non-cash credits   (20,646 )   (7,638 )
  Gain on sale of business, net of tax       (109,403 )
  Changes in working capital   12,289     (15,191 )
Net cash provided by operating activities   55,044     41,765  
Investing activities        
Purchase of property and equipment   (19,923 )   (41,216 )
Sale of business, net of cash sold       371,580  
Equity investments/loan to joint venture   10     (13,663 )
Proceeds from sale of equity investment   15,593      
Other investing activities   5,134     7,204  
Net cash provided by investing activities   814     323,905  
Financing activities        
Preferred stock dividends   (4,418 )   (4,419 )
Repurchase of common stock, for treasury   (29,364 )   (70,378 )
Net proceeds of long-term debt       (304,950 )
Other financing activities   (6 )   2,926  
Net cash used in financing activities   (33,788 )   (376,821 )
Effect of exchange rate changes on cash   978     (1,357 )
Net change in cash and cash equivalents   23,048     (12,508 )
Cash and cash equivalents at beginning of period   72,262     84,770  
Cash and cash equivalents at end of period   $ 95,310     $ 72,262  

(1) Includes both continuing and discontinued operations.



The Providence Service Corporation
Reconciliation of Non-GAAP Financial Measures
Segment Information and Adjusted EBITDA
(in thousands)
(Unaudited)


    Three months ended December 31, 2017
    NET Services   WD Services   Total Segment-Level   Matrix Investment   Corporate and Other   Total Continuing Operations
                         
Service revenue, net $ 330,558     $ 76,330     $ 406,888     $     $     $ 406,888  
                         
Operating expenses:                      
  Service expense 300,344     65,752     366,096         (1,530 )   364,566  
  General and administrative expense 2,901     4,494     7,395         11,237     18,632  
  Depreciation and amortization 3,513     3,156     6,669         84     6,753  
Total operating expenses 306,758     73,402     380,160         9,791     389,951  
                         
Operating income (loss) 23,800     2,928     26,728         (9,791 )   16,937  
                         
Other expenses:                      
  Interest expense, net 20     375     395         (99 )   296  
  Other income                 (5,363 )   (5,363 )
  Equity in net (gain) loss of investees     (27 )   (27 )   (13,017 )       (13,044 )
  Loss on sale of equity investment     229     229             229  
  Loss (gain) on foreign currency                      
  transactions     (256 )   (256 )           (256 )
Income (loss) from continuing                      
  operations, before income tax 23,780     2,607     26,387     13,017     (4,329 )   35,075  
Provision (benefit) for income taxes 7,796     1,668     9,464     3,322     (16,777 )   (3,991 )
Income (loss) from continuing operations, net of taxes 15,984     939     16,923     9,695     12,448     39,066  
                         
Interest expense, net 20     375     395         (99 )   296  
Provision (benefit) for income taxes 7,796     1,668     9,464     3,322     (16,777 )   (3,991 )
Depreciation and amortization 3,513     3,156     6,669         84     6,753  
                         
EBITDA 27,313     6,138     33,451     13,017     (4,344 )   42,124  
                         
Restructuring and related charges (1) 1,404     1,507     2,911         1,716     4,627  
Equity in net (gain) loss of investees     (27 )   (27 )   (13,017 )       (13,044 )
Loss on sale of equity investment     229     229             229  
Loss (gain) on foreign currency transactions     (256 )   (256 )           (256 )
Litigation income (2)                 (5,273 )   (5,273 )
Other (3)     (2,041 )   (2,041 )           (2,041 )
                         
Adjusted EBITDA $ 28,717     $ 5,550     $ 34,267     $     $ (7,901 )   $ 26,366  

(1) Restructuring and related charges are comprised of employee separation costs, which include redundancy program costs of $1,459 within WD Services, as well as third-party consulting and implementation costs related to WD Services' value enhancement initiative of $48 and NET Services' value enhancement initiative of $1,404. They also include $1,716 of severance and other costs related to the former CEO of Providence within Corporate and Other.
(2) Litigation Income related to the settlement of a putative stockholder class action derivative complaint, which is more fully described in the Company's Form 10-K.
(3) Reflects the favorable resolution of contingency related to the acquisition of Ingeus.



