Providence Service Corporation Reports 2013 Results 2013 Highlights: - Net income rose to $19.4 million - Diluted EPS increased to $1.41 - Adjusted EBITDA increased 27% to $55.3 million - Net cash provided by operations totaled $55.2 million PR Newswire TUCSON, Ariz., March 12, 2014 TUCSON, Ariz., March 12, 2014 /PRNewswire/ -- The Providence Service Corporation (Nasdaq: PRSC) today announced its financial results for the fourth quarter and year ended December 31, 2013. Fourth Quarter 2013 Results For the fourth quarter of 2013, the Company reported revenue of $276.8 million, a decrease of 3% from $286.5 million in the comparable period of 2012. Revenue from Providence's Non-emergency Transportation (NET) services segment decreased 7% to $187.2 million in the fourth quarter from $200.8 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 membership growth in the New York City administrative contracts. Revenue from the Human Services segment increased 5% to $89.6 million from $85.7 million in the fourth quarter of 2012, primarily related to the impact of a new workforce development contract in Wisconsin and a new foster care contract in Texas. Net income increased 17% to $3.4 million, or $0.24 per diluted share, in the fourth quarter of 2013 compared to net income of $2.9 million, or $0.22 per diluted share, in the prior year period. The fourth quarters of 2013 and 2012 each included expenses of approximately $1.3 million (net of benefit of forfeiture of stock based compensation) related to the separation of certain former executive officers. The Company's effective tax rate declined in the fourth quarter of 2013 to 25.8%. The decrease in the tax rate was primarily related to the favorable tax treatment of certain equity compensation expenses in 2013. EBITDA (non-GAAP) for the fourth quarter of 2013 was $9.8 million compared to $12.0 million in the same period last year. Adjusted EBITDA (non-GAAP) for the fourth quarter of 2013 was $11.1 million compared to $13.3 million in the same period last year. A reconciliation of net income to EBITDA and Adjusted EBITDA is presented below. The Company had approximately 15.8 million individuals eligible to receive services under its NET Services contracts at December 31, 2013, an increase of 5% from approximately 15.1 million at December 31, 2012. Providence's direct Human Service client census at December 31, 2013 was approximately 56,300, up 9% from 51,600 at December 31, 2012. Full-Year 2013 Results For the full year of 2013, the Company reported revenue of $1,122.7 million, an increase of 2% from $1,105.9 million in 2012. Revenue from Providence's NET Services segment grew 3% to $770.2 million in 2013 from $750.7 million in the prior year, primarily due to contracts that began or were expanded in 2012 and 2013 and favorable rate adjustments. This increase was partially offset by 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. Revenue from the Human Services segment decreased 1% to $352.4 million in 2013 from $355.2 million in 2012, primarily due to the termination of and changes to certain management service agreements, 2012 contract terminations related to the workforce development business in Canada, and the expiration of contracts related to Providence's home based educational tutoring. This decrease was partially offset by revenue growth related to new contracts awarded in 2013. Net income was $19.4 million, or $1.41 per diluted share, in 2013, a 129% and 120% increase, respectively, from $8.5 million, or $0.64 per diluted share, in 2012. EBITDA (non-GAAP) for 2013 was $53.0 million, a 35% increase from $39.2 million last year. Adjusted EBITDA (non-GAAP) for 2013 was $55.3 million, an increase of 27% from $43.6 million last year. A reconciliation of net income to EBITDA and Adjusted EBITDA is presented below. During 2013, the Company generated a total of $55.2 million in cash from operations. At December 31, 2013, the Company had unrestricted cash and cash equivalents of $99.0 million as well as approximately $142.3 million available for borrowing under the 2013 amended and restated senior secured credit facility. Long-term obligations at December 31, 2013 were $123.5 million. "We finished 2013 with favorable financial results," said Warren Rustand, Chief Executive Officer. "Our NET Services segment benefitted from 2012 start-up efforts, expanded business, negotiated