ATLANTA, Feb. 27, 2020 (GLOBE NEWSWIRE) -- The Providence Service Corporation (the “Company” or “Providence”) (Nasdaq: PRSC), the nation's largest provider of non-emergency medical transportation ("NEMT") programs and holder of a minority interest in Matrix Medical Network, today reported financial results for the quarter and year ended December 31, 2019.

Daniel E. Greenleaf, President and Chief Executive Officer, commented, “In the fourth quarter of 2019, Providence delivered strong revenue growth of 6.7%, net loss from continuing operations of $11.4 million and Adjusted EBITDA of $10.2 million. During the quarter, in response to higher transportation cost experienced throughout the year, the team remained focused on operational execution. This included a focus on network development to drive a more robust and competitive transportation network. On revenue, we were able to successfully renegotiate several contracts which contributed $4.0 million of in-quarter benefit.”

He continued, “For the year, our revenue grew by $125.0 million, or 9.0%, reflecting the mission-critical nature of our services to payors and members. Since joining the Company in December, I have been impressed by our team's unwavering commitment to serving our members. Looking ahead, I see compelling opportunities to leverage our leadership position in NEMT to drive continued revenue growth, sustainable margin expansion, value to our shareholders, and improved quality of life and better health outcomes for our members.”

Fourth Quarter 2019 Highlights

  • Revenue from continuing operations of $384.8 million, an increase of 6.7% from the fourth quarter of 2018
  • Loss from continuing operations, net of tax, of $11.4 million, or loss of $0.97 per diluted common share
  • Adjusted EBITDA of $10.2 million, Adjusted Net Income of $7.9 million and Adjusted EPS of $0.45
  • Matrix, on a standalone basis, recorded a net loss of $54.3 million, which included a pre-tax asset impairment charge of $55.1 million, and Adjusted EBITDA of $6.3 million

2019 Highlights

  • Revenue from continuing operations of $1.51 billion, an increase of 9.0% from 2018
  • Loss from continuing operations, net of tax, of $5.0 million, or loss of $0.72 per diluted common share
  • Adjusted EBITDA of $51.2 million, Adjusted Net Income of $29.2 million and Adjusted EPS of $1.65
  • Net cash provided by operating activities of $60.9 million
  • Unrestricted Cash of $61.4 million in 2019 compared to $5.7 million in 2018
  • Matrix, on a standalone basis, recorded a net loss of $69.4 million, which included a pre-tax asset impairment charge of $55.1 million, and Adjusted EBITDA of $44.0 million

Fourth Quarter 2019 Results

For the fourth quarter of 2019, the Company reported revenue of $384.8 million, an increase of 6.7% from $360.8 million in the fourth quarter of 2018.

Operating income was $7.6 million, or 2.0% of revenue, in the fourth quarter of 2019, compared to operating loss of $0.7 million, or negative 0.2% of revenue, in the fourth quarter of 2018. Loss from continuing operations, net of tax, in the fourth quarter of 2019 was $11.4 million, or $0.97 loss per diluted common share, compared to loss from continuing operations, net of tax, of $1.5 million, or $0.20 loss per diluted common share, in the fourth quarter of 2018.

Adjusted EBITDA was $10.2 million, or 2.6% of revenue, in the fourth quarter of 2019, compared to $27.3 million, or 7.6% of revenue, in the fourth quarter of 2018.

Adjusted Net Income in the fourth quarter of 2019 was $7.9 million, or $0.45 earnings per diluted common share, compared to $17.2 million, or $1.08 earnings per diluted common share, in the fourth quarter of 2018.

The quarter-over-quarter increase in revenue was a result of increased volume within existing contracts as well as rate changes and a new managed care organization ("MCO") contract in Minnesota. These increases were partially offset by the impact of contracts the Company no longer serves, including a state contract in Rhode Island and MCO contracts in California, Florida and New Mexico.

