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The Providence Service Corporation Reports Second Quarter 2020 Financial Results

ATLANTA--(BUSINESS WIRE)--Aug. 6, 2020-- The Providence Service Corporation (the “Company” or “Providence”) (Nasdaq: PRSC), the nation’s largest provider of non-emergency medical transportation (“NEMT”) programs and holder of a minority interest in Matrix Medical Network, today reported financial results for the three months ended June 30, 2020.

Second Quarter 2020 Highlights:

  • Revenue from continuing operations of $282.3 million
  • Income from continuing operations, net of tax, of $37.3 million, and loss of $0.96 per diluted common share
  • Adjusted EBITDA of $56.4 million, Adjusted Net Income of $38.0 million and Adjusted EPS of $2.53
  • Net cash provided by operating activities during the quarter of $108.4 million
  • At June 30, 2020, cash of $41.8 million, with no debt outstanding
  • Matrix, on a standalone basis, achieved net income of $8.9 million and Adjusted EBITDA of $32.6 million; launched new Employee Health & Wellness and telehealth products

Daniel E. Greenleaf, President and Chief Executive Officer, said, “Providence’s second quarter Adjusted EBITDA of $56.4 million exceeded the prior year comparable figure primarily due to lower operating expenses driven by our six-pillar growth strategy, incremental contribution from National MedTrans and lower utilization under our capitated contracts. We were pleased to end the quarter with $41.8 million in cash with no debt, despite deploying capital on two highly strategic, accretive transactions: the purchase of National MedTrans in May 2020 and the conversion of the majority of the Company’s Series A convertible preferred stock in June 2020.”

Mr. Greenleaf continued, “From a position of strength, and as the clear leader in our industry, we remain dedicated to providing safe and reliable non-emergency medical transportation services during the ongoing COVID-19 pandemic, while delivering food to a growing number of food-insecure members and offering financial support to our transportation partners. Moreover, we continue to invest in key areas of our growth strategy, such as the digitization of our transportation network and technology enhancements in our contact centers. We believe these kinds of investments will help meaningfully streamline our operations, reduce costs and enhance service quality. We are rapidly transforming our organization through new technology, talent and culture. With the benefit of our strong operating platform and balance sheet, we are actively evaluating new service lines to further support our members and payors. During this process, we intend to build substantial long-term value for our customers and shareholders alike.”

Second Quarter 2020 Results

For the second quarter of 2020, the Company reported revenue of $282.3 million, a decrease of 22.4% from $363.9 million in the second quarter of 2019.

Operating income was $48.8 million, or 17.3% of revenue, in the second quarter of 2020, compared to operating loss of $(3.3) million, or (0.9)% of revenue, in the second quarter of 2019. Income from continuing operations, net of tax, in the second quarter of 2020 was $37.3 million, or $0.96 loss per diluted common share, compared to loss from continuing operations, net of tax, of $(3.4) million, or $0.35 loss per diluted common share, in the second quarter of 2019. Loss per diluted common share in the second quarter of 2020 included $49.0 million related to the Company's conversion of the majority of the Company's Series A convertible stock on June 8, 2020.

Adjusted EBITDA was $56.4 million, or 20.0% of revenue, in the second quarter of 2020, compared to $5.8 million, or 1.6% of revenue, in the second quarter of 2019.

Adjusted Net Income in the second quarter of 2020 was $38.0 million, or $2.53 earnings per diluted common share, compared to $2.2 million, or $0.07 earnings per diluted common share, in the second quarter of 2019.

The quarter-over-quarter decrease in revenue was primarily due to lower trip volume associated with certain profit corridor and reconciliation contracts due to the COVID-19 pandemic. This was partially offset by $8.4 million of revenue as a result of the National MedTrans acquisition.

Adjusted EBITDA increased in the second quarter of 2020 due to cost savings and productivity initiatives associated with the Company's six-pillar growth strategy in addition to incremental margin from the National MedTrans acquisition and lower utilization and contact center activity due to COVID-19. This was partially offset by higher corporate general and administrative cost as the Company made investments in its employees and technology.