rate adjustments and the exit from some of its less profitable markets. However, the NET Services segment margins in the fourth quarter were negatively impacted by a revenue reserve for certain potential overpayments made to the Company that resulted from errors in the eligibility files provided by the payer." "Our Human Services segment continued to experience revenue growth in the fourth quarter due primarily to new workforce development and foster care contracts that began in 2013. This growth was offset by margin declines in the fourth quarter related to weather disruptions and the continued transition in Texas related to our new foster care contract. We expect the Texas foster care implementation to be completed by the end of the first quarter in 2014. In addition, the continued transition of certain states to the managed care environment has contributed to the margin pressure we have experienced in the Human Services segment in the past year." "During 2014 we will direct our attention to expanding our operating segments through both organic and acquisitive growth, with a specific focus on growing our home and community-based services and foster care services, while reducing our involvement in management fee service arrangements in our Human Services segment." "Overall, looking out to 2014 and beyond, we believe we are positioned to benefit from current health care trends, including the Affordable Care Act, increased Medicaid enrollment, the trend toward home and community-based care and the industry-wide focus on the reduction in health care delivery costs. In order to position ourselves to take full advantage of these opportunities, we have continued to strengthen our management team and further improve our operational efficiency. Additionally, our consistently positive cash flow, strong cash position and substantial borrowing capacity will continue to support our company-wide growth initiatives." Conference Call Providence will hold a conference call at 11:00 a.m. EDT (8:00 a.m. PDT/MST) Thursday, March 13, 2014 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) 706-7745, or for international callers (617) 614-3472, and by using the passcode 47132627. A replay of the teleconference will be available on http://investor.provcorp.com. A replay will also be available until March 20, 2014 by dialing (888) 286-8010 or (617) 801-6888 and using passcode 53482011. 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 56,300 clients at December 31, 2013, with approximately 15.8 million individuals eligible to receive the Company's non-emergency transportation services. The Company had over $1.1 billion in revenues in 2013. 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. 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 Year ended December 31, December 31, 2013 2012 2013 2012 Revenues: Non-emergency $ $ $ $ transportation services 187,218 200,814 770,246 750,658 Human services 89,627 85,705 352,436 355,231 Total revenues 276,845 286,519 1,122,682 1,105,889 Operating expenses: Cost of non-emergency 173,765 185,826 710,428 706,692 transportation services Client service expense 80,929 73,884 309,623 304,084 General and 12,368 14,784 48,633 53,383 administrative expense Depreciation and 3,683 3,769 14,872 15,023 amortization Asset impairment charge - - 492 2,506 Total operating expenses 270,745 278,263 1,084,048 1,081,688 Operating income 6,100 8,256 38,634 24,201 Other (income) expense: Interest expense 1,627 1,834 7,035 7,640 Loss on extinguishment - - 525 - of debt Interest income (49) (23) (141) (132) Income before income taxes 4,522 6,445 31,215 16,693 Provision for income taxes 1,165 3,580 11,777 8,211 Net income $ $ $ $ 3,357 2,865 19,438 8,482 Earnings per share: Basic $ $ $ $ 0.24 0.22 1.44 0.64 Diluted $ $ $ $ 0.24 0.22 1.41 0.64 Weighted-average number of common shares outstanding: Basic 13,763,037 13,071,342 13,499,885 13,225,448 Diluted 14,121,956 13,254,509 13,809,874 13,354,613 The Providence Service Corporation Consolidated Balance Sheets (in thousands except share and per share data) (UNAUDITED) December 31, 2013 2012 Assets Current assets: Cash and cash equivalents $ 98,995 $ 55,863 Accounts receivable, net of allowance of $4.2 million in 2013 and $3.7 million in 2012 88,315 98,628 Management fee receivable 1,821 2,662 Other receivables 4,786 4,105 Prepaid expenses and other 11,831 12,622 