Providence Service Corporation Reports Second Quarter 2016 Results
STAMFORD, CT--(Marketwired - August 01, 2016) -
- Revenue of $450.6 million
- Income from continuing operations, net of tax, of $4.0 million; diluted EPS of $0.21
- Adjusted Net Income (non-GAAP) of $13.1 million; Adjusted EPS (non-GAAP) of $0.70
- Adjusted EBITDA (non-GAAP) of $30.7 million
/EINPresswire.com/ -- The Providence Service Corporation (the "Company") (NASDAQ: PRSC), a holding company whose subsidiaries provide critical healthcare and workforce development services, today reported financial results for the second quarter and six months ended June 30, 2016.
"I am pleased to announce another quarter of solid performance, particularly within US Healthcare Services where both transportation revenue and assessment margins exceeded our expectations," said James Lindstrom, President and Chief Executive Officer. "Providence's underlying fundamentals remain strong, supplemented by our holding company approach and multiple value enhancement initiatives."
Second Quarter 2016 Results
For the second quarter of 2016, the Company reported consolidated revenue of $450.6 million, an increase of 7.7% from $418.2 million in the second quarter of 2015.
Income from continuing operations, net of tax, in the second quarter of 2016 was $4.0 million, or $0.21 per diluted common share, compared to $4.8 million, or $0.16 per diluted common share, in the second quarter of 2015. Adjusted Net Income (non-GAAP) in the second quarter of 2016 was $13.1 million, or $0.70 per diluted common share, compared to $14.2 million, or $0.67 per diluted common share, in the second quarter of 2015.
Adjusted EBITDA (non-GAAP) in the second quarter of 2016 was $30.7 million, compared to $31.6 million in the second quarter of 2015.
During the second quarter of 2016, the Company repurchased 273,169 common shares under its share repurchase program for $12.9 million, or for an average price of $47.36 per share.
Year to Date 2016 Results
For the first six months of 2016, the Company reported consolidated revenue of $883.3 million, an increase of 5.4% from $838.1 million in the comparable period of 2015.
Income from continuing operations, net of tax, for the first six months of 2016 was $6.1 million, or $0.27 per diluted common share, compared to $10.7 million, or $0.45 per diluted common share, in the comparable period of 2015. Adjusted Net Income (non-GAAP) for the first half of 2016 was $22.5 million, or $1.19 per diluted common share, compared to $29.0 million, or $1.48 per diluted common share, in the same period last year.
Adjusted EBITDA (non-GAAP) for the first half of 2016 was $56.0 million, compared to $64.6 million for the first half of 2015.
During the first half of 2016, the Company repurchased 708,904 common shares for $32.4 million, or for an average price of $45.73 per share.
A reconciliation of Adjusted EBITDA and Adjusted Net Income to income from continuing operations, net of tax, and the calculation of Adjusted EPS are presented below.
Segment Results
For analysis purposes, we provide revenue, expenses, operating income (loss), income (loss) from continuing operations, net of taxes, and Adjusted EBITDA (non-GAAP) on a segment basis. Segment results include revenue and expenses incurred by the segment, as well as an allocation of direct expenses incurred by Corporate on behalf of the segment. Indirect expenses, including unallocated corporate functions and expenses, such as executive, accounting, finance, human resources, information technology and legal, as well as the results of our captive insurance company and elimination entries recorded in consolidation are reflected in Corporate and Other.
US Healthcare Services
NET Services
NET Services revenue was $309.2 million for the second quarter of 2016, an increase of 14.2% from $270.7 million in the second quarter of 2015. Operating income was $17.8 million, or 5.7% of revenue, in the second quarter of 2016, compared to $18.9 million, or 7.0% of revenue, in the second quarter of 2015. Adjusted EBITDA (non-GAAP) was $20.7 million, or 6.7% of revenue, in the second quarter of 2016, compared to $21.2 million, or 7.8% of revenue, in the second quarter of 2015.
NET Services revenue was $600.1 million for the first half of 2016, an increase of 14.2% from $525.5 million in the first half of 2015. Operating income was $36.1 million, or 6.0% of revenue, for the first half of 2016, compared to $39.6 million, or 7.5% of revenue, for the first half of 2015. Adjusted EBITDA (non-GAAP) was $41.9 million, or 7.0% of revenue, for the first half of 2016, compared to $44.2 million, or 8.4% of revenue, for the first half of 2015.