Matrix - Equity Investment

For the second quarter of 2020, Matrix’s revenue was $90.7 million, an increase of 25.6% from $72.2 million in the second quarter of 2019. Matrix had an operating income of $15.3 million for the second quarter of 2020, compared to operating income of $1.5 million for the second quarter of 2019.

Providence recorded a gain of $4.4 million related to its Matrix equity investment compared to a loss of $1.3 million for the second quarter of 2019. For the second quarter of 2020, Matrix recorded Adjusted EBITDA of $32.6 million, or 36.0% of revenue, compared to $13.7 million, or 19.0% of revenue, for the second quarter of 2019.

Matrix’s Adjusted EBITDA for the quarter was positively impacted by its launch of a new Employee Health and Wellness product developed for companies maintaining critical operations during COVID-19. Matrix quickly rolled out this new offering by leveraging its national clinical staff and fleet of mobile units. Due to the pandemic, Matrix’s payor customers paused in-home visits for a period during the quarter that adversely affected Home product volume. In an effort to mitigate, Matrix implemented a new telehealth alternative, partially offsetting the pause. At the end of the quarter, several of Matrix’s payor customers began resuming in-home visits.

As of June 30, 2020, Matrix had $285.2 million in net debt and Providence's ownership interest was 43.6%.

Investor Presentation and Conference Call

Providence will hold a conference call to discuss its financial results on Thursday, August 6, 2020 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 (877) 423 9820
International: 1 (201) 493 6749

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, through its fully-owned subsidiary LogistiCare Solutions, LLC, is the nation's largest manager of non-emergency medical transportation programs for state governments and managed care organizations. Its range of services includes call center management, network credentialing, vendor payment management and non-emergency medical transport management. The Company also holds a minority interest in Matrix Medical Network which provides a broad array of assessment and care management services to individuals that improve health outcomes and health plan financial performance. For more information, please visit prscholdings.com.

Non-GAAP Financial Measures and Adjustments

In addition to the financial results prepared in accordance with generally accepted accounting principles in the United States ("GAAP"), this press release includes EBITDA and Adjusted EBITDA for the Company and its segments, as well as Adjusted Net Income and Adjusted EPS, 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, including costs related to our corporate reorganization, (2) equity in net (gain) loss of investee, (3) certain litigation related expenses, settlement income or other negotiated settlements relating to certain matters from prior periods, (4) certain transaction and related costs, and (5) COVID-19 related costs. Adjusted Net Income is defined as income from continuing operations, net of taxes, before certain items, including (1) restructuring and related charges, (2) equity in net (gain) loss of investee, (3) certain litigation related expenses, settlement income or other negotiated settlements relating to certain matters from prior periods, (4) intangible asset amortization, (5) certain transaction and related costs, (6) COVID-19 related costs, (7) tax impacts from the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") and (8) the income tax impact of such adjustments. Adjusted EPS is calculated as Adjusted Net Income less (as applicable): (1) dividends on convertible preferred stock and (2) adjusted net income allocated to participating stockholders, divided by the diluted weighted-average number of common shares outstanding as calculated for Adjusted Net Income. Our non-GAAP performance measures exclude certain expenses and amounts that are not driven by our core operating results and may be one time in nature. Excluding these expenses makes comparisons with prior periods as well as to other companies in our industry more 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 gain or loss in equity investee is excluded from these measures, as we do not have the ability to manage the venture, allocate resources within the venture, or directly control its 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

