UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 


FORM 8-K

 


CURRENT REPORT

 

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported): May 11, 2015

 


The Providence Service Corporation

(Exact name of registrant as specified in its charter)

 


Delaware

 

001-34221

 

86-0845127

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

   

64 East Broadway Blvd., Tucson, Arizona

 

85701

(Address of principal executive offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code: (520) 747-6600

 

Not Applicable

(Former name or former address, if changed since last report)

 


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 
 

 

 

Item 2.02 Results of Operations and Financial Condition.

 

On May 11, 2015, we issued a press release containing certain financial information for the quarter ended March 31, 2015. As noted in the press release, we have provided non-GAAP financial measures (earnings before interest, taxes, depreciation and amortization (EBITDA), adjusted EBITDA, adjusted net income and adjusted diluted earnings per share), the reasons we have provided such measures and a reconciliation of the non-GAAP measures to the most directly comparable GAAP measure. Readers should consider the non-GAAP measures in addition to, and not as a substitute for, the measure of financial performance prepared in accordance with GAAP. In this regard, GAAP refers to accounting principles generally accepted in the United States. A copy of the press release is being furnished hereto as Exhibit 99.1 and is incorporated herein by reference.

 

 

On our earnings call scheduled for May 12, 2015, we intend to provide certain pro forma financial measures assuming our acquisitions of both Ingeus Limited (“Ingeus”) and CCHN Group Holdings, Inc., the parent company of Community Care Health Network, Inc. (d/b/a Matrix Medical Network) (“Matrix”) occurred on January 1, 2014. The table below presents our revenue and a reconciliation of net income to adjusted EBITDA for the twelve months ended March 31, 2015, assuming that we had acquired Ingeus and Matrix on January 1, 2014:

 

 

   

(in thousands)

 
   

Pro forma twelve months ended

 
   

March 31, 2015

 
         

Service revenue

  $ 1,877,028  
         

Net income

  $ 31,844  
         

Interest expense, net

    31,703  

Provision for income taxes

    17,867  

Depreciation and amortization

    61,524  
         

EBITDA

    142,938  
         

Acquisition costs

    100  

Integration and restructuring charges

    2,771  

Ingeus acquisition related equity compensation

    5,959  

Loss on foreign currency translation

    216  

Contingent consideration adjustments

    (16,314 )

Asset impairment charges

    6,915  
         

Adjusted EBITDA

  $ 142,585  

 

 
 

 

  

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

 

On May 11, 2015, we also announced that Chief Executive Officer Warren Rustand has informed our board of directors that he will be stepping down from his role as Chief Executive Officer and board member, effective as of June 1, 2015.  Our chairman, Chris Shackelton, will assume the role of Chief Executive Officer on an interim basis until a replacement is named, also effective June 1, 2015. Mr. Rustand has agreed to remain with the Company as a Senior Advisor for the remainder of 2015. A copy of the press release is attached hereto as Exhibit 99.2 and is incorporated herein by reference.

 

Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits.

 

Exhibit
Number

  

Description

   

99.1

  

Company’s Press Release dated May 11, 2015.

     
99.2   Company’s Press Release dated May 11, 2015.

 

 
 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

 

 

THE PROVIDENCE SERVICE CORPORATION

       

Date: May 11, 2015

 

 

 

By:

 

/s/ James Lindstrom

 

 

 

 

Name:

 

James Lindstrom

 

 

 

 

Title:

 

Chief Financial Officer

 



Exhibit 99.1

 

 

 

   

AT THE COMPANY

AT CAMERON ASSOCIATES

James M. Lindstrom – Chief Financial Officer     

Alison Ziegler     212/554-5469

520/747-6600

 

 

FOR IMMEDIATE RELEASE

 

Providence Service Corporation Reports First Quarter 2015 Results

 

First Quarter 2015 Financial Highlights:

 

Revenues increased 74.8% to $505.8 million (or 20.0% organically)

 

Diluted earnings per common share of $0.32, Adjusted diluted earnings per common share (non-GAAP) of $0.77

 

Adjusted EBITDA (non-GAAP) of $36.3 million

 

Cash flow from operations of $15.4 million

 

 

TUCSON, ARIZONA May 11, 2015 -- The Providence Service Corporation (Nasdaq: PRSC) today announced its financial results for the first quarter ended March 31, 2015. Included in the results are the acquired operations of Ingeus and Matrix Medical Network from May 31, 2014 and October 24, 2014, respectively.