The Providence Service Corporation
Reconciliation of Non-GAAP Financial Measures
Segment Information and Adjusted EBITDA
 (in thousands)
(Unaudited)


    Three months ended December 31, 2016
    NET Services (1)   WD Services   Total Segment-Level   Matrix
Investment
  Corporate and Other   Total  Continuing Operations
                         
Service revenue, net $ 316,562     $ 69,111     $ 385,673     $     $ 146     $ 385,819  
                         
Operating expenses:                      
  Service expense 286,545     72,351     358,896         (1,797 )   357,099  
  General and administrative expense 2,923     7,064     9,987         7,376     17,363  
  Asset impairment charge     19,588     19,588         1,415     21,003  
  Depreciation and amortization 3,517     2,912     6,429         117     6,546  
Total operating expenses 292,985     101,915     394,900         7,111     402,011  
                         
Operating income (loss) 23,577     (32,804 )   (9,227 )       (6,965 )   (16,192 )
                         
Other expenses:                      
  Interest expense, net (1 )   209     208         136     344  
  Equity in net (gain) loss of investees     2,804     2,804     1,789         4,593  
  Loss (gain) on foreign currency                      
  transactions     (42 )   (42 )           (42 )
Income (loss) from continuing                      
  operations, before income tax 23,578     (35,775 )   (12,197 )   (1,789 )   (7,101 )   (21,087 )
Provision (benefit) for income taxes 9,210     (288 )   8,922     (674 )   (3,678 )   4,570  
Income (loss) from continuing operations, net of taxes 14,368     (35,487 )   (21,119 )   (1,115 )   (3,423 )   (25,657 )
                         
Interest expense, net (1 )   209     208         136     344  
Provision (benefit) for income taxes 9,210     (288 )   8,922     (674 )   (3,678 )   4,570  
Depreciation and amortization 3,517     2,912     6,429         117     6,546  
                         
EBITDA 27,094     (32,654 )   (5,560 )   (1,789 )   (6,848 )   (14,197 )
                         
Asset impairment charge     19,588     19,588         1,415     21,003  
Restructuring and related charges (2) 1,679     5,756     7,435             7,435  
Equity in net (gain) loss of investees     2,804     2,804     1,789         4,593  
Loss (gain) on foreign currency transactions     (42 )   (42 )           (42 )
Litigation expense (3)                 491     491  
                         
                         
Adjusted EBITDA $ 28,773     $ (4,548 )   $ 24,225     $     $ (4,942 )   $ 19,283  

(1) We have reclassified certain amounts relating to our prior period results to conform to our current period presentation.
(2) Restructuring and related charges include employee separation costs related to redundancy programs within WD Services of $3,771, and $881 of former CEO departure costs within NET Services, as well as third-party consulting and implementation costs related to WD Services' value enhancement initiative of $1,985 and NET Services' value enhancement initiative of $798.
(3) Litigation expense related to defense cost for a putative stockholder class action derivative complaint, which is more fully described in the Company's Form 10-K.



The Providence Service Corporation
Reconciliation of Non-GAAP Financial Measures
Segment Information and Adjusted EBITDA
(in thousands)
(Unaudited)


    Twelve months ended December 31, 2017
    NET Services   WD Services   Total Segment-Level   Matrix Investment   Corporate and Other   Total Continuing Operations
                         
Service revenue, net $ 1,318,220     $ 305,662     $ 1,623,882     $     $     $ 1,623,882  
                         
Operating expenses:                      
  Service expense 1,227,426     265,417     1,492,843         (3,799 )   1,489,044  
  General and administrative expense 11,779     25,438     37,217         35,119     72,336  
  Depreciation and amortization 13,275     12,851     26,126         343     26,469  
Total operating expenses 1,252,480     303,706     1,556,186         31,663     1,587,849  
                         
Operating income (loss) 65,740     1,956     67,696         (31,663 )   36,033  
                         
Other expenses:                      
  Interest expense, net 69     1,333     1,402         (124 )   1,278  
  Other income                 (5,363 )   (5,363 )
  Equity in net (gain) loss of investees     1,391     1,391     (13,445 )       (12,054 )
  (Gain) on sale of equity investment     (12,377 )   (12,377 )           (12,377 )
  Loss (gain) on foreign currency                      
  transactions     345     345             345  
Income (loss) from continuing operations,                      
  before income tax 65,671     11,264     76,935     13,445     (26,176 )   64,204  
Provision (benefit) for income taxes 24,018     1,218     25,236     3,483     (24,318 )   4,401  
Income (loss) from continuing operations, net of taxes 41,653     10,046     51,699     9,962     (1,858 )   59,803  
                         