Certain statements contained in this press release constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are predictive in nature and are frequently identified by the use of terms such as “may,” “will,” “should,” “expect,” “believe,” “estimate,” “intend,” and similar words indicating possible future expectations, events or actions. Such forward-looking statements are based on current expectations, assumptions, estimates and projections about our business and our industry, and are not guarantees of our future performance. These statements are subject to a number of known and unknown risks, uncertainties and other factors, many of which are beyond our ability to control or predict, which may cause actual events to be materially different from those expressed or implied herein, including but not limited to: the early termination or non-renewal of contracts; our ability to successfully respond to governmental requests for proposal; our ability to fulfill our contractual obligations; our ability to identify and successfully complete and integrate acquisitions; our ability to identify and realize the benefits of strategic initiatives; the loss of any of the significant payors from whom we generate a significant amount of our revenue; our ability to accurately estimate the cost of performing under certain capitated contracts; our ability to match the timing of the costs of new contracts with its related revenue; the outcome of pending or future litigation; our ability to attract and retain senior management and other qualified employees; our ability to successfully complete recent divestitures or business termination; the accuracy of representations and warranties and strength of related indemnities provided to us in acquisitions or claims made against us for representations and warranties and related indemnities in our dispositions; our ability to effectively compete in the marketplace; inadequacies in or security breaches of our information technology systems, including our ability to protect private data; the impact of COVID-19 on us (including: the duration and scope of the pandemic; governmental, business and individuals’ actions taken in response to the pandemic; economic activity and actions taken in response; the effect on our clients and client demand for our services; and the ability of our clients to pay for our services); seasonal fluctuations in our operations; impairment of long-lived assets; the adequacy of our insurance coverage for automobile, general liability, professional liability and workers’ compensation; damage to our reputation by inaccurate, misleading or negative media coverage; our ability to comply with government healthcare and other regulations; changes in budgetary priorities of government entities that fund our services; failure to adequately comply with patient and service user information regulations; possible actions under Medicare and Medicaid programs for false claims or recoupment of funds for noncompliance; changes in the regulatory landscape applicable to Matrix; changes to our estimated income tax liability from audits or otherwise; our ability to meet restrictive covenants in our credit agreement; restrictions in the terms of our preferred stock; the costs of complying with public company reporting obligations; and the accuracy of our accounting estimates and assumptions.

The Company has provided additional information in our annual report on Form 10-K and subsequent filings with the Securities and Exchange Commission. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made. We undertake no obligation to update or revise any forward- looking statements contained in this release, whether as a result of new information, future events or otherwise, except as required by applicable law.

--financial tables to follow--

The Providence Service Corporation

Unaudited Condensed Consolidated Statements of Operations

(in thousands except share and per share data)

 

 

 

 

 

 

 

 

 

 

 

Three months ended
June 30,

 

Six months ended June 30,

 

 

2020

 

2019

 

2020

 

2019

 

 

 

 

 

 

 

 

 

Service revenue, net

 

$

282,256

 

 

$

363,911

 

 

$

649,547

 

 

$

731,726

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

Service expense

 

196,106

 

 

345,948

 

 

528,767

 

 

686,446

 

General and administrative expense

 

31,199

 

 

16,860

 

 

51,994

 

 

36,262

 

Depreciation and amortization

 

6,108

 

 

4,353

 

 

9,898

 

 

8,827

 

Total operating expenses

 

233,413

 

 

367,161

 

 

590,659

 

 

731,535

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

 

48,843

 

 

(3,250)

 

 

58,888

 

 

191

 

 

 

 

 

 

 

 

 

 

Other expenses (income):

 

 

 

 

 

 

 

 

Interest expense, net

 

1,498

 

 

301

 

 

1,739

 

 

604

 

Other income

 

 

 

(66)

 

 

 

 

(132)

 

Equity in net (gain) loss of investee

 

(4,425)

 

 

1,315

 

 

(1,875)

 

 

2,971

 

Income (loss) from continuing operations before income taxes

 

51,770

 

 

(4,800)

 

 

59,024

 

 

(3,252)

 

Provision (benefit) for income taxes

 

14,471

 

 

(1,391)

 

 

5,425

 

 

(1,157)

 

Income (loss) from continuing operations, net of tax

 

37,299

 

 

(3,409)

 

 

53,599

 

 

(2,095)

 

(Loss) income from discontinued operations, net of tax

 

(301)

 

 

1,697

 

 

(503)

 

 

966

 

Net income (loss)

 

$

36,998

 

 

$

(1,712)

 

 

$

53,096

 

 

$

(1,129)

 

 

 

 

 

 

 

 

 

 

Net (loss) income attributable to common stockholders

 

$

(12,819)

 

 

$

(2,810)

 

 

$

1,920

 

 

$

(3,314)

 

 

 

 

 

 

 

 

 

 

Basic (loss) earnings per common share:

 

 

 

 

 

 

 

 

Continuing operations

 

$

(0.96)

 

 

$

(0.35)

 

 

$

0.19

 

 

$

(0.33)

 