 

First Quarter 2015 Results

For the first quarter of 2015, the Company reported consolidated revenue of $505.8 million, an increase of 74.8% from $289.4 million in the comparable period of 2014. This included $158.4 million of revenue contributed by Ingeus and Matrix. Excluding this revenue from acquired businesses, consolidated revenue was $347.4 million, an increase of 20.0% from the comparable period of 2014.

 

Service expense as a percentage of revenue was 87.8% in the first quarter of 2015 compared to 89.8% in the first quarter of 2014. First quarter 2015 service expense included a $1.5 million charge related to the amortization of the fair value of restricted stock awards issued in connection with the acquisition of Ingeus. General and administrative (G&A) expense as a percentage of revenue was 4.9% in the first quarter of 2015 compared to 4.7% in the first quarter of 2014. The Company also reported a loss on equity investment of $2.5 million in the quarter related to the Company’s investment in Mission Providence, a joint venture in Australia, which incurred start-up costs during the first quarter of 2015 related to recent successful bidding activity.

 

The Company reported net income available to common shareholders of $5.1 million, or $0.32 per diluted common share, in the first quarter of 2015 compared to net income available to common shareholders of $6.3 million, or $0.44 per diluted common share, in the prior year period. Adjusted net income available to common shareholders (non-GAAP) in the first quarter of 2015 was $12.5 million, or $0.77 per diluted common share, versus first quarter 2014 adjusted net income available to common shareholders (non-GAAP) of $9.2 million, or $0.60 per diluted common share. A reconciliation of net income to adjusted net income available to common shareholders (non-GAAP) and showing the calculation of adjusted earnings per common share is presented below.

 

Adjusted EBITDA (non-GAAP) for the first quarter of 2015 was $36.3 million compared to $18.2 million in the same period last year. Adjusted EBITDA includes the loss on equity investment of $2.5 million related to Mission Providence. A reconciliation of net income to EBITDA and Adjusted EBITDA is presented below.

 

Warren Rustand, Chief Executive Officer, stated, “We are pleased to report solid first quarter financial results, driven by strong revenue growth and operating margins at both our NET and Health Assessment Services segments. We were also pleased to see continued revenue growth and margin expansion in our Human Services segment and, as expected, our Workforce Development segment experienced low-single digit margins due to start-up costs associated with multiple new contracts. Finally, while we experienced strong organic growth in the first quarter across our segments, we remain cognizant of the quarterly volatility of certain of our businesses and focused on our 2015 goals as previously communicated.”

  

 
 

 

 

Segment Results

For analysis purposes, revenue, expenses, operating income, net income, EBITDA (non-GAAP), and Adjusted EBITDA (non-GAAP) on a comparable basis are provided for Providence’s four segments for the three month period ended March 31, 2015 and 2014. Beginning in 2015, the Company began analyzing the results of the segments without the historical allocation of indirect corporate costs. Only corporate costs that represent expenses directly attributable to specific segments are allocated to the respective segment. As such, the operating segment results for 2014 have been recast. Corporate and Other includes corporate costs that are not directly attributable to a segment, eliminations, and the activities of the Company’s wholly-owned captive insurance subsidiary. Additionally, in 2015, the oversight of the Company’s legacy workforce development businesses has been transferred to the management team of the WD Services segment. As such, the financial results of these legacy workforce development businesses have been reclassified from the Human Services segment to the WD Services segment for the periods presented.

