Providence Service Corporation Reports Q1 2013 Results First Quarter Highlights: - Revenue rose 8% over last year's first quarter to $281.5 million - Diluted earnings per share increased to $0.49 - Net cash provided by operations totaled $30 million - Net income and adjusted EBITDA increased 120% and 64%, respectively, from the first quarter of 2012 PR Newswire TUCSON, Ariz., May 8, 2013 TUCSON, Ariz., May 8, 2013 /PRNewswire/ --The Providence Service Corporation (Nasdaq: PRSC) today announced its financial results for the first quarter ended March 31, 2013. First Quarter 2013 Results For the first quarter of 2013, the Company reported revenue of $281.5 million, an increase of 8% from $260.1 million in the comparable period in 2012. Revenue from Providence's non-emergency transportation (NET) services segment grew 17% to $193.1 million in the first quarter from $164.7 million in the prior year period, benefiting from new contacts and program expansions in certain NET markets. Revenue from the social services segment declined 7% to $88.4 million from $95.5 million in the first quarter of 2012. Social services revenue was impacted primarily by 2012 contract terminations related to the workforce development business in Canada as well as the expiration of contracts related to Providence's home based educational tutoring business due to changes in the No Child Left Behind Act. Excluding Canada and educational tutoring, social services revenue would have declined by approximately 2% which was due primarily to the impact of inclement weather on billable hours in the Northeast. Providence reported net income of $6.7 million, or $0.49 per diluted share, in the first quarter of 2013 compared to net income of $3.0 million, or $0.23 per diluted share, in the first quarter of 2012. Earnings for the first quarter of 2013 were positively impacted by the full implementation of NET contracts that were in start-up mode in the first quarter of 2012, the recent expansion of business in existing markets and negotiated rate adjustments in select programs in both the social services and NET segments. The prior year quarter included a non-recurring tax benefit of approximately $0.03 per share related to a tax accounting method change for a 2011 acquisition. Adjusted EBITDA (non-GAAP) for the first quarter of 2013 was $16.8 million, representing an increase of 64% from $10.3 million in the same period last year. A reconciliation of net income to Adjusted EBITDA (non-GAAP) is presented below. The Company had approximately 16.8 million individuals eligible to receive services under its NET contracts at March 31, 2013, an increase of 36% from approximately 12.4 million at March 31, 2012. Providence's direct social service client census was approximately 54,500 at March 31, 2013 compared to approximately 61,900 at March 31, 2012. The decrease in the number of clients was primarily due to contract terminations in certain markets and expiration of contracts related to our home based educational tutoring business which resulted from waivers granted under the No Child Left Behind Act. At March 31, 2013, the Company had unrestricted cash and cash equivalents of $83.1 million. During the first quarter of 2013, the Company generated a total of $29.8 million in cash from operations. At March 31, 2013, the Company had total long-term obligations of $127.3 million compared to $130.0 million at December 31, 2012. "We are pleased with our NET results in the quarter, which saw the effect of a full quarter of revenue from our NET start-up efforts in 2012 as well as the final phase-in of our New York City contract , which went live in January," said Warren Rustand, Chief Executive Officer. "Our results also benefited from expanded NET business in Georgia and South Carolina compared to the year ago period, as well as further growth of our commercial and managed care lines of business in California. Additionally, we are starting to benefit from negotiated rate adjustments in select programs." "On the social services side, our contract base is solid going into the 2013 renewal cycle with the implementation of several new programs including our foster care contract in Texas. We remain committed to our focus on operating efficiencies and improving returns. We saw some initial benefit in the first quarter as a result of performance improvements and positive rate increases in certain markets. As we look to