The year-over-year increase in NET Services revenue in the second quarter of 2016 was primarily due to new state and managed care organization contracts in multiple geographies as well as increased membership under certain existing contracts. Adjusted EBITDA (non-GAAP) as a percentage of revenue declined as a result of increased member utilization and additional compensation expense related to long-term incentive plans tied to value creation.
HA Services
HA Services revenue was $52.3 million in the second quarter of 2016, a decrease of 5.7% compared to the second quarter of 2015. Operating income was $6.7 million, or 12.8% of revenue, in the second quarter of 2016, compared to $6.3 million, or 11.3% of revenue, in the second quarter of 2015. Adjusted EBITDA (non-GAAP) was $14.6 million, or 28.0% of revenue, in the second quarter of 2016, compared to $13.5 million, or 24.3% of revenue, in the second quarter of 2015.
HA Services revenue was $102.9 million for the first half of 2016, a decrease of 8.8% compared to the first half of 2015. Operating income was $11.0 million, or 10.7% of revenue, for the first half of 2016, compared to $12.8 million, or 11.3% of revenue, for the first half of 2015. Adjusted EBITDA (non-GAAP) was $26.8 million, or 26.0% of revenue, for the first half of 2016, compared to $27.1 million, or 24.1% of revenue, for the first half of 2015.
The decline in HA Services revenue in the second quarter of 2016 compared to the prior year period was due to a decline in the average price per assessment, which was largely the result of a change in customer mix in the second quarter of 2016 compared to the second quarter of 2015. In 2015, pricing was highest in the second quarter, which will not be the case in 2016. Adjusted EBITDA (non-GAAP) as a percentage of revenue increased due to management's continued success in driving efficiencies as well as a reduction in expense due to forfeited long-term awards, which have been reallocated to current employees.
Global Workforce Development
WD Services
WD Services revenue for the second quarter of 2016 was $89.3 million, a decrease of 3.1% compared to the second quarter of 2015. Excluding the effects of changes in currency exchange rates, revenue increased 1.6% in the second quarter of 2016 versus the second quarter of 2015. WD Services incurred an operating loss of $5.2 million in the second quarter of 2016, compared to an operating loss of $2.4 million in the second quarter of 2015. The operating loss in the second quarter of 2016 includes $3.7 million of redundancy costs related to continued service delivery redesigns, primarily related to the segment's offender rehabilitation program.
Prior to the impact of the Mission Providence joint venture, WD Services Adjusted EBITDA (non-GAAP) was $2.3 million, or 2.6% of revenue, in the second quarter of 2016 compared to $4.7 million, or 5.1% of revenue, in the second quarter of 2015. The Adjusted EBITDA (non-GAAP) associated with Mission Providence was negative $1.2 million in the second quarter of 2016 and negative $1.3 million in the second quarter of 2015.
Revenue for the first half of 2016 was $180.3 million, a decrease of 9.7% compared to the first half of 2015. Excluding the effects of changes in currency exchange rates, revenue declined 5.2% in the first half of 2016 versus the first half of 2015. WD Services incurred an operating loss of $7.3 million for the first half of 2016, compared to operating income of $0.4 million for the first half of 2015. The operating loss for the first half of 2016 included $5.1 million of redundancy costs related to continued service delivery redesigns and the anticipated closure of the segment's operations in Poland.
Prior to the impact of the Mission Providence joint venture, WD Services Adjusted EBITDA (non-GAAP) was $5.2 million, or 2.9% of revenue, for the first half of 2016 compared to $13.6 million, or 6.8% of revenue, for the first half of 2015. The Adjusted EBITDA (non-GAAP) associated with Mission Providence was negative $4.3 million for the first half of 2016 and negative $4.9 million for the first half of 2015.
The decline in Adjusted EBITDA (non-GAAP) at WD Services was primarily due to start-up costs related to the segment's offender rehabilitation program in the United Kingdom and the operational underperformance of employability programs in France.