Adjusted EBITDA decreased in the fourth quarter of 2019 versus the fourth quarter of 2018 primarily due to increased transportation costs on a per trip basis in addition to higher utilization across multiple at-risk contracts. 

Matrix - Equity Investment

For the fourth quarter of 2019, Matrix recorded revenue of $64.6 million, a decrease of 1.8% from $65.7 million in the fourth quarter of 2018. Matrix had an operating loss of $60.5 million for the fourth quarter of 2019, primarily as a result of asset impairment charges of $55.1 million compared to an operating loss of $6.5 million in the fourth quarter of 2018. Providence recorded a loss in equity earnings of $23.5 million related to its Matrix equity investment for the fourth quarter of 2019 compared to a loss of $2.1 million for the fourth quarter of 2018.

In the fourth quarter of 2019, Matrix had Adjusted EBITDA of $6.3 million or 9.8% of revenue, compared to $12.5 million, or 18.9% of revenue, in the fourth quarter of 2018.

Adjusted EBITDA was impacted by higher direct and indirect costs, compared to the fourth quarter of 2018.

As of December 31, 2019, Providence's ownership interest and equity investment in Matrix was 43.6% and $130.9 million, respectively.

Investor Presentation and Conference Call

Providence will hold a conference call to discuss its financial results on February 27, 2020 at 8:00 a.m. ET. An investor presentation has been prepared to accompany the conference call and can be found on the Company’s website (investor.prscholdings.com). To access the call, please dial:

US toll-free: 1 (844) 244 3865
International: 1 (518) 444 0681
Passcode: 5959714

Replay (available until March 5, 2020):
US toll-free: 1 (855) 859 2056
International: 1 (404) 537 3406
Passcode: 5959714

You may also access the conference call via webcast at investor.prscholdings.com, where the call also will be archived.

About Providence

The Providence Service Corporation, through its fully-owned subsidiaries LogistiCare Solutions, LLC and Circulation, Inc., is the nation's largest manager of non-emergency medical transportation programs for state governments and managed care organizations. Its range of services includes call center management, network credentialing, vendor payment management and non-emergency medical transport management. The Company also holds a minority interest in Matrix Medical Network which provides a broad array of assessment and care management services to individuals that improve health outcomes and health plan financial performance. For more information, please visit prscholdings.com.

Non-GAAP Financial Measures and Adjustments

In addition to the financial results prepared in accordance with generally accepted accounting principles in the United States ("GAAP"), this press release includes EBITDA and Adjusted EBITDA for the Company and its segments, and Adjusted Net Income and Adjusted EPS for the Company, which are performance measures that are not recognized under GAAP. EBITDA is defined as income (loss) from continuing operations, net of taxes, 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 (as applicable): (1) restructuring and related charges, including costs related to our corporate reorganization, (2) equity in net loss of investee, (3) certain litigation related expenses, settlement income or other negotiated settlements relating to certain matters from prior periods, (4) certain transaction and related costs, (5) asset impairment charges, and (6) gain on remeasurement of cost investment. Adjusted Net Income is defined as income (loss) from continuing operations, net of taxes, before certain items, including (1) restructuring and related charges, (2) equity in net loss of investee, (3) certain litigation related expenses, settlement income or other negotiated settlements relating to certain matters from prior periods, (4) intangible asset amortization, (5) certain transaction and related costs, (6) asset impairment charges, (7) gain on remeasurement of cost investment, and (8) the income tax impact of such adjustments. Adjusted EPS is calculated as Adjusted Net Income less (as applicable): (1) dividends on convertible preferred stock and (2) adjusted net income allocated to participating stockholders, divided by the diluted weighted-average number of common shares outstanding as calculated for Adjusted Net Income. We utilize these non-GAAP performance measures, which exclude certain expenses and amounts, 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 operations of our business. We consider our core operations to be the ongoing activities to provide services from which we earn revenue, including direct operating costs and indirect costs to support these activities. In addition, our net loss in equity investee is excluded from these measures, as we do not have the ability to manage these ventures, allocate resources within the ventures, or directly control their operations or performance.