Interest expense, net 69     1,333     1,402         (124 )   1,278  
Provision (benefit) for income taxes 24,018     1,218     25,236     3,483     (24,318 )   4,401  
Depreciation and amortization 13,275     12,851     26,126         343     26,469  
                         
EBITDA 79,015     25,448     104,463     13,445     (25,957 )   91,951  
                         
Restructuring and related charges (1) 6,318     3,554     9,872         1,716     11,588  
Equity in net (gain) loss of investees     1,391     1,391     (13,445 )       (12,054 )
(Gain) on sale of equity investment     (12,377 )   (12,377 )           (12,377 )
Loss (gain) on foreign currency transactions     345     345             345  
Litigation income (2)                 (4,969 )   (4,969 )
Other (3)       (2,041 )   (2,041 )           (2,041 )
                         
Adjusted EBITDA $ 85,333     $ 16,320     $ 101,653     $     $ (29,210 )   $ 72,443  

(1) Restructuring and related charges are comprised of employee separation costs, which include redundancy program costs of $2,577 and other severance costs of $182 within WD Services and NET Services chief executive officer search fees of $214, as well as third-party consulting and implementation costs related to WD Services' value enhancement initiative of $795 and NET Services' value enhancement initiative of $6,104. They also include $1,716 of severance and other costs related to the former CEO of Providence within Corporate and Other.
(2) Litigation Income related to the settlement of a putative stockholder class action derivative complaint, which is more fully described in the Company's Form 10-K.   
(3) Reflects the favorable resolution of contingency related to the acquisition of Ingeus.
  


The Providence Service Corporation
Reconciliation of Non-GAAP Financial Measures
Segment Information and Adjusted EBITDA
 (in thousands)
(Unaudited)


    Twelve months ended December 31, 2016
    NET Services (1)   WD Services   Total Segment-Level   Matrix
Investment
  Corporate and Other   Total  Continuing Operations
                         
Service revenue, net $ 1,233,720     $ 344,403     $ 1,578,123     $     $ 122     $ 1,578,245  
                         
Operating expenses:                      
  Service expense 1,132,857     320,147     1,453,004         (894 )   1,452,110  
  General and administrative expense 11,406     30,300     41,706         28,205     69,911  
  Asset impairment charge     19,588     19,588         1,415     21,003  
  Depreciation and amortization 12,375     13,824     26,199         405     26,604  
Total operating expenses 1,156,638     383,859     1,540,497         29,131     1,569,628  
                         
Operating income (loss) 77,082     (39,456 )   37,626         (29,009 )   8,617  
                         
Other expenses:                      
  Interest expense, net (4 )   777     773         810     1,583  
  Equity in net (gain) loss of investees     8,498     8,498     1,789         10,287  
  Loss (gain) on foreign currency                      
  transactions     (1,375 )   (1,375 )           (1,375 )
Income (loss) from continuing                      
  operations, before income tax 77,086     (47,356 )   29,730     (1,789 )   (29,819 )   (1,878 )
Provision (benefit) for income taxes 29,708     (1,172 )   28,536     (674 )   (10,826 )   17,036  
Income (loss) from continuing operations, net of taxes 47,378     (46,184 )   1,194     (1,115 )   (18,993 )   (18,914 )
                         
Interest expense, net (4 )   777     773         810     1,583  
Provision (benefit) for income taxes 29,708     (1,172 )   28,536     (674 )   (10,826 )   17,036  
Depreciation and amortization 12,375     13,824     26,199         405     26,604  
                         
EBITDA 89,457     (32,755 )   56,702     (1,789 )   (28,604 )   26,309  
                         
Asset impairment charge     19,588     19,588         1,415     21,003  
Restructuring and related charges (2) 2,909     11,513     14,422             14,422  
Equity in net (gain) loss of investees     8,498     8,498     1,789         10,287  
Loss (gain) on foreign currency transactions     (1,375 )   (1,375 )           (1,375 )
Litigation expense (3)                 1,574     1,574  
                         
                         
Adjusted EBITDA $ 92,366     $ 5,469     $ 97,835     $     $ (25,615 )   $ 72,220  

(1) We have reclassified certain amounts relating to our prior period results to conform to our current period presentation.
(2) Restructuring and related charges include employee separation costs related to redundancy programs within WD Services of $8,951, and $881 of former CEO departure costs within NET Services, as well as third-party consulting and implementation costs related to WD Services' value enhancement initiative of $2,562 and NET Services' value enhancement initiative of $2,028.
(3) Litigation expense related to defense cost for a putative stockholder class action derivative complaint, which is more fully described in the Company's Form 10-K.