Corporate and Other
Corporate and Other incurred an operating loss of $5.8 million in the second quarter of 2016 compared to an operating loss of $7.6 million in the second quarter of 2015. Adjusted EBITDA (non-GAAP) was negative $5.8 million in the second quarter of 2016 compared to negative $6.5 million in the second quarter of 2015.
Corporate and Other incurred an operating loss of $13.8 million for the first half of 2016 compared to an operating loss of $16.9 million for the first half of 2015. Adjusted EBITDA (non-GAAP) was negative $13.6 million in the second quarter of 2016 compared to negative $15.6 million in the second quarter of 2015.
The improvement in Adjusted EBITDA (non-GAAP) in the second quarter of 2016 versus the prior year period was primarily due a reduction in professional fees and stock-based compensation expense.
Conference Call
Providence will hold a conference call at 8:00 a.m. EDT Tuesday, August 2, 2016 to discuss its financial results and corporate developments. Interested parties are invited to listen to the call live at http://investor.prscholdings.com or by dialing (844) 244-3865, or for international callers (518) 444-0681, and using the passcode 56389155. A replay of the teleconference will be available on http://investor.prscholdings.com. A replay will also be available until August 16, 2016 by dialing (855) 859-2056 or (404) 537-3406 and using passcode 56389155.
About Providence
The Providence Service Corporation is a holding company whose subsidiaries provide critical healthcare and workforce development services, comprised of non-emergency transportation services, workforce development services, legal offender rehabilitation services, health assessment services, and care management services in the United States and abroad. For more information, please visit prscholdings.com.
Non-GAAP Financial Measures and Adjustments
In addition to the financial results prepared in accordance with US generally accepted accounting principles (GAAP), this press release includes EBITDA and Adjusted EBITDA for the Company and our operating segments and Adjusted Net Income and Adjusted EPS for the Company, which are financial measures that are not recognized under GAAP. EBITDA is defined as income (loss) from continuing operations, 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 restructuring and termination costs and foreign currency adjustments. Adjusted Net Income is defined as income from continuing operations, net of tax plus net loss attributable to noncontrolling interest and before: (1) certain items, including restructuring and termination costs, and foreign currency adjustments, (2) intangible amortization expense and (3) 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 measurements, which exclude certain expenses, 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 cash earnings capabilities of our business, for which capital investments are made and debt is serviced.
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 the healthcare reform law, state budget changes and legislation and other risks detailed in Providence's filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended December 31, 2015 and subsequent filings. 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.
The Providence Service Corporation
Unaudited Condensed Consolidated Statements of Income
(in thousands except share and per share data)
Three months ended June Six months ended June
30, 30,
------------------------ --------------------------
2016 2015 2016 2015
----------- ----------- ------------ ------------
Service revenue, net $ 450,632 $ 418,238 $ 883,282 $ 838,067
Operating expenses:
Service expense 405,050 371,616 791,538 738,153
General and
administrative
expense 17,373 18,294 36,546 37,760
Depreciation and
amortization 14,814 13,191 29,150 26,244
------------ ------------ ------------ -------------
Total operating
expenses 437,237 403,101 857,234 802,157
------------ ------------ ------------ -------------
Operating income 13,395 15,137 26,048 35,910
Other expenses:
Interest expense, net 3,436 3,722 7,071 8,917
Equity in net loss of
investee 1,459 1,059 4,176 3,542
Gain on foreign
currency
transactions (775) (714) (849) (395)
------------ ------------ ------------ -------------
Income from continuing
operations
before income taxes 9,275 11,070 15,650 23,846
Provision for income
taxes 5,280 6,227 9,527 13,148
------------ ------------ ------------ -------------
Income from continuing
operations, net of tax 3,995 4,843 6,123 10,698