 

Non-emergency Transportation (NET) Services

Revenue from the NET Services segment increased 28.6% to $254.8 million in the first quarter from $198.1 million in the prior year period. Service expense for the segment increased to $229.2 million in the first quarter, or 90.0% of NET Services revenue, compared to $175.2 million or 88.5% of NET Services revenue in the first quarter of 2014. NET Services operating income increased 8.4% to $20.7 million in the first quarter from $19.1 million in the prior year period. NET Services Adjusted EBITDA (non-GAAP) increased $2.1 million, or 10.1%, to $23.0 million in the first quarter from $20.9 million in the prior year period.

 

NET Services revenue was favorably impacted by new contracts in Rhode Island, Maine, and Texas and increased membership in certain states, partially offset by the elimination of contracts in Mississippi and Connecticut. Our cost of transportation as a percentage of non-emergency transportation services revenue increased due primarily to increased utilization partially attributable to higher usage by expansion and woodwork populations, as well as less severe weather in the first quarter of 2015 compared to the prior year period.

 

Human Services

Revenue from the Human Services segment increased 2.5% to $86.2 million in the first quarter of 2015, compared to $84.1 million in the first quarter of 2014. Both periods exclude revenue related to the legacy workforce development services business that was transitioned to the WD Services segment at the beginning of 2015. Service expense for the segment was $77.5 million in the first quarter of 2015, or 90.0% of Human Services revenue, compared to $78.9 million, or 93.8% of revenue in 2014. Human Services operating income was $1.8 million in the first quarter compared to a loss of $1.3 million in the prior year period. Human Services Adjusted EBITDA (non-GAAP) increased $2.9 million to $3.7 million in the first quarter from $0.8 million in the prior year period.

 

Human Services revenue increased primarily due to two acquisitions and organic expansion in certain markets, partially offset by the decrease in revenue related to the termination of the Texas foster care contract. The exit from Texas contributed to the lower cost of services as a percent of revenue in the quarter.

 

Workforce Development (WD) Services

WD Services revenue was $107.6 million in the first quarter of 2015 and relates primarily to the Ingeus business that was acquired on May 30, 2014. In the first quarter of 2014, WD Services revenue was $7.4 million and represents the legacy workforce development services business that had historically been part of Human Services. Service expense for the segment was $94.2 million in the first quarter of 2015, or 87.6% of WD revenue. WD Services operating income was $2.8 million in the first quarter of 2015 and included a $1.5 million expense related to the amortization of the fair value of restricted stock awards issued in connection with the acquisition of Ingeus. WD Services Adjusted EBITDA (non-GAAP) was $5.2 million in the first quarter of 2015 and included a loss on equity investment of $2.5 million related to Mission Providence. In the first quarter of 2014, service expense was $6.4 million, or 86.2% of WD revenue, operating income was $0.4 million, and Adjusted EBITDA (non-GAAP) was $0.5 million.

 

As previously disclosed, our WD Services operating results may fluctuate from quarter to quarter due to the recognition of revenues based upon the achievement of certain contract milestones and expenses related to the commencement of new contracts.

 

Health Assessment (HA) Services

HA Services revenue, primarily derived from providing comprehensive health assessments, was $57.4 million in the first quarter of 2015 and is comprised of revenue from Matrix, acquired on October 23, 2014. Service expense for the segment was $43.2 million, or 75.2% of HA Services revenue. HA Services operating income was $6.5 million in the first quarter of 2015, and HA Services Adjusted EBITDA (non-GAAP) was $13.7 million for the same period.

 

 
 

 

 

Conference Call

Providence will hold a conference call at 11:00 a.m. EDT (8:00 a.m. PDT/MST) Tuesday, May 12, 2015 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 (877) 703-6103, or for international callers (857) 244-7302, and by using the passcode 86411673. A replay of the teleconference will be available on http://investor.provcorp.com. A replay will also be available until May 19, 2015 by dialing (888) 286-8010 or (617) 801-6888 and using passcode 41247620.