the remainder of 2013 and beyond, we will continue to invest in our infrastructure and take the necessary steps to position the company to benefit from emerging trends in healthcare, particularly the development of integrated models of healthcare delivery and increased outsourcing of transportation management." Conference Call Providence will hold a conference call at 11:00 a.m. EDT (8:00 a.m. Arizona and PDT) Thursday, May 9, 2013 to discuss its financial results and corporate developments. Interested parties are invited to listen to the call live over the Internet at http://investor.provcorp.com or http://www.earnings.com. The call is also available by dialing (866) 318-8617 or for international callers (617) 399-5136 and by using the passcode 57144115. A replay of the teleconference will be available on http://investor.provcorp.com. A replay will also be available until May 16, 2013 by dialing (888) 286-8010 or (617) 801-6888, and using passcode 44683383. About Providence The Providence Service Corporation provides or manages the delivery of home and community based social services and NET management services to primarily government sponsored clients under programs such as welfare, juvenile justice, Medicaid and corrections. Providence is unique in that it provides or manages social services primarily in the client's own home or in community based settings rather than in hospitals or other treatment facilities, and provides its NET management services through local transportation providers rather than an owned fleet of vehicles. The Company provides a range of services through its direct entities to approximately 54,500 clients through 649 active contracts at March 31, 2013, with an approximate 16.8 million individuals eligible to receive the Company's non-emergency transportation services. The Company had over $1.1 billion in revenues in 2012. Non-GAAP Presentation In addition to the financial results prepared in accordance with generally accepted accounting principles (GAAP) provided throughout this press release, the Company has provided EBITDA and Adjusted EBITDA, non-GAAP measurements, which present its earnings on a pro forma basis. Providence's management utilizes these non-GAAP measurements as a means to measure overall operating performance and to better compare current operating results with other companies within its industry. Details of the excluded items and a reconciliation of the non-GAAP financial measures to the most comparable GAAP financial measure are presented in the table below. The non-GAAP measures do not replace the presentation of our GAAP financial results. The Company has provided this supplemental non-GAAP information because the Company believes it provides meaningful comparisons of the results of Providence's operations for the periods presented in this press release. The non-GAAP measures are not in accordance with, or an alternative for GAAP and may be different from pro forma measures used by some companies. 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 the global credit crisis, capital market conditions, 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, 2012. 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. --financial tables to follow-- The Providence Service Corporation Consolidated Statements of Income (in thousands except share and per share data) (UNAUDITED) Three months ended March 31, 2013 2012 Revenues: Home and community based $ 76,960 $ 84,125 services Foster care services 8,444 8,355 Management fees 2,950 2,995 Non-emergency transportation 193,133 164,672 services 281,487 260,147 Operating expenses: Client service expense 75,517 80,210 Cost of non-emergency 176,684 156,979 transportation services General and administrative 12,452 12,739 expense Depreciation and amortization 3,729 3,626 Total operating expenses 268,382 253,554 Operating income 13,105 6,593 Other (income) expense: Interest expense 1,772 1,907 Interest income (21) (42) Income before income taxes 11,354 4,728 Provision for income taxes 4,676 1,686 Net income $ 6,678 $ 3,042 Earnings per share: Basic $ 0.51 $ 0.23 Diluted $ 0.49 $ 0.23 Weighted-average number of common shares outstanding: Basic 13,148,717 13,266,908 Diluted 14,507,367 13,404,833 The Providence Service Corporation Consolidated Balance Sheets (in thousands except share and per share data) (Unaudited) March 31, December 31, 2013 2012 Assets Current assets: Cash and