Discontinued
operations, net of tax - 1,732 - 2,126
------------ ------------ ------------ -------------
Net income 3,995 6,575 6,123 12,824
Net loss attributable
to noncontrolling
interests 628 59 735 47
------------ ------------ ------------ -------------
Net income attributable
to Providence $ 4,623 $ 6,634 $ 6,858 $ 12,871
============ ============ ============ =============
Net income available to
common
stockholders $ 3,104 $ 4,181 $ 4,108 $ 9,243
============ ============ ============ =============
Basic earnings per
common share:
Continuing operations $ 0.21 $ 0.16 $ 0.27 $ 0.46
Discontinued operations - 0.10 - 0.12
------------ ------------ ------------ -------------
Basic earnings per
common share $ 0.21 $ 0.26 $ 0.27 $ 0.58
============ ============ ============ =============
Diluted earnings per
common share:
Continuing operations $ 0.21 $ 0.16 $ 0.27 $ 0.45
Discontinued operations - 0.10 - 0.12
------------ ------------ ------------ -------------
Diluted earnings per
common share $ 0.21 $ 0.26 $ 0.27 $ 0.57
============ ============ ============ =============
Weighted-average number
of common
shares outstanding:
Basic 14,893,595 16,097,198 14,975,582 16,036,959
Diluted 15,019,312 16,240,898 15,098,945 16,193,372
The Providence Service Corporation
Condensed Consolidated Balance Sheets
(in thousands)
(Unaudited)
June 30, December 31,
2016 2015
------------- --------------
Assets
Current assets:
Cash and cash equivalents $ 68,824 $ 84,770
Accounts receivable, net of allowance 178,295 178,049
Other current assets (1) 78,260 56,905
------------- --------------
Total current assets 325,379 319,724
Property and equipment, net 67,324 57,787
Goodwill and intangible assets, net 601,076 625,980
Other long-term assets (2) 42,486 46,711
------------- --------------
Total assets $ 1,036,265 $ 1,050,202
============= ==============
Liabilities and stockholders' equity
Current liabilities:
Current portion of long-term obligations $ 35,250 $ 31,375
Other current liabilities (3) 275,823 263,897
------------- --------------
Total current liabilities 311,073 295,272
Long-term obligations, less current portion 272,828 268,696
Other long-term liabilities (4) 118,716 118,526
------------- --------------
Total liabilities 702,617 682,494
Mezzanine and stockholders' equity
Convertible preferred stock, net 77,565 77,576
------------- --------------
Stockholders' equity 256,083 290,132
------------- --------------
Total liabilities and stockholders' equity $ 1,036,265 $ 1,050,202
============= ==============
(1) Comprised of other receivables, restricted cash, deferred tax assets 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 liability reserves.
(4) Includes deferred tax liabilities and other long-term liabilities.
The Providence Service Corporation
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
Six months ended
June 30,
-----------------------
2016 2015 (1)
---------- -----------
Operating activities
Net income $ 6,123 $ 12,824
Depreciation and amortization 29,150 29,857
Stock based compensation 1,947 6,058
Equity in net loss of investee 4,176 3,542
Other non-cash charges (8,167) (4,839)
Changes in working capital (2) 32,605 (23,886)
Income taxes payable on sale of business (28,337) -
---------- -----------
Net cash provided by operating activities 37,497 23,556
Investing activities
Purchase of property and equipment (23,636) (13,122)
Acquisition, net of cash acquired - (1,665)
Equity investments (6,381) (13,784)
Other investing activities 3,840 (422)
---------- -----------
Net cash used in investing activities (26,177) (28,993)
Financing activities
Proceeds from issuance of preferred stock, net of
issuance costs - 80,667
Preferred stock dividends (2,197) (1,698)
Repurchase of common stock, for treasury (32,534) (734)
Net, proceeds (repayment) of long-term debt 7,000 (87,125)
Other financing activities 998 (2,909)
---------- -----------
Net cash used in financing activities (26,733) (11,799)
---------- -----------
Effect of exchange rate changes on cash (533) 1,991
---------- -----------
Net change in cash (15,946) (15,245)
Cash at beginning of period 84,770 160,406
---------- -----------
Cash at end of period $ 68,824 $ 145,161
========== ===========
(1) Includes both continuing and discontinued operations.
(2) Comprised of changes in accounts receivable, other receivables, restricted cash, prepaid expenses, accounts payable, accrued expenses, accrued transportation costs, deferred revenue and other liabilities.
