Providence Service Corporation Reports Q3 2013 Results Third Quarter Highlights: - Net income rose to $3.5 million - Diluted EPS increased to $0.25 - Adjusted EBITDA was $11.7 million - Quarter benefitted from improved NET margins PR Newswire TUCSON, Ariz., Nov. 6, 2013 TUCSON, Ariz., Nov. 6, 2013 /PRNewswire/ -- The Providence Service Corporation (Nasdaq: PRSC) today announced its financial results for the third quarter ended September 30, 2013. For the third quarter of 2013, the Company reported revenue of $276.7 million, a decrease of 1% from $280.3 million in the comparable period of 2012. Revenue from Providence's Non-emergency Transportation (NET) services segment decreased 2% to $192.0 million in the third quarter from $196.3 million in the prior year period. The decrease was due primarily to the transition of the Connecticut contract from "at risk" to "administrative services only", and the voluntary termination of the Wisconsin contracts effective July 31, 2013. This decrease was partially offset by increased revenue related to continued expansion in California, membership growth in the New York City administrative contracts, and favorable rate adjustments in other states. Revenue from the Human Services segment, formerly known as the Social Services segment, increased 1% to $84.7 million from $84.0 million in the third quarter of 2012, primarily related to the impact of a new workforce development contract in Wisconsin which began in 2013. Net income was $3.5 million, or $0.25 per diluted share, in the third quarter of 2013 compared to net income of $1.2 million, or $0.09 per diluted share in the prior year period. The increase in net income was due primarily to improved margins in the NET Services segment. In addition, the results for third quarter of 2012 included an asset impairment charge of approximately $2.5 million, before taxes, related to our Canadian operations. EBITDA (non-GAAP) for the third quarter of 2013 was $11.2 million compared to $9.0 million in the same period last year. Adjusted EBITDA (non-GAAP) for the third quarter of 2013 was $11.7 million compared to $11.5 million in the same period last year. A reconciliation of net income to EBITDA and Adjusted EBITDA is presented below. The Company had approximately 16.0 million individuals eligible to receive services under its NET contracts at September 30, 2013, an increase of 8% from approximately 14.8 million at September 30, 2012. Providence's direct Human Service client census was approximately 55,700, up 9% from 50,900 at September 30, 2012. For the first nine months of 2013, the Company reported revenue of $845.8 million, an increase of 3% from $819.4 million in the first nine months of 2012. Revenue from Providence's NET services segment grew 6% to $583.0 million in the first nine months of 2013 from $549.8 million in the prior year period. Revenue from the Human Services segment decreased 2% to $262.8 million, down from $269.5 million in the first nine months of 2012. Net income was $16.1 million, or $1.17 per diluted share, in the first nine months of 2013. This is an increase from net income of $5.6 million, or $0.42 per diluted share, in the first nine months of 2012. EBITDA (non-GAAP) for the first nine months of 2013 was $43.2 million, representing a 59% increase from $27.2 million in the same period last year. Adjusted EBITDA (non-GAAP) for the first nine months of 2013 was $44.2 million, representing an increase of 46% from $30.3 million in the same period last year. A reconciliation of net income to EBITDA and Adjusted EBITDA is presented below. During the first nine months of 2013, the Company generated a total of $45.7 million in cash from operations. At September 30, 2013, the Company had unrestricted cash and cash equivalents of $91.1 million as well as approximately $142.3 million available for borrowing under the recently amended and restated senior secured credit facility.Long-term obligations at September 30, 2013 were $123.5 million. "We continue to show solid financial results year to date in 2013," said Warren Rustand, Chief Executive Officer. "Growth and profitability were driven by our NET Services segment, which is benefitting from the full