Discontinued operations

 

(0.02)

 

 

0.13

 

 

(0.04)

 

 

0.07

 

Basic (loss) earnings per common share

 

$

(0.98)

 

 

$

(0.22)

 

 

$

0.15

 

 

$

(0.26)

 

 

 

 

 

 

 

 

 

 

Diluted (loss) earnings per common share:

 

 

 

 

 

 

 

 

Continuing operations

 

$

(0.96)

 

 

$

(0.35)

 

 

$

0.19

 

 

$

(0.33)

 

Discontinued operations

 

(0.02)

 

 

0.13

 

 

(0.04)

 

 

0.07

 

Diluted (loss) earnings per common share

 

$

(0.98)

 

 

$

(0.22)

 

 

$

0.15

 

 

$

(0.26)

 

 

 

 

 

 

 

 

 

 

Weighted-average number of common

 

 

 

 

 

 

 

 

shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

13,077,596

 

 

12,973,496

 

 

13,032,931

 

 

12,937,054

 

Diluted

 

13,077,596

 

 

12,973,496

 

 

13,059,699

 

 

12,937,054

 

The Providence Service Corporation

Unaudited Condensed Consolidated Balance Sheets

(in thousands)

 

 

 

 

 

 

 

June 30, 2020

 

December 31, 2019

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

41,786

 

 

$

61,365

 

Accounts receivable, net of allowance

 

170,063

 

 

180,416

 

Other current assets (1)

 

33,942

 

 

14,491

 

Current assets of discontinued operations (2)

 

89

 

 

155

 

Total current assets

 

245,880

 

 

256,427

 

Operating lease right-of-use assets

 

19,864

 

 

20,095

 

Property and equipment, net

 

20,793

 

 

23,243

 

Goodwill and intangible assets, net

 

227,458

 

 

155,127

 

Equity investment

 

131,974

 

 

130,869

 

Other long-term assets

 

8,365

 

 

11,620

 

Total assets

 

$

654,334

 

 

$

597,381

 

 

 

 

 

 

Liabilities, redeemable convertible preferred stock and stockholders' equity

Current liabilities:

 

 

 

 

Current portion of finance lease liabilities

 

$

199

 

 

$

308

 

Current portion of operating lease liabilities

 

7,016

 

 

6,730

 

Other current liabilities (3)

 

192,595

 

 

141,718

 

Current liabilities of discontinued operations (2)

 

1,504

 

 

1,430

 

Total current liabilities

 

201,314

 

 

150,186

 

Finance lease liabilities, less current portion

 

 

 

45

 

Operating lease liabilities, less current portion

 

13,886

 

 

14,502

 

Long-term contracts payable

 

26,079

 

 

 

Other long-term liabilities (4)

 

47,298

 

 

37,936

 

Total liabilities

 

288,577

 

 

202,669

 

 

 

 

 

 

Mezzanine and stockholders' equity

 

 

 

 

Convertible preferred stock, net

 

5,299

 

 

77,120

 

Stockholders' equity

 

360,458

 

 

317,592

 

Total liabilities, redeemable convertible preferred stock
and stockholders' equity

 

$

654,334

 

 

$

597,381

 

(1)

  Includes other receivables, prepaid expenses and short-term restricted cash.

(2)

  Includes assets or liabilities primarily related to WD Services' former Saudi Arabian operation.

(3)

  Includes accounts payable, accrued expenses, accrued transportation costs, deferred revenue and self-funded insurance programs.

(4)

  Includes other long-term liabilities and deferred tax liabilities.

The Providence Service Corporation

Unaudited Condensed Consolidated Statements of Cash Flows

(in thousands) (1)

 

 

 

 

 

 

 

Six months ended June 30,

 

 

2020

 

2019

Operating activities

 

 

 

 

Net income (loss)

 

$

53,096

 

 

$

(1,129)

 

Depreciation and amortization

 

9,898

 

 

8,827

 

Stock-based compensation

 

1,772

 

 

3,392

 

Equity in net (gain) loss of investee

 

(1,875)

 

 

2,971

 

Other non-cash items

 

18,395

 

 

4,229

 

Changes in working capital

 

65,902

 

 

4,781

 