Restricted cash 3,772 1,787 Deferred tax assets 2,152 532 Total current assets 211,672 176,199 Property and equipment, net 32,709 30,380 Goodwill 113,263 113,915 Intangible assets, net 43,476 49,651 Other assets 11,681 10,639 Restricted cash, less current portion 11,957 10,953 Total assets $ 424,758 $ 391,737 Liabilities and stockholders' equity Current liabilities: Current portion of long-term obligations $ 48,250 $ 14,000 Accounts payable 3,904 4,569 Accrued expenses 52,484 32,976 Accrued transportation costs 54,962 61,316 Deferred revenue 3,687 7,055 Reinsurance liability reserve 10,778 12,713 Total current liabilities 174,065 132,629 Long-term obligations, less current portion 75,250 116,000 Other long-term liabilities 15,359 13,527 Deferred tax liabilities 9,447 10,894 Total liabilities 274,121 273,050 Commitments and contingencies Stockholders' equity Common stock: authorized 40,000,000 shares; $0.001 par value; 14,477,312 and 13,785,947 issued and outstanding (including treasury shares) 14 14 Additional paid-in capital 194,363 180,778 Accumulated deficit (33,641) (53,079) Accumulated other comprehensive loss, net of (1,419) (893) tax Treasury shares, at cost, 956,442 and 928,478 (15,641) (15,094) shares Total Providence stockholders' equity 143,676 111,726 Non-controlling interest 6,961 6,961 Total stockholders' equity 150,637 118,687 Total liabilities and stockholders' equity $ 424,758 $ 391,737 The Providence Service Corporation Consolidated Statements of Cash Flows (in thousands) (Unaudited) Year ended December 31, 2013 2012 Operating activities Net income $ 19,438 $ 8,482 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 7,738 7,537 Amortization 7,134 7,486 Provision for doubtful accounts 3,245 2,305 Stock based compensation 3,079 3,873 Deferred income taxes (3,282) (816) Amortization of deferred financing costs 960 1,138 Loss on extinguishment of debt 525 - Excess tax benefit upon exercise of stock options (1,120) (91) Asset impairment charge 492 2,506 Other non-cash charges 364 158 Changes in operating assets and liabilities, net of effects of acquisitions: Accounts receivable 7,186 (16,589) Management fee receivable 659 875 Other receivables 540 (319) Restricted cash (141) 163 Prepaid expenses and other (856) 256 Reinsurance liability reserve (19) 1,034 Accounts payable and accrued expenses 18,863 2,412 Accrued transportation costs (6,354) 13,660 Deferred revenue (3,366) 4,862 Other long-term liabilities 152 3,556 Net cash provided by operating activities 55,237 42,488 Investing activities Purchase of property and equipment (10,183) (9,522) Net increase in short-term investments 177 444 Acquisitions, net of cash acquired (989) (190) Restricted cash for reinsured claims losses (2,848) 2,633 Net cash used in investing activities (13,843) (6,635) Financing activities Repurchase of common stock, for treasury (547) (3,658) Proceeds from common stock issued pursuant to stock option exercise 10,069 949 Excess tax benefit upon exercise of stock options 1,120 91 Proceeds from long-term debt 76,000 - Repayment of long-term debt (82,500) (20,493) Debt financing costs (2,082) (65) Capital lease payments (9) (23) Net cash provided by (used in) financing activities 2,051 (23,199) Effect of exchange rate changes on cash (313) 25 Net change in cash 43,132 12,679 Cash at beginning of period 55,863 43,184 Cash at end of period $ 98,995 $ 55,863 The Providence Service Corporation Reconciliation of Non-GAAP Financial Measures Adjusted EBITDA (in thousands) (Unaudited) Three months ended Year ended December 31, December 31, 2013 2012 2013 2012 Net income $ 3,357 $ 2,865 $ 19,438 $ 8,482 Interest expense, net 1,578 1,811 6,894 7,508 Provision for income taxes 1,165 3,580 11,777 8,211 Depreciation and 3,683 3,769 14,872 15,023 amortization EBITDA 9,783 12,025 52,981 39,224 Asset impairment charge - - 492 2,506 Payments related to retirement and termination of executive 1,277 1,293 1,277 1,293 officers Loss on extinguishment of - - 525 - debt Strategic alternatives - - - 593 costs Adjusted EBITDA $ 11,060 $ 13,318 $ 55,275 $ 43,616 SOURCE The Providence Service Corporation Website: http://www.provcorp.com Contact: Robert Wilson - Chief Financial Officer, 520/747-6600; or Alison Ziegler, Cameron Associates, 212/554-5469
Providence Service Corporation Reports 2013 Results
Press spacebar to pause and continue. Press esc to stop.