period impact of new contract awards that began during 2012, as well as the termination of, or changes to, contracts that were not meeting our financial expectations." "Our Human Services segment experienced modest revenue growth in the third quarter due to a new workforce development contract that started up in 2013, as well as stabilization of the business following contract terminations related to our Canadian and tutoring businesses. We will continue to focus our attention on expanding and improving the performance of our Human Services segment through operating efficiencies and both organic and acquisitive growth." "Overall, we are pleased with the progress the Company has made in 2013 to date and remain committed to initiatives that we set forth at the beginning of the year, primarily related to improving efficiencies. As we look toward 2014 and beyond, we continue to believe that the impact of Medicaid expansion under the Affordable Care Act will create opportunities for us to serve a substantially larger population of currently underserved citizens. Beyond Medicaid expansion, we continue to believe that general health care market trends, which include growing awareness of the need to coordinate physical and behavioral health care services and the importance of facilitated non-emergency access to preventative services, will position Providence to benefit from systemic market changes in the future." Conference Call Providence will hold a conference call at 11:00 a.m. EST (9:00 a.m. Arizona and MST and 8:00 a.m. PST) Thursday November 7, 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. The call is also available by dialing (800) 510-0146 or for international callers (617) 614-3449 and by using the passcode 94634423. A replay of the teleconference will be available on http://investor.provcorp.com. A replay will also be available until November 14, 2013 by dialing (888) 286-8010 or (617) 801-6888, and using passcode 49143112. About Providence The Providence Service Corporation provides or manages the delivery of home and community based human 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 its human 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 55,700 clients at September 30, 2013, with approximately 16.0 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 US 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 non-GAAP measures used by some other 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 Nine months ended September 30, September 30, 2013 2012 2013 2012 Revenues: Human services $ 84,702 $ $ 262,809 $ 269,526 83,950 Non-emergency 192,011 196,335 583,028 549,844 transportation services 276,713 280,285 845,837 819,370 Operating expenses: Client service 76,881 73,462 228,695 230,200 expense Cost of non-emergency 177,049 183,248 536,664 520,866 transportation services General and 11,082 12,069 36,265 38,599 administrative expense Asset impairment - 2,506 492 2,506 charge Depreciation and 3,725 4,018 11,188 11,254 amortization Total operating 268,737 275,303 813,304 803,425 expenses Operating income 7,976 4,982 32,533 15,945 Other (income) expense: Interest expense 1,916 1,990 5,407 5,806 Loss on 525 - 525 - extinguishment of debt Interest income (40) (25) (92) (109) Income before income 5,575 3,017 26,693 10,248 taxes Provision for income 2,048 1,859 10,612 4,631 taxes Net income $ $ $ $ 3,527 1,158 16,081 5,617 Earnings per share: Basic $ $ $ $ 0.26 0.09 1.20 0.42 Diluted $ $ $ $ 0.25 0.09 1.17 0.42 Weighted-average number of common shares outstanding: Basic 13,674,467 13,263,826 13,411,204 13,277,191 Diluted 14,049,329 13,342,614 13,711,124 13,388,355 The Providence Service Corporation Consolidated Balance Sheets (in thousands except share and per share data) September 30, December 31, 2013 2012 Assets (Unaudited) Current assets: Cash and cash equivalents $ $ 91,103 55,863 Accounts receivable, net of allowance of $4.4 million for 2013 and $3.7 million for 91,245 98,628 2012 Management fee receivable 2,309 2,662 Other receivables 1,683 1,920 Restricted cash 3,837 1,787 Prepaid expenses and other 19,577 14,807 Deferred tax assets 130 532 Total current assets 209,884 176,199 Property and equipment, net 30,886 