Net cash provided by operating activities

 

147,188

 

 

23,071

 

Investing activities

 

 

 

 

Purchase of property and equipment

 

(2,330)

 

 

(4,277)

 

Acquisition, net of cash acquired

 

(77,665)

 

 

 

Net cash used in investing activities

 

(79,995)

 

 

(4,277)

 

Financing activities

 

 

 

 

Proceeds from debt

 

162,000

 

 

12,000

 

Repayment of debt

 

(162,000)

 

 

(12,000)

 

Preferred stock conversion payment

 

(82,769)

 

 

 

Preferred stock dividends

 

(1,961)

 

 

(2,185)

 

Repurchase of common stock, for treasury

 

(10,186)

 

 

(372)

 

Proceeds from common stock issued pursuant to stock option exercise

 

11,329

 

 

6,383

 

Restricted stock surrendered for employee tax payment

 

(37)

 

 

 

Other financing activities

 

(154)

 

 

(566)

 

Net cash (used in) provided by financing activities

 

(83,778)

 

 

3,260

 

Net change in cash and cash equivalents

 

(16,585)

 

 

22,054

 

Cash, cash equivalents and restricted cash at beginning of period

 

61,673

 

 

12,367

 

Cash, cash equivalents and restricted cash at end of period

 

$

45,088

 

 

$

34,421

 

(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 June 30, 2020

 

 

NET
Services

 

Matrix
Investment

 

Total
Continuing
Operations

 

 

 

 

 

 

 

Service revenue, net

$

282,256

 

 

$

 

 

$

282,256

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

Service expense

196,106

 

 

 

 

196,106

 

General and administrative expense

31,199

 

 

 

 

31,199

 

Depreciation and amortization

6,108

 

 

 

 

6,108

 

Total operating expenses

233,413

 

 

 

 

233,413

 

 

 

 

 

 

 

 

Operating income

48,843

 

 

 

 

48,843

 

 

 

 

 

 

 

 

Other expenses (income):

 

 

 

 

 

Interest expense, net

1,498

 

 

 

 

1,498

 

Equity in net gain of investee

 

 

(4,425)

 

 

(4,425)

 

Income from continuing

 

 

 

 

 

operations before income taxes

47,345

 

 

4,425

 

 

51,770

 

Provision for income taxes

13,363

 

 

1,108

 

 

14,471

 

Income from continuing
operations, net of taxes

33,982

 

 

3,317

 

 

37,299

 

 

 

 

 

 

 

 

Interest expense, net

1,498

 

 

 

 

1,498

 

Provision for income taxes

13,363

 

 

1,108

 

 

14,471

 

Depreciation and amortization

6,108

 

 

 

 

6,108

 

 

 

 

 

 

 

 

EBITDA

54,951

 

 

4,425

 

 

59,376

 

 

 

 

 

 

 

 

Restructuring and related charges (1)

986

 

 

 

 

986

 

Transaction costs (2)

266

 

 

 

 

266

 

COVID-19 related costs

209

 

 

 

 

209

 

Equity in net gain of investee

 

 

(4,425)

 

 

(4,425)

 

 

 

 

 

 

 

 

Adjusted EBITDA

$

56,412

 

 

$

 

 

$

56,412

 

(1)

  Restructuring and related charges include severance and office closure costs of $506 and professional services costs of $480.

(2)

  Transaction costs include Circulation management incentive plan ("MIP") costs and certain transaction-related expenses.

The Providence Service Corporation

Reconciliation of Non-GAAP Financial Measures

Segment Information and Adjusted EBITDA

(in thousands) (Unaudited)

 

 

 

Three months ended June 30, 2019

 

 

NET
Services

 

Matrix
Investment

 

Total
Continuing
Operations

 

 

 

 

 

 

 

Service revenue, net

$

363,911

 

 

$

 

 

$

363,911

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

Service expense

345,948

 

 

 

 

345,948

 

General and administrative expense

16,860

 

 

 

 

16,860

 

Depreciation and amortization

4,353

 

 

 

 

4,353

 

Total operating expenses

367,161

 

 

 

 

367,161

 

 

 

 

 

 

 

 

Operating loss

(3,250)

 

 

 

 

(3,250)