The Providence Service Corporation
Summary Financial Information of Equity Investments (1)
(in thousands)
(Unaudited)
   
  Three months ended December 31, 2017
  Matrix Investment   Mission
Providence
  Other   Total
Revenue $ 52,536     $     $ 691     $ 53,227  
Operating expense (2) 41,881         628     42,509  
Depreciation and amortization 8,883         5     8,888  
Operating income (loss) 1,772         58     1,830  
               
Other expense (income)         (12 )   (12 )
Interest expense 3,823             3,823  
Provision (benefit) for income taxes (29,492 )       17     (29,475 )
Net income (loss) 27,441         53     27,494  
               
Interest 46.6 %   75.0 %   50.0 %   N/A
Net income (loss) - Equity Investment 12,796         27     12,823  
Management fee and other (3) 221             221  
Equity in net gain (loss) of investee $ 13,017     $     $ 27     $ 13,044  
               
Net Debt (4) 178,030              
               
  Three months ended December 31, 2016
  Matrix
Investment
  Mission
Providence
  Other   Total
Revenue $ 41,635     $ 10,106     $ 442     $ 52,183  
Operating expense (2) 39,357     10,718     444     50,519  
Depreciation and amortization 6,356     903     1     7,260  
Operating income (loss) (4,078 )   (1,515 )   (3 )   (5,596 )
               
Other expense (income)     (195 )   (11 )   (206 )
Interest expense 2,949     15         2,964  
Provision (benefit) for income taxes (2,828 )   2,400     15     (413 )
Net income (loss) (4,199 )   (3,735 )   (7 )   (7,941 )
               
Interest 46.8 %   75.0 %   50.0 %   N/A
Net income (loss) - Equity Investment (1,965 )   (2,801 )   (3 )   (4,769 )
Management fee and other (5) 176             176  
Equity in net gain (loss) of investee $ (1,789 )   $ (2,801 )   $ (3 )   $ (4,593 )

(1) The results of equity method investments are excluded from the calculation of Providence's Adjusted EBITDA and Adjusted Net Income.
(2) Excludes depreciation and amortization.
(3) Includes amounts relating to management fees due from Matrix to Providence of $247 less Providence share-based compensation expense of $26.
(4) Represents cash of $15,020 and debt of $193,050 on Matrix's standalone balance sheet as of December 31, 2017.
(5) Includes amounts relating to management fees due from Matrix to Providence of $185 less Providence share-based compensation expense of $9.



The Providence Service Corporation
Summary Financial Information of Equity Investments (1)
(in thousands)
(Unaudited)
   
  Twelve months ended December 31, 2017
  Matrix Investment   Mission
Providence
  Other   Total
Revenue $ 227,872     $ 30,125     $ 2,185     $ 260,182  
Operating expense (2) 182,489     28,739     2,055     213,283  
Depreciation and amortization 33,512     3,150     20     36,682  
Operating income (loss) 11,871     (1,764 )   110     10,217  
               
Other expense (income)     18     (46 )   (28 )
Interest expense 14,818     150         14,968  
Provision (benefit) for income taxes (29,613 )   1     38     (29,574 )
Net income (loss) 26,666     (1,933 )   118     24,851  
               
Interest 46.6 %   75.0 %   50.0 %   N/A
Net income (loss) - Equity Investment 12,434     (1,451 )   60     11,043  
Management fee and other (3) 1,011             1,011  
Equity in net gain (loss) of investee $ 13,445     $ (1,451 )   $ 60     $ 12,054  
               
               
  Twelve months ended December 31, 2016
  Matrix
Investment
  Mission
Providence
  Other   Total
Revenue $ 41,635     $ 36,581     $ 722     $ 78,938  
Operating expense (2) 39,357     45,234     665     85,256  
Depreciation and amortization 6,356     3,559     2     9,917  
Operating income (loss) (4,078 )   (12,212 )   55     (16,235 )
               
Other expense (income)     (853 )   (19 )   (872 )
Interest expense 2,949     33         2,982  
Provision (benefit) for income taxes (2,828 )   (31 )   27     (2,832 )
Net income (loss) (4,199 )   (11,361 )   47     (15,513 )
               