The Providence Service Corporation
Reconciliation of Non-GAAP Financial Measures
Adjusted EBITDA and Segment Information
(in thousands)
(Unaudited)
Three Months Ended June 30, 2016
--------------------------------------------------------
NET Corporate
Services WD Services HA Services and Other Total
---------- ----------- ----------- ---------- ----------
Service revenue,
net $ 309,156 $ 89,289 $ 52,272 $ (85) $450,632
Operating expenses:
Service expense 285,687 82,073 36,963 327 405,050
General and
administrative
expense 2,785 8,585 662 5,341 17,373
Depreciation and
amortization 2,931 3,836 7,965 82 14,814
---------- ----------- ----------- ---------- ----------
Total operating
expenses 291,403 94,494 45,590 5,750 437,237
Operating income
(loss) 17,753 (5,205) 6,682 (5,835) 13,395
Other expenses:
Interest expense,
net (1) 56 (2) 3,383 3,436
Equity in net
loss of investee - 1,459 - - 1,459
Gain on foreign
currency
transactions - (773) - (2) (775)
---------- ----------- ----------- ---------- ----------
Income (loss) from
continuing
operations,
before income tax 17,754 (5,947) 6,684 (9,216) 9,275
Provision (benefit)
for income taxes 6,044 (797) 2,466 (2,433) 5,280
---------- ----------- ----------- ---------- ----------
Income (loss) from
continuing
operations, net of
taxes 11,710 (5,150) 4,218 (6,783) 3,995
Interest expense,
net (1) 56 (2) 3,383 3,436
Provision (benefit)
for income taxes 6,044 (797) 2,466 (2,433) 5,280
Depreciation and
amortization 2,931 3,836 7,965 82 14,814
---------- ----------- ----------- ---------- ----------
EBITDA 20,684 (2,055) 14,647 (5,751) 27,525
Gain on foreign
currency
transactions - (773) - (2) (775)
WD Services
adjustments (1) - 3,919 - - 3,919
---------- ----------- ----------- ---------- ----------
Adjusted EBITDA $ 20,684 $ 1,091 $ 14,647 $ (5,753) $ 30,669
========== =========== =========== ========== ==========
(1) Includes expense related to redundancy costs of $3,665 and income tax benefit and D&A included within equity in net loss of investee of $254.
The Providence Service Corporation
Reconciliation of Non-GAAP Financial Measures
Adjusted EBITDA and Segment Information
(in thousands)
(Unaudited)
Three Months Ended June 30, 2015 (1)
----------------------------------------------------------
NET WD HA Corporate
Services Services Services and Other Total
Service revenue,
net $ 270,690 $ 92,175 $ 55,404 $ (31) $418,238
Operating
expenses:
Service expense 246,931 83,308 41,193 184 371,616
General and
administrative
expense 2,554 7,984 760 6,996 18,294
Depreciation and
amortization 2,329 3,332 7,185 345 13,191
---------- ----------- ----------- ----------- ----------
Total operating
expenses 251,814 94,624 49,138 7,525 403,101
Operating income
(loss) 18,876 (2,449) 6,266 (7,556) 15,137
Other expenses:
Interest
expense, net - (58) (5) 3,785 3,722
Equity in net
loss of
investee - 1,059 - - 1,059
Gain on foreign
currency
transactions - (714) - - (714)
---------- ----------- ----------- ----------- ----------
Income (loss) from
continuing
operations,
before income tax 18,876 (2,736) 6,271 (11,341) 11,070
Provision
(benefit) for
income taxes 7,183 (785) 2,521 (2,692) 6,227
---------- ----------- ----------- ----------- ----------
Income (loss) from
continuing
operations, net
of taxes 11,693 (1,951) 3,750 (8,649) 4,843
Interest expense,
net - (58) (5) 3,785 3,722
Provision
(benefit) for
income taxes 7,183 (785) 2,521 (2,692) 6,227
-
Depreciation and
amortization 2,329 3,332 7,185 345 13,191
---------- ----------- ----------- ----------- ----------
EBITDA 21,205 538 13,451 (7,211) 27,983
-
Charges related to
the separation of
an executive
officer, net - - - 695 695
WD Services
adjustments (2) - 2,895 - - 2,895
---------- ----------- ----------- ----------- ----------
Adjusted EBITDA $ 21,205 $ 3,433 $ 13,451 $ (6,516) $ 31,573
========== =========== ==========- ==========- ==========
(1) Beginning in the fourth quarter of 2015, the Company began including in the calculation of WD Services Adjusted EBITDA expenses related to restricted shares and cash placed into escrow accounts at the time of the Ingeus acquisition as well as redundancy costs associated with WD Services. The Company has updated the 2015 quarterly presentations of Adjusted EBITDA to be consistent with these changes.