 

 

 

 

 

 

 

 

Other expenses (income):

 

 

 

 

 

Interest expense, net

301

 

 

 

 

301

 

Other income

(66)

 

 

 

 

(66)

 

Equity in net loss of investee

 

 

1,315

 

 

1,315

 

Loss from continuing

 

 

 

 

 

operations, before income tax

(3,485)

 

 

(1,315)

 

 

(4,800)

 

Benefit for income taxes

(1,251)

 

 

(140)

 

 

(1,391)

 

Loss from continuing operations, net of taxes

(2,234)

 

 

(1,175)

 

 

(3,409)

 

 

 

 

 

 

 

 

Interest expense, net

301

 

 

 

 

301

 

Benefit for income taxes

(1,251)

 

 

(140)

 

 

(1,391)

 

Depreciation and amortization

4,353

 

 

 

 

4,353

 

 

 

 

 

 

 

 

EBITDA

1,169

 

 

(1,315)

 

 

(146)

 

 

 

 

 

 

 

 

Restructuring and related charges (1)

1,658

 

 

 

 

1,658

 

Transaction costs (2)

2,950

 

 

 

 

2,950

 

Equity in net loss of investee

 

 

1,315

 

 

1,315

 

 

 

 

 

 

 

 

Adjusted EBITDA

$

5,777

 

 

$

 

 

$

5,777

 

(1)

  Restructuring and related charges include organizational consolidation costs of $1,316 and severance costs of $342.

(2)

  Transaction costs include Circulation MIP and certain transaction-related expenses.

The Providence Service Corporation

Reconciliation of Non-GAAP Financial Measures

Segment Information and Adjusted EBITDA

(in thousands) (Unaudited)

 

 

 

Six months ended June 30, 2020

 

 

NET
Services

 

Matrix
Investment

 

Total
Continuing
Operations

 

 

 

 

 

 

 

Service revenue, net

$

649,547

 

 

$

 

 

$

649,547

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

Service expense

528,767

 

 

 

 

528,767

 

General and administrative expense

51,994

 

 

 

 

51,994

 

Depreciation and amortization

9,898

 

 

 

 

9,898

 

Total operating expenses

590,659

 

 

 

 

590,659

 

 

 

 

 

 

 

 

Operating income

58,888

 

 

 

 

58,888

 

 

 

 

 

 

 

 

Other expenses (income):

 

 

 

 

 

Interest expense, net

1,739

 

 

 

 

1,739

 

Equity in net gain of investee

 

 

(1,875)

 

 

(1,875)

 

Income from continuing

 

 

 

 

 

operations before income tax

57,149

 

 

1,875

 

 

59,024

 

Provision for income taxes

4,955

 

 

470

 

 

5,425

 

Income from continuing operations,
net of taxes

52,194

 

 

1,405

 

 

53,599

 

 

 

 

 

 

 

 

Interest expense, net

1,739

 

 

 

 

1,739

 

Provision for income taxes

4,955

 

 

470

 

 

5,425

 

Depreciation and amortization

9,898

 

 

 

 

9,898

 

 

 

 

 

 

 

 

EBITDA

68,786

 

 

1,875

 

 

70,661

 

 

 

 

 

 

 

 

Restructuring and related charges (1)

2,308

 

 

 

 

2,308

 

Transaction costs (2)

1,121

 

 

 

 

1,121

 

COVID-19 related costs

231

 

 

 

 

231

 

Equity in net gain of investee

 

 

(1,875)

 

 

(1,875)

 

 

 

 

 

 

 

 

Adjusted EBITDA

$

72,446

 

 

$

 

 

$

72,446

 

(1)

  Restructuring and related charges include severance and office closure costs of $1,186 and professional services of $1,122.

(2)

  Transaction costs include Circulation MIP and certain transaction-related expenses.