 

About Providence

Providence is a Tucson, Arizona-based company that provides and manages government sponsored human services, innovative global employment services, comprehensive health assessment and care management services, and non-emergency transportation services. It offers: (1) non-emergency transportation management services to state Medicaid programs, local government agencies, hospital systems, health maintenance organizations, private managed care organizations and commercial insurers, as well as to individuals with limited mobility, people with limited means of transportation, people with disabilities and Medicaid members (2) home- and community-based counseling services, which include home-based and intensive home-based counseling, workforce development, substance abuse treatment services, school support services and correctional services; (3) foster care and therapeutic foster care services; (4) case management, referral and monitoring services; (5) social improvement, employment and welfare services to various international government bodies and corporations; and (6) in-home comprehensive health assessment and care management services primarily to Medicare Advantage programs. Providence is unique in that it provides and manages its human services primarily in the client’s own home or in community based settings, rather than in hospitals or treatment facilities and provides its non-emergency transportation services clients through local transportation providers rather than an owned fleet of vehicles.

 

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, Adjusted EBITDA, Adjusted net income, and Adjusted diluted EPS, 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, 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, 2014 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.

 

 

--financial tables to follow--

 

 
 

 

 

 

 

Providence Service Corporation

Page 4

 

The Providence Service Corporation

Unaudited Condensed Consolidated Statements of Income

(in thousands except share and per share data)

 

   

Three months ended

 
   

March 31,

 
   

2015

   

2014

 
                 

Service revenue

  $ 505,795     $ 289,403  
                 

Operating expenses:

               

Service expense

    443,868       259,937  

General and administrative expense

    24,684       13,617  

Depreciation and amortization

    14,900       3,728  

Total operating expenses

    483,452       277,282  

Operating income

    22,343       12,121  
                 

Other expenses:

               

Interest expense, net

    6,007       1,585  

Loss on equity investment

    2,483       -  

Loss on foreign currency translation

    319       41  

Income before income taxes

    13,534       10,495  

Provision for income taxes

    7,297       4,208  

Net income

  $ 6,237     $ 6,287  
                 

Net income available to common stockholders

  $ 5,093     $ 6,287  
                 

Earnings per common share:

               

Basic

  $ 0.32     $ 0.45  

Diluted

  $ 0.32     $ 0.44  
                 

Weighted-average number of common shares outstanding:

               

Basic

    15,976,050       13,801,456  

Diluted

    16,145,176       15,257,557  

 

 

--more--

 

 
 

 

 

Providence Service Corporation

Page 5

 

The Providence Service Corporation

Condensed Consolidated Balance Sheets

(in thousands except share and per share data)

 

   

March 31,

   

December 31,

 
   

2015

   

2014

 
    (Unaudited)          

Assets

 

 

         

Current assets:

               

Cash and cash equivalents

  $ 170,130     $ 160,406  

Accounts receivable, net of allowance of $6,449 in 2015 and $6,034 in 2014

    198,644       151,344  

Other receivables

    6,724       6,866  

Prepaid expenses and other

    36,323       46,157  

Restricted cash

    2,633       3,807  

Deferred tax assets

    5,729       6,066  

Total current assets

    420,183       374,646  

Property and equipment, net

    58,689       57,148  

Goodwill

    353,995       355,641  

Intangible assets, net

    328,289       340,673  

Other assets

    22,053       22,373  

Restricted cash, less current portion

    15,349       14,764  

Total assets

  $ 1,198,558     $ 1,165,245  

Liabilities and stockholders' equity

               

Current liabilities:

               

Current portion of long-term obligations

  $ 27,125     $ 25,188  

Note payable to related party

    -       65,500  

Accounts payable

    34,626       48,061  

Accrued expenses

    137,682       121,857  

Accrued transportation costs

    73,322       55,492  

Deferred revenue

    14,678       12,245  

Reinsurance liability reserve

    6,880       11,115  

Total current liabilities

    294,313       339,458  

Long-term obligations, less current portion

    476,898       484,525  

Other long-term liabilities

    30,139       26,609  

Deferred tax liabilities

    91,386       93,239  

Total liabilities

    892,736       943,831  

Commitments and contingencies

               

Mezzanine equity

               

Preferred stock: Authorized 10,000,000 shares; $0.001 par value; 805,000 and 0 issued and outstanding; 5.5%/8.5% dividend rate