(2) Includes expense related to restricted shares and cash placed into escrow at the time of the Ingeus acquisition and other acquisition related costs of $1,980, redundancy costs of $1,882, income tax benefit and D&A included within equity in net loss of investee of ($253), and gain on foreign currency transactions of ($714).
The Providence Service Corporation
Reconciliation of Non-GAAP Financial Measures
Adjusted EBITDA and Segment Information
(in thousands)
(Unaudited)
Six Months Ended June 30, 2016
--------------------------------------------------------
NET WD HA Corporate
Services Services Services and Other Total
----------- ---------- ---------- ---------- -----------
Service revenue,
net $ 600,140 $ 180,332 $ 102,864 $ (54) $ 883,282
Operating expenses:
Service expense 552,656 163,745 74,753 384 791,538
General and
administrative
expense 5,622 16,456 1,318 13,150 36,546
Depreciation and
amortization 5,807 7,415 15,762 166 29,150
---------- ---------- ---------- ----------- -----------
Total operating
expenses 564,085 187,616 91,833 13,700 857,234
Operating income
(loss) 36,055 (7,284) 11,031 (13,754) 26,048
Other expenses:
Interest expense,
net (2) 89 (4) 6,988 7,071
Equity in net loss
of investee - 4,176 - - 4,176
Gain on foreign
currency
transactions - (848) - (1) (849)
---------- ---------- ---------- ----------- -----------
Income (loss) from
continuing
operations,
before income tax 36,057 (10,701) 11,035 (20,741) 15,650
Provision (benefit)
for income taxes 13,193 (979) 4,150 (6,837) 9,527
---------- ---------- ---------- ----------- -----------
Income (loss) from
continuing
operations, net of
taxes 22,864 (9,722) 6,885 (13,904) 6,123
Interest expense,
net (2) 89 (4) 6,988 7,071
Provision (benefit)
for income taxes 13,193 (979) 4,150 (6,837) 9,527
Depreciation and
amortization 5,807 7,415 15,762 166 29,150
---------- ---------- ---------- ----------- -----------
EBITDA 41,862 (3,197) 26,793 (13,587) 51,871
Gain on foreign
currency
transactions - (848) - (1) (849)
WD Services
adjustments (1) - 4,972 - - 4,972
---------- ---------- ---------- ----------- -----------
Adjusted EBITDA $ 41,862 $ 927 $ 26,793 $ (13,588) $ 55,994
========== ========== ========== =========== ===========
(1) Includes expense related to redundancy costs of $5,056 and income tax benefit and D&A included within equity in net loss of investee of ($84).