The Providence Service Corporation

Reconciliation of Non-GAAP Financial Measures

Segment Information and Adjusted EBITDA

(in thousands) (Unaudited)

 

 

 

Six months ended June 30, 2019

 

 

NET
Services

 

Matrix
Investment

 

Total
Continuing
Operations

 

 

 

 

 

 

 

Service revenue, net

$

731,726

 

 

$

 

 

$

731,726

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

Service expense

686,446

 

 

 

 

686,446

 

General and administrative expense

36,262

 

 

 

 

36,262

 

Depreciation and amortization

8,827

 

 

 

 

8,827

 

Total operating expenses

731,535

 

 

 

 

731,535

 

 

 

 

 

 

 

 

Operating income

191

 

 

 

 

191

 

 

 

 

 

 

 

 

Other expenses (income):

 

 

 

 

 

Interest expense, net

604

 

 

 

 

604

 

Other Income

(132)

 

 

 

 

(132)

 

Equity in net loss of investee

 

 

2,971

 

 

2,971

 

Loss from continuing

 

 

 

 

 

operations, before income tax

(281)

 

 

(2,971)

 

 

(3,252)

 

Benefit for income taxes

(680)

 

 

(477)

 

 

(1,157)

 

Income (loss) from continuing
operations, net of taxes

399

 

 

(2,494)

 

 

(2,095)

 

 

 

 

 

 

 

 

Interest expense, net

604

 

 

 

 

604

 

Benefit for income taxes

(680)

 

 

(477)

 

 

(1,157)

 

Depreciation and amortization

8,827

 

 

 

 

8,827

 

 

 

 

 

 

 

 

EBITDA

9,150

 

 

(2,971)

 

 

6,179

 

 

 

 

 

 

 

 

Restructuring and related charges (1)

4,470

 

 

 

 

4,470

 

Transaction costs (2)

4,339

 

 

 

 

4,339

 

Equity in net loss of investee

 

 

2,971

 

 

2,971

 

Litigation Expense

9

 

 

 

 

9

 

 

 

 

 

 

 

 

Adjusted EBITDA

$

17,968

 

 

$

 

 

$

17,968

 

(1)

  Restructuring and related charges include organizational consolidation costs of $3,102 and severance costs of $1,368.

(2)

  Transaction costs include Circulation MIP and certain transaction-related expenses.

The Providence Service Corporation

Summary Financial Information of Equity Investment in Matrix Medical Network (1)

(in thousands)

(Unaudited)

 

 

Three months ended June 30,

 

Six months ended June 30,

 

 

2020

 

2019

 

2020

 

2019

 

Revenue

$

90,667

 

 

$

72,161

 

 

$

151,971

 

 

$

139,144

 

 

Operating expense

65,661

 

 

59,362

 

 

118,710

 

 

114,581

 

 

Depreciation and amortization

9,748

 

 

11,256

 

 

19,676

 

 

22,465

 

 

Operating income

15,258

 

 

1,543

 

 

13,585

 

 

2,098

 

 

 

 

 

 

 

 

 

 

 

Interest expense

4,989

 

 

6,384

 

 

10,719

 

 

12,777

 

 

Provision (benefit) for income taxes

1,377

 

 

(1,180)

 

 

331

 

 

(2,531)

 

 

Net income (loss)

8,892

 

 

(3,661)

 

 

2,535

 

 

(8,148)

 

 

 

 

 

 

 

 

 

 

 

Interest

43.6

%

 

43.6

%

 

43.6

%

 

43.6

%

 

Net gain (loss) - Equity Investment

3,876

 

 

(1,597)

 

 

1,105

 

 

(3,555)

 

 

Management fee and other

549

 

 

282

 

 

770

 

 

584

 

 

Equity in net gain (loss) of investee

$

4,425

 

 

$

(1,315)

 

 

$

1,875

 

 

$

(2,971)

 

 

 

 

 

 

 

 

 

 

 

Cash

$

39,006

 

 

$

32,247

 

 

 

 

 

 

Total Debt (2)

$

324,225

 

 

$

326,700

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

  The results of our equity method investment are excluded from the calculation of Providence's Adjusted EBITDA and Adjusted Net Income.

(2)

  Represents long-term debt, excluding deferred financing costs.