    76,894       -  

Stockholders' equity

               

Common stock: Authorized 40,000,000 shares; $0.001 par value; 17,060,002 and 16,870,285 issued and outstanding (including treasury shares)

    17       17  

Additional paid-in capital

    268,438       261,155  

Accumulated deficit

    (7,129 )     (13,366 )

Accumulated other comprehensive loss, net of tax

    (14,051 )     (8,756 )

Treasury shares, at cost, 1,029,294 and 1,014,108 shares

    (18,407 )     (17,686 )

Total Providence stockholders' equity

    228,868       221,364  

Non-controlling interest

    60       50  

Total stockholders' equity

    228,928       221,414  

Total liabilities and stockholders' equity

  $ 1,198,558     $ 1,165,245  

 

 

--more--

 

 
 

 

 

Providence Service Corporation

Page 6

 

The Providence Service Corporation

Unaudited Condensed Consolidated Statements of Cash Flows

(in thousands)

 

   

Three months ended March 31,

 
   

2015

   

2014

 

Operating activities

               

Net income

  $ 6,237     $ 6,287  

Adjustments to reconcile net income to net cash provided by operating activities:

               

Depreciation

    5,089       2,103  

Amortization

    9,811       1,625  

Provision for doubtful accounts

    599       557  

Stock based compensation

    2,864       408  

Deferred income taxes

    (1,512 )     (1,333 )

Amortization of deferred financing costs

    539       214  

Excess tax benefit upon exercise of stock options

    (1,989 )     (323 )

Loss on equity investment

    2,483       -  

Other non-cash charges

    319       35  

Changes in operating assets and liabilities:

               

Accounts receivable

    (49,699 )     (12,534 )

Other receivables

    77       984  

Restricted cash

    (106 )     (111 )

Prepaid expenses and other

    6,364       6,049  

Reinsurance liability reserve

    (1,121 )     (1,950 )

Accounts payable and accrued expenses

    14,083       8,862  

Accrued transportation costs

    17,830       (98 )

Deferred revenue

    2,879       131  

Other long-term liabilities

    631       (3,060 )

Net cash provided by operating activities

    15,378       7,846  

Investing activities

               

Purchase of property and equipment

    (6,394 )     (2,723 )

Acquisitions, net of cash acquired

    (1,665 )     -  

Net decrease in short-term investments

    (5 )     (5 )

Restricted cash for reinsured claims losses

    694       1,525  

Net cash used in investing activities

    (7,370 )     (1,203 )

Financing activities

               

Proceeds from issuance of preferred stock, net of issuance costs

    80,667       -  

Preferred stock dividends

    (594 )     -  

Repurchase of common stock, for treasury

    (721 )     (470 )

Proceeds from common stock issued pursuant to stock option exercise

    2,199       506  

Excess tax benefit upon exercise of stock options

    1,989       323  

Repayment of long-term debt

    (71,312 )     -  

Payment of contingent consideration

    (7,496 )     -  

Other

    13       (2 )

Net cash provided by financing activities

    4,745       357  

Effect of exchange rate changes on cash

    (3,029 )     (155 )

Net change in cash

    9,724       6,845  

Cash at beginning of period

    160,406       98,995  

Cash at end of period

  $ 170,130     $ 105,840  

 

 

--more--

 

 
 

 

 

Providence Service Corporation

Page 7

 

The Providence Service Corporation

Reconciliation of Non-GAAP Financial Measures

Adjusted EBITDA

(in thousands)

(Unaudited)

 

   

Three Months Ended March 31, 2015

 
   

NET Services

   

Human

Services

   

WD Services

   

HA Services

   

Corporate and

Other

   

Total

 
                                                 