The Providence Service Corporation
Reconciliation of Non-GAAP Financial Measures
Adjusted EBITDA and Segment Information
(in thousands)
(Unaudited)
Six Months Ended June 30, 2015 (1)
--------------------------------------------------------
NET WD HA Corporate
Services Services Services and Other Total
----------- ---------- ---------- ---------- -----------
Service revenue, net $ 525,450 $ 199,792 $ 112,836 $ (11) $ 838,067
Operating expenses:
Service expense 476,178 177,540 84,406 29 738,153
General and
administrative
expense 5,051 15,209 1,282 16,218 37,760
Depreciation and
amortization 4,606 6,648 14,367 623 26,244
----------- ---------- ---------- ---------- -----------
Total operating
expenses 485,835 199,397 100,055 16,870 802,157
Operating income
(loss) 39,615 395 12,781 (16,881) 35,910
Other expenses:
Interest expense,
net (1) (58) (9) 8,985 8,917
Equity in net loss
of investee - 3,542 - - 3,542
Gain on foreign
currency
transactions - (395) - - (395)
----------- ---------- ---------- ---------- -----------
Income (loss) from
continuing
operations,
before income tax 39,616 (2,694) 12,790 (25,866) 23,846
Provision (benefit)
for income taxes 15,312 1,640 5,194 (8,998) 13,148
----------- ---------- ---------- ---------- -----------
Income (loss) from
continuing
operations, net of
taxes 24,304 (4,334) 7,596 (16,868) 10,698
Interest expense,
net (1) (58) (9) 8,985 8,917
Provision (benefit)
for income taxes 15,312 1,640 5,194 (8,998) 13,148
Depreciation and
amortization 4,606 6,648 14,367 623 26,244
----------- ---------- ---------- ---------- -----------
EBITDA 44,221 3,896 27,148 (16,258) 59,007
Charges related to
the separation of
an executive
officer, net - - - 695 695
WD Services
adjustments (2) - 4,891 - - 4,891
----------- ---------- ---------- ---------- -----------
Adjusted EBITDA $ 44,221 $ 8,787 $ 27,148 $ (15,563) $ 64,593
=========== ========== ========== ========== ===========
(1) Beginning in the fourth quarter of 2015, the Company began including in the calculation of WD Services Adjusted EBITDA expenses related to restricted shares and cash placed into escrow accounts at the time of the Ingeus acquisition as well as redundancy costs associated with WD Services. The Company has updated the 2015 quarterly presentations of Adjusted EBITDA to be consistent with these changes.
(2) Includes expense related to restricted shares and cash placed into escrow at the time of the Ingeus acquisition and other acquisition related expenses of $3,970, redundancy costs of $2,631, income tax benefit and D&A included within equity in net loss of investee of ($1,315), and gain on foreign currency transactions of ($395).
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,
---------------------------- ----------------------------
2016 2015 2016 2015
------------- ------------ ------------ ------------
Income from
continuing
operations,
net of tax $ 3,995 $ 4,843 $ 6,123 $ 10,698
Net loss
attributable
to
noncontrolling
interests 628 59 735 47
WD Services
adjustments 3,386 (1) 3,004 (2) 5,169 (3) 6,062 (4)
Gain on foreign
currency
transactions (2) - (1) -
Payments
related to
separation
arrangements
with executive
officer, net - 695 - 695
Intangible
amortization
expense 8,817 9,881 17,632 19,692
Tax effected
impact of
adjustments (3,729) (4,264) (7,141) (8,243)
------------- ------------ ------------ ------------
Adjusted Net
Income 13,095 14,218 22,517 28,951
Dividends on
convertible
preferred
stock (1,099) (1,104) (2,197) (1,698)
Less: Accretion
of convertible
preferred
stock discount - (826) - (1,071)
Income
allocated to
participating
securities (1,429) (1,369) (2,409) (2,226)
------------- ------------ ------------ ------------
Adjusted Net
Income
available to
common
stockholders $ 10,567 $ 10,919 $ 17,911 $ 23,956
============= ============ ============ ============
Adjusted Net
Income per
common share $ 0.70 $ 0.67 $ 1.19 $ 1.48
Diluted
weighted-
average number
of common
shares
outstanding 15,019,312 16,240,898 15,098,945 16,193,372
(1) WD Services adjustments include redundancy costs of $3,665, amortization expense included within equity in net loss of investee of $494, and gain on foreign currency transactions of ($773).
(2) WD Services adjustments include expense related to restricted shares and cash placed into escrow at the time of the Ingeus acquisition and other acquisition related costs of $1,980, redundancy costs of $1,882, gain on foreign currency transactions of ($714), and amortization expense included within equity in net loss of investee of ($144).
(3) WD Services adjustments include redundancy costs of $5,056, amortization expense included within equity in net loss of investee of $961, and gain on foreign currency transactions of ($848).
(4) WD Services adjustments include expense related to restricted shares and cash placed into escrow at the time of the Ingeus acquisition of $3,970, redundancy costs of $2,631, gain on foreign currency transactions of ($395), and amortization expense included within equity in net loss of investee of ($144).
Investor Relations Contact
Chris Brigleb
VP of Finance
(203) 816-6589
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