The Providence Service Corporation

Reconciliation of Non-GAAP Financial Measures

Adjusted EBITDA: Matrix Medical Network (1)

(in thousands) (Unaudited)

 

 

Three months ended June 30,

 

Six months ended June 30,

 

2020

 

2019

 

2020

 

2019

Revenue

$

90,667

 

 

$

72,161

 

 

$

151,971

 

 

$

139,144

 

Operating expense

65,661

 

 

59,362

 

 

118,710

 

 

114,581

 

Depreciation and amortization

9,748

 

 

11,256

 

 

19,676

 

 

22,465

 

Operating income

15,258

 

 

1,543

 

 

13,585

 

 

2,098

 

 

 

 

 

 

 

 

 

Interest expense

4,989

 

 

6,384

 

 

10,719

 

 

12,777

 

Provision (benefit) for income taxes

1,377

 

 

(1,180)

 

 

331

 

 

(2,531)

 

Net income (loss)

8,892

 

 

(3,661)

 

 

2,535

 

 

(8,148)

 

 

 

 

 

 

 

 

 

Depreciation and amortization

9,748

 

 

11,256

 

 

19,676

 

 

22,465

 

Interest expense

4,989

 

 

6,384

 

 

10,719

 

 

12,777

 

Provision (benefit) for income taxes

1,377

 

 

(1,180)

 

 

331

 

 

(2,531)

 

EBITDA

25,006

 

 

12,799

 

 

33,261

 

 

24,563

 

Management fees

1,176

 

 

637

 

 

1,669

 

 

1,297

 

Integration costs

 

 

5

 

 

 

 

1,488

 

Severance costs

138

 

 

 

 

937

 

 

 

COVID-19 related costs

4,935

 

 

 

 

5,092

 

 

 

Transaction costs

1,369

 

 

286

 

 

1,754

 

 

330

 

Adjusted EBITDA

$

32,624

 

 

$

13,727

 

 

$

42,713

 

 

$

27,678

 

(1)

  Providence accounts for its proportionate share of Matrix's results using the equity method. Matrix's Adjusted EBITDA is not included within Providence's Adjusted EBITDA in any period presented.

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 June 30,

 

Six months
ended June 30,

 

 

2020

 

2019

 

2020

 

2019

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations, net of tax

$

37,299

 

 

$

(3,409)

 

 

$

53,599

 

 

$

(2,095)

 

 

 

 

 

 

 

 

 

Restructuring and related charges (1)

986

 

 

1,755

 

 

2,308

 

 

4,785

 

Transaction costs (2)

266

 

 

2,950

 

 

1,121

 

 

4,339

 

Equity in net (gain) loss of investee

(4,425)

 

 

1,315

 

 

(1,875)

 

 

2,971

 

Intangible amortization expense

3,775

 

 

1,559

 

 

5,334

 

 

3,117

 

Litigation expense, net

 

 

 

 

 

 

9

 

COVID-19 related costs

209

 

 

 

 

231

 

 

 

Tax impact of the CARES Act

76

 

 

 

 

(10,984)

 

 

 

Tax effected impact of adjustments

(167)

 

 

(1,986)

 

 

(1,831)

 

 

(5,121)

 

 

 

 

 

 

 

 

 

 

Adjusted Net Income

$

38,019

 

 

$

2,184

 

 

47,903

 

 

8,005

 

 

 

 

 

.

 

 

 

 

Dividends on convertible preferred stock

(866)

 

 

(1,098)

 

 

(1,961)

 

 

(2,185)

 

Income allocated to participating securities

(4,024)

 

 

(146)

 

 

(5,560)

 

 

(782)

 

 

 

 

 

 

 

 

 

 

Adjusted Net Income available to common stockholders

$

33,129

 

 

$

940

 

 

$

40,382

 

 

$

5,038

 

 

 

 

 

 

 

 

 

 

Adjusted EPS

$

2.53

 

 

$

0.07

 

 

$

3.09

 

 

$

0.39

 

 

 

 

 

 

 

 

 

 

Diluted weighted-average number of common shares outstanding

13,110,687

 

 

13,011,033

 

 

13,059,699

 

 

12,982,630

 

(1)

  Restructuring and related charges include severance, organizational consolidation costs and professional fees.

(2)

  Transaction costs include the MIP related to the Circulation acquisition and certain other transaction-related expenses.

 

Investor Relations
Kalle Ahl, The Equity Group
(212) 836-9614
kahl@equityny.com

Source: The Providence Service Corporation