Interest 46.8 %   75.0 %   50.0 %   N/A
Net income (loss) - Equity Investment (1,965 )   (8,521 )   23     (10,463 )
Management fee and other (4) 176             176  
Equity in net gain (loss) of investee $ (1,789 )   $ (8,521 )   $ 23     $ (10,287 )

(1) The results of equity method investments are excluded from the calculation of Providence's Adjusted EBITDA and Adjusted Net Income.
(2) Excludes depreciation and amortization.
(3) Includes amounts relating to management fees due from Matrix to Providence of $1,087 less Providence share-based compensation expense of $76.
(4) Includes amounts relating to management fees due from Matrix to Providence of $185 less Providence share-based compensation expense of $9.



The Providence Service Corporation
Reconciliation of Non-GAAP Financial Measures
Adjusted EBITDA: Matrix Medical Network (1)
(in thousands) (Unaudited)
   
  Three months ended December 31, 2017
  HA Services Segment   Matrix
Investment
  Total
Matrix
Revenue $     $ 52,536     $ 52,536  
Operating expense (2)     41,881     41,881  
Depreciation and amortization     8,883     8,883  
Operating income     1,772     1,772  
           
Other expense          
Interest expense     3,823     3,823  
Provision (benefit) for income taxes     (29,492 )   (29,492 )
Net income     27,441     27,441  
           
Depreciation and amortization     8,883     8,883  
Interest expense     3,823     3,823  
Provision (benefit) for income taxes     (29,492 )   (29,492 )
EBITDA     10,655     10,655  
Matrix management transaction bonuses     12     12  
Management fees     529     529  
Acquisition costs     412     412  
Transaction costs     6     6  
Adjusted EBITDA $     $ 11,614     $ 11,614  
           
  Three months ended December 31, 2016
  HA Services
Segment (3)
  Matrix
Investment (4)
  Total
Matrix
Revenue $ 10,669     $ 41,635     $ 52,304  
Operating expense (2) 6,776     39,357     46,133  
Depreciation and amortization     6,356     6,356  
Operating income (loss) 3,893     (4,078 )   (185 )
           
Other expense 2,302         2,302  
Interest expense 625     2,949     3,574  
Gain on disposition (167,895 )       (167,895 )
Provision (benefit) for income taxes 59,903     (2,828 )   57,075  
Net income (loss) 108,958     (4,199 )   104,759  
           
Depreciation and amortization     6,356     6,356  
Interest expense 625     2,949     3,574  
Provision (benefit) for income taxes 59,903     (2,828 )   57,075  
EBITDA 169,486     2,278     171,764  
Gain on disposition (167,895 )       (167,895 )
Write-off of deferred financing fees 2,302         2,302  
Matrix management transaction bonuses     4,033     4,033  
Transaction costs (794 )   2,334     1,540  
Adjusted EBITDA $ 3,099     $ 8,645     $ 11,744  

(1) Matrix's Adjusted EBITDA is not included within Providence's Adjusted EBITDA in any period presented.
(2) Excludes depreciation and amortization.
(3) Represents Matrix's results of operations from October 1, 2016 to October 19, 2016.  These results are included within Discontinued Operations on the Company's consolidated financial statements.
(4) Represents Matrix's results of operation from October 20, 2016 to December 31, 2016.  Providence accounts for its proportionate share of Matrix's results during this time period using the equity method.                                                  


The Providence Service Corporation
Reconciliation of Non-GAAP Financial Measures

Adjusted EBITDA: Matrix Medical Network (1)
(in thousands) (Unaudited)
   
  Twelve months ended December 31, 2017
  HA Services Segment   Matrix
Investment
  Total
Matrix
Revenue $     $ 227,872     $ 227,872  
Operating expense (2)     182,489     182,489  
Depreciation and amortization     33,512     33,512  
Operating income     11,871     11,871  
           
Other expense          
Interest expense     14,818     14,818  
Provision (benefit) for income taxes     (29,613 )   (29,613 )
Net Income     26,666     26,666  
           
Depreciation and amortization     33,512     33,512  
Interest expense     14,818     14,818  
Provision (benefit) for income taxes     (29,613 )   (29,613 )
EBITDA     45,383     45,383  
Matrix management transaction bonuses     2,679     2,679  
Management fees     2,331     2,331  
Acquisition costs     412     412  
Transaction costs     857     857  
Adjusted EBITDA $     $ 51,662     $ 51,662  
           