Net income

  $ 12,611     $ 1,036     $ (2,380 )   $ 3,846     $ (8,876 )   $ 6,237  
                                                 

Interest expense, net

    (1 )     (20 )     (16 )     (4 )     6,048       6,007  

Provision for income taxes

    8,129       804       2,427       2,672       (6,735 )     7,297  

Depreciation and amortization

    2,277       1,847       3,316       7,182       278       14,900  
                                                 

EBITDA

    23,016       3,667       3,347       13,696       (9,285 )     34,441  
                                                 

Acquisition costs

    -       -       -       -       -       -  

Ingeus acquisition related equity compensation

    -       -       1,533       -       -       1,533  

Loss on foreign currency translation

    -       -       319       -       -       319  

Payments related to the termination of an executive officer, net

    -       -       -       -       -       -  
                                                 

Adjusted EBITDA

  $ 23,016     $ 3,667     $ 5,199     $ 13,696     $ (9,285 )   $ 36,293  

 

 

   

Three Months Ended March 31, 2014

 
   

NET Services

   

Human

Services

   

WD Services

   

HA Services

   

Corporate and

Other

   

Total

 
                                                 

Net income

  $ 11,408     $ (802 )   $ 209     $ -     $ (4,528 )   $ 6,287  
                                                 

Interest expense, net

    (5 )     (11 )     (14 )     -       1,615       1,585  

Provision for income taxes

    7,733       (507 )     157       -       (3,175 )     4,208  

Depreciation and amortization

    1,761       1,579       131       -       257       3,728  
                                                 

EBITDA

    20,897       259       483       -       (5,831 )     15,808  
                                                 

Acquisition costs

    -       -       -       -       1,829       1,829  

Ingeus acquisition related equity compensation

    -       -       -       -       -       -  

Loss on foreign currency translation

    -       -       42       -       (1 )     41  

Payments related to the termination of an executive officer, net

    -       511       -       -       -       511  
                                                 

Adjusted EBITDA

  $ 20,897     $ 770     $ 525     $ -     $ (4,003 )   $ 18,189  

 

 

--more--

 

 
 

 

 

Providence Service Corporation

Page 8

 

The Providence Service Corporation

Adjusted Earnings Per Share

(in thousands, except share and per share data)

(Unaudited)

 

   

(in thousands)

 
   

Three months ended March 31,

 
   

2015

   

2014

 
                 

Net income

  $ 6,237     $ 6,287  
                 

Acquisition costs

    -       1,829  

Ingeus acquisition related equity compensation

    1,533       -  

Loss on foreign currency translation

    319       41  

Payments related to the termination of an executive officer, net

    -       511  

Intangible amortization expense

    9,811       1,625  

Tax effected impact of adjustments

    (3,828 )     (1,597 )

Adjusted net income

    14,072       8,696  
                 

Dividends on preferred stock

    (594 )     -  

Amortization of preferred stock discount

    (246 )     -  

Income allocated to participating securities

    (747 )     -  

Adjusted net income available to common stockholders, basic

    12,485       8,696  
                 

Effect of interest related to the Senior Notes

    -       499  

Adjusted net income available to common stockholders, diluted

  $ 12,485     $ 9,195  
                 

Adjusted diluted earnings per common share

  $ 0.77     $ 0.60  
                 

Diluted weighted-average number of common shares outstanding

    16,145,176       15,257,557  

 

 

--more--

 

 
 

 

 

Providence Service Corporation

Page 9

 

The Providence Service Corporation

Segment Information

(in thousands)

(Unaudited)

 

   

Three Months Ended March 31, 2015

 
   

NET Services

   

Human

Services

   

WD Services

   

HA Services

   

Corporate

and Other

   

Total

 

Revenues

  $ 254,760     $ 86,187     $ 107,618     $ 57,432     $ (202 )   $ 505,795  

Operating income

    20,739       1,820       2,833       6,514       (9,563 )     22,343  

Depreciation and amortization

    2,277       1,847       3,316       7,182       278       14,900  

Net Income

    12,611       1,036       (2,380 )     3,846       (8,876 )     6,237  

Adjusted EBITDA (Non-GAAP)

    23,016       3,667       5,199       13,696       (9,285 )     36,293  

 

   

Three Months Ended March 31, 2014

 
   

NET Services

   

Human

Services

   

WD Services

   

HA Services

   

Corporate

and Other

   

Total

 