30,380 Goodwill 113,345 113,915 Intangible assets, net 44,250 49,651 Restricted cash, less current portion 14,198 10,953 Other assets 12,318 10,639 Total assets $ $ 424,881 391,737 Liabilities and stockholders' equity Current liabilities: Current portion of long-term obligations $ $ 47,500 14,000 Accounts payable 4,543 4,569 Accrued expenses 48,766 32,976 Accrued transportation costs 56,410 61,316 Deferred revenue 5,263 7,055 Reinsurance liability reserve 13,159 12,713 Total current liabilities 175,641 132,629 Long-term obligations, less current portion 76,000 116,000 Other long-term liabilities 15,736 13,527 Deferred tax liabilities 11,683 10,894 Total liabilities 279,060 273,050 Commitments and contingencies Stockholders' equity: Common stock: Authorized 40,000,000 shares;$0.001 par value; 14,426,603 and 13,785,947 issued and 14 14 outstanding (including treasury shares) Additional paid-in capital 192,547 180,778 Accumulated deficit (36,998) (53,079) Accumulated other comprehensive loss, (1,155) (893) net of tax Treasury stock, at cost, 952,776 and (15,548) (15,094) 928,478 shares Total Providence stockholders' equity 138,860 111,726 Non-controlling interest 6,961 6,961 Total stockholders' equity 145,821 118,687 Total liabilities and stockholders' equity $ $ 424,881 391,737 The Providence Service Corporation Consolidated Statements of Cash Flows (in thousands) (Unaudited) Nine months ended September 30, 2013 2012 Operating activities Net income $ 16,081 $ 5,617 Adjustments to reconcile net income to net cashprovided by operating activities: Depreciation 5,802 5,578 Amortization 5,386 5,676 Amortization of deferred financing costs 746 865 Loss on extinguishment of debt 525 - Provision for doubtful accounts 2,570 1,418 Deferred income taxes 1,395 (420) Stock based compensation 2,402 3,586 Excess tax benefit upon exercise of stock (999) (60) options Asset impairment charge 492 2,506 Other 352 (33) Changes in operating assets and liabilities: Accounts receivable 5,033 (10,304) Management fee receivable 105 849 Other receivables 237 (509) Restricted cash (255) 14 Prepaid expenses and other (6,031) (3,556) Reinsurance liability reserve 2,720 1,773 Accounts payable and accrued expenses 15,744 3,040 Accrued transportation costs (4,906) 16,901 Deferred revenue (1,792) 3,639 Other long-term liabilities 52 3,357 Net cash provided by operating activities 45,659 39,937 Investing activities Purchase of property and equipment, net (6,413) (7,565) Acquisition of businesses, net of cash - (190) acquired Restricted cash for reinsured claims losses (5,040) 1,269 Purchase of short-term investments, net (23) 452 Net cash used in investing activities (11,476) (6,034) Financing activities Repurchase of common stock for treasury (454) (3,658) Proceeds from common stock issued pursuant 9,244 258 tostock option exercise Excess tax benefit upon exercise of stock 999 60 options Proceeds from long-term debt 76,000 - Repayment of long-term debt (82,500) (9,993) Debt financing costs (2,083) (53) Capital lease payments (8) (20) Net cash provided by (used in) financing 1,198 (13,406) activities Effect of exchange rate changes on cash (141) 76 Net change in cash 35,240 20,573 Cash at beginning of period 55,863 43,184 Cash at end of period $ 91,103 $ 63,757 The Providence Service Corporation Reconciliation of Non-GAAP Financial Measures Adjusted EBITDA (in thousands) (Unaudited) Three months ended Nine months ended September 30, September 30, 2013 2012 2013 2012 Net income $ 3,527 $ 1,158 $ 16,081 $ 5,617 Interest expense, net 1,876 1,965 5,315 5,697 Provision for income taxes 2,048 1,859 10,612 4,631 Depreciation and amortization 3,725 4,018 11,188 11,254 EBITDA 11,176 9,000 43,196 27,199 Asset impairment charge - 2,506 492 2,506 Loss on extinguishment of debt 525 - 525 - Strategic alternatives costs - 2 - 593 Adjusted EBITDA $ 11,701 $ 11,508 $ 44,213 $ 30,298 SOURCE The Providence Service Corporation Website: http://www.provcorp.com Contact: At The Company, Robert Wilson - Chief Financial Officer, 520/747-6600; or At Cameron Associates, Alison Ziegler, 212/554-5469
Providence Service Corporation Reports Q3 2013 Results
Press spacebar to pause and continue. Press esc to stop.