  Twelve months ended December 31, 2016
  HA Services
Segment (3)
  Matrix
Investment (4)
  Total
Matrix
Revenue $ 166,090     $ 41,635     $ 207,725  
Operating expense (2) 123,054     39,357     162,411  
Depreciation and amortization 21,121     6,356     27,477  
Operating income (loss) 21,915     (4,078 )   17,837  
           
Other expense 2,302         2,302  
Interest expense 9,929     2,949     12,878  
Gain on disposition (167,895 )       (167,895 )
Provision (benefit) for income taxes 63,254     (2,828 )   60,426  
Net income (loss) 114,325     (4,199 )   110,126  
           
Depreciation and amortization 21,121     6,356     27,477  
Interest expense 9,929     2,949     12,878  
Provision (benefit) for income taxes 63,254     (2,828 )   60,426  
EBITDA 208,629     2,278     210,907  
Gain on disposition (167,895 )       (167,895 )
Write-off of deferred financing fees 2,302         2,302  
Matrix management transaction bonuses     4,033     4,033  
Transaction costs 47     2,334     2,381  
Adjusted EBITDA $ 43,083     $ 8,645     $ 51,728  

(1) Matrix's Adjusted EBITDA is not included within Providence's Adjusted EBITDA in any period presented.
(2) Excludes depreciation and amortization.
(3) Represents Matrix's results of operations from January 1, 2016 to October 19, 2016.  These results are included within Discontinued Operations on the Company's consolidated financial statements.
(4) Represents Matrix's results of operation from October 20, 2016 to December 31, 2016.  Providence accounts for its proportionate share of Matrix's results during this time period using the equity method.



The Providence Service Corporation
Reconciliation of Non-GAAP Financial Measures
Adjusted Net Income and Adjusted Net Income per Common Share:
(in thousands, except share and per share data)
(Unaudited)
         
    Three months ended December 31,   Twelve months ended December 31,
    2017   2016   2017   2016
                 
Income from continuing operations, net of tax $ 39,066     $ (25,657 )   $ 59,803     $ (18,914 )
Net loss (income) attributable to noncontrolling interests (156 )   1,649     (451 )   2,082  
               
Asset impairment charge     21,003         21,003  
Restructuring and related charges (1) 4,627     7,435     11,588     14,422  
Equity in net (gain) loss of investees (13,044 )   4,593     (12,054 )   10,287  
Gain on sale of equity investment 229         (12,377 )    
Loss (gain) on foreign currency transactions (256 )   (42 )   345     (1,375 )
Intangible amortization expense 2,013     1,886     7,927     8,566  
Litigation (income) expense, net (2) (5,273 )   491     (4,969 )   1,574  
Other (2,041 )       (2,041 )    
Impact of adjustments on noncontrolling interests (145 )   (1,053 )   (159 )   (1,475 )
Impact of Tax Reform Act (19,397 )       (19,397 )    
Tax adjustment for 2015 Holding Company LTI Program 3,590         3,590      
Tax effected impact of adjustments 2,239     (3,857 )   (1,490 )   (6,277 )
                 
Adjusted Net Income 11,452     6,448     30,315     29,893  
                 
Dividends on convertible preferred stock (1,114 )   (1,111 )   (4,419 )   (4,419 )
Income allocated to participating securities (1,336 )   (663 )   (3,341 )   (3,076 )
                 
Adjusted Net Income available to common
  stockholders
$ 9,002     $ 4,674     $ 22,555     $ 22,398  
                 
Adjusted EPS $ 0.66     $ 0.33     $ 1.65     $ 1.52  
                 
Diluted weighted-average number of common shares outstanding 13,664,727     14,271,935     13,673,314     14,779,398  

(1) Restructuring and related charges are comprised of employee separation costs, severance and other costs related to the former CEO of Providence, NET Services chief executive officer search fees, as well as third-party consulting and implementation costs related to WD Services' Ingeus Futures initiative and NET Services' LogistiCare Member Experience initiative.  See the above Segment Information and Adjusted EBITDA tables for a detailed breakdown of the restructuring and related charges for each time period presented.
(2) Income or expense related to defense cost and final settlement for a putative stockholder class action derivative complaint, which is more fully described in the Company's Form 10-K.

 

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Source: Providence Service Corporation