cash equivalents $ $ 83,080 55,863 Accounts receivable, net of allowance of $3.8 million in 2013 and $3.7 million in 2012 89,147 98,628 Management fee receivable 3,305 2,662 Other receivables 1,267 1,920 Restricted cash 2,151 1,787 Prepaid expenses and other 14,581 14,807 Deferred tax assets 994 532 Total current assets 194,525 176,199 Property and equipment, net 29,858 30,380 Goodwill 113,866 113,915 Intangible assets, net 47,846 49,651 Restricted cash, less current portion 10,953 10,953 Other assets 10,822 10,639 Total assets $ $ 407,870 391,737 Liabilities and stockholders' equity Current liabilities: Current portion of long-term $ $ obligations 15,000 14,000 Accounts payable 4,650 4,569 Accrued expenses 44,303 32,976 Accrued transportation costs 59,257 61,316 Deferred revenue 9,377 7,055 Reinsurance liability reserve 9,174 12,713 Total current liabilities 141,761 132,629 Long-term obligations, less current 112,250 116,000 portion Other long-term liabilities 14,974 13,527 Deferred tax liabilities 11,785 10,894 Total liabilities 280,770 273,050 Stockholders' equity: Common stock: Authorized 40,000,000 shares; $0.001 par value; 13,988,726 and 13,785,947 issued and outstanding 14 14 (including treasury shares) Additional paid-in capital 183,057 180,778 Accumulated deficit (46,401) (53,079) Accumulated other comprehensive (1,053) (893) loss, net of tax Treasury stock, at cost, 949,961 and (15,478) (15,094) 928,478 shares Total Providence stockholders' equity 120,139 111,726 Non-controlling interest 6,961 6,961 Total stockholders' equity 127,100 118,687 Total liabilities and stockholders' $ $ equity 407,870 391,737 The Providence Service Corporation Consolidated Statements of Cash Flows (in thousands) (Unaudited) Three months ended March 31, 2013 2012 Operating activities Net income $ 6,678 $ 3,042 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 1,934 1,729 Amortization 1,795 1,897 Amortization of deferred financing costs 264 286 Provision for doubtful accounts 558 (193) Deferred income taxes (21) (441) Stock based compensation 918 1,067 Excess tax benefit upon exercise of stock (158) (21) options Other 22 (18) Changes in operating assets and liabilities: Accounts receivable 8,905 (8,282) Management fee receivable (643) 470 Other receivables 653 (228) Restricted cash (410) (215) Prepaid expenses and other (287) 445 Reinsurance liability reserve (1,948) (1,811) Accounts payable and accrued expenses 11,349 592 Accrued transportation costs (2,059) 6,159 Deferred revenue 2,322 1,230 Other long-term liabilities (71) 3,446 Net cash provided by operating activities 29,801 9,154 Investing activities Purchase of property and equipment, net (1,438) (4,168) Acquisition of businesses, net of cash - (190) acquired Restricted cash for reinsured claims losses 46 1,553 Purchase of short-term investments, net (8) (25) Net cash used in investing activities (1,400) (2,830) Financing activities Repurchase of common stock for treasury (384) (118) Proceeds from common stock issued pursuant to stock option exercise 1,878 80 Excess tax benefit upon exercise of stock 158 21 options Repayment of long-term debt (2,750) (2,500) Capital lease payments (3) (14) Net cash used in financing activities (1,101) (2,531) Effect of exchange rate changes on cash (83) 78 Net change in cash 27,217 3,871 Cash at beginning of period 55,863 43,184 Cash at end of period $ 83,080 $ 47,055 The Providence Service Corporation Reconciliation of Non-GAAP Financial Measures Adjusted EBITDA (in thousands) Three months ended March 31, 2013 2012 Net income $ 6,678 $ 3,042 Interest expense, net 1,751 1,865 Provision for income taxes 4,676 1,686 Depreciation and amortization 3,729 3,626 EBITDA 16,834 10,219 Strategic alternatives costs (a) - 73 Adjusted EBITDA $ 16,834 $ 10,292 Notes: Represents costs incurred related to the Company's review of strategic alternatives arising from unsolicited proposals to take the Company a) private. The Company terminated this review in June 2012 upon determining that a continued focus on the Company's operations was the best alternative to maximize shareholder value. SOURCE The Providence Service Corporation Website: http://www.provcorp.com Contact: AT THE COMPANY: Robert Wilson - Chief Financial Officer, 520/747-6605; AT CAMERON ASSOCIATES: Alison Ziegler, 212/554-5469
Providence Service Corporation Reports Q1 2013 Results
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