Revenues

  $ 198,077     $ 84,102     $ 7,448     $ -     $ (224 )   $ 289,403  

Operating income

    19,136       (1,320 )     394       -       (6,089 )     12,121  

Depreciation and amortization

    1,761       1,579       131       -       257       3,728  

Net Income

    11,408       (802 )     209       -       (4,528 )     6,287  

Adjusted EBITDA (Non-GAAP)

    20,897       770       525       -       (4,003 )     18,189  

 

 

###



Exhibit 99.2

 

 

 

 

AT THE COMPANY

AT CAMERON ASSOCIATES

James M. Lindstrom – Chief Financial Officer

Alison Ziegler   212/554-5469

520/747-6600

 

 

FOR IMMEDIATE RELEASE

 

Providence Service Corporation Announces CEO Transition Plan

 

 

TUCSON, ARIZONA May 11, 2015 -- The Providence Service Corporation (Nasdaq: PRSC) today announced Chief Executive Officer Warren Rustand has informed the Providence Board of Directors that he will be stepping down from his role as the CEO and as a Board Director. Providence’s Chairman, Chris Shackelton, will assume the CEO role on an interim basis until a replacement is named. A transition of Mr. Rustand’s responsibilities as CEO has commenced, with a formal title change anticipated to occur on June 1, 2015. The Providence Board has engaged Heidrick & Struggles International, Inc. to conduct a broad and comprehensive search for a full time CEO replacement. The search is expected to be completed over the next few months. Mr. Rustand has agreed to remain with the Company as a Senior Advisor for the remainder of 2015.

 

Commenting on Mr. Rustand’s decision to step down from his role as CEO, Mr. Shackelton stated, “Warren has given 10 years of excellent service to Providence as a Board member. In 2012, at the Board’s request, Warren agreed to step in as CEO. As CEO, Warren rolled up his sleeves and led the Company through a challenging and transformative period. Providence is undoubtedly a better, stronger Company thanks to Warren. The Board is supportive of Warren’s desire to take a step back and appreciative of his leadership and contributions.”

 

Kristi Meints, a Board Member since 2003, added, “Warren has been discussing this transition with the Board for several months, and we are grateful for his willingness to remain involved with the Company as a Senior Advisor. Given Providence’s holding company structure, with an experienced corporate leadership team and strong CEOs at our portfolio companies, we do not anticipate any disruption over the interim period. Furthermore, Warren’s on-going role as a Senior Advisor combined with Chris’s deep familiarity with the operations and management throughout the Company provide a stable foundation from which to lead Providence.”

 

Mr. Rustand added, “I am grateful to Providence’s shareholders, board, and employees for having allowed me to serve as CEO over the past two and a half years. It has been a privilege to work with thousands of talented colleagues across multiple countries. I am proud of the Company and the culture we have created together. I look forward to supporting the Company for the remainder of the year as a Senior Advisor and helping to facilitate a smooth transition to Chris as interim CEO and ultimately to a permanent CEO.”

 

 

About Providence

Providence is a Tucson, Arizona-based company that provides and manages government sponsored human services, innovative global employment services, comprehensive health assessment and care management services, and non-emergency transportation services. It offers: (1) non-emergency transportation management services to state Medicaid programs, local government agencies, hospital systems, health maintenance organizations, private managed care organizations and commercial insurers, as well as to individuals with limited mobility, people with limited means of transportation, people with disabilities and Medicaid members (2) home- and community-based counseling services, which include home-based and intensive home-based counseling, workforce development, substance abuse treatment services, school support services and correctional services; (3) foster care and therapeutic foster care services; (4) case management, referral and monitoring services; (5) social improvement, employment and welfare services to various international government bodies and corporations; and (6) in-home comprehensive health assessment and care management services primarily to Medicare Advantage programs. Providence is unique in that it provides and manages its human services primarily in the client’s own home or in community based settings, rather than in hospitals or treatment facilities and provides its non-emergency transportation services clients through local transportation providers rather than an owned fleet of vehicles.

 

 
 

 

 

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 “will,” “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, 2014 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.

 

 

###

 

 

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