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

Certain statements contained in this press release constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are predictive in nature and are frequently identified by the use of terms such as "may," "will," "should," "expect," "believe," "estimate," "intend," and similar words indicating possible future expectations, events or actions. Such forward-looking statements are based on current expectations, assumptions, estimates and projections about our business and our industry, and are not guarantees of our future performance. These statements are subject to a number of known and unknown risks, uncertainties and other factors, many of which are beyond our ability to control or predict, which may cause actual events to be materially different from those expressed or implied herein, including but not limited to: the early termination for non-renewal of contracts; our ability to successfully respond to governmental requests for proposal; our ability to fulfill our contractual obligations; our ability to identify and successfully complete and integrate acquisitions; our ability to identify and realize the benefits of strategic initiatives; the loss of any of the significant payors from whom we generate a significant amount of our revenue; our ability to accurately estimate the cost of performing under certain capitated contracts; our ability to match the timing of the costs of new contracts with its related revenue; the outcome of pending or future litigation; our ability to attract and retain senior management and other qualified employees; our ability to successfully complete recent divestitures or business termination; the accuracy of representations and warranties and strength of related indemnities provided to us in acquisitions or claims made against us for representations and warranties and related indemnities in our dispositions; our ability to effectively compete in the marketplace; inadequacies in or security breaches of our information technology systems, including our ability to protect private data; seasonal fluctuations in our operations; impairment of long-lived assets; the adequacy of our insurance coverage for automobile, general liability, professional liability and workers’ compensation; damage to our reputation by inaccurate, misleading or negative media coverage; our ability to comply with government healthcare and other regulations; changes in budgetary priorities of government entities that fund our services; failure to adequately comply with patient and service user information regulations; possible actions under Medicare and Medicaid programs for false claims or recoupment of funds for noncompliance; changes in the regulatory landscape applicable to Matrix; changes to our estimated income tax liability from audits or otherwise; our ability to meet restrictive covenants in our credit agreement; restrictions in the terms of our preferred stock; the costs of complying with public company reporting obligations; and the accuracy of our accounting estimates and assumptions.

The Company has provided additional information in our annual report on Form 10-K and subsequent filings with the Securities and Exchange Commission. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made. We undertake no obligation to update or revise any forward- looking statements contained in this release, whether as a result of new information, future events or otherwise, except as required by applicable law.

Investor Relations Contact
Kalle Ahl, The Equity Group
(212) 836-9614
kahl@equityny.com

 
The Providence Service Corporation
Unaudited Condensed Consolidated Statements of Operations
(in thousands except share and per share data)
         
  Quarter ended December 31, Year ended December 31,
  2019 2018 2019 2018
         
Service revenue, net $384,833  $360,762  $1,509,944  $1,384,965 
         
Operating expenses:        
Service expense 358,436  319,241  1,401,152  1,253,608 
General and administrative expense 15,003  24,011  67,244  77,093 
Asset impairment charge —  13,497  —  14,175 
Depreciation and amortization 3,840  4,706  16,816  15,813 
Total operating expenses 377,279  361,455  1,485,212  1,360,689 
Operating income (loss) 7,554  (693) 24,732  24,276 
         
Other expenses (income):        
Interest expense, net 57  976  850  1,783 
Other income (78) —  (277) — 
Equity in net loss of investee 23,526  2,052  29,685  6,158 
Gain on remeasurement of cost method investment —  —  —  (6,577)
(Loss) income from continuing operations before income taxes (15,951) (3,721) (5,526) 22,912 
(Benefit) provision for income taxes (4,513) (2,267) (573) 4,684 
(Loss) income from continuing operations, net of tax (11,438) (1,454) (4,953) 18,228 
Income (loss) from discontinued operations, net of tax 5,380  (19,026) 5,919  (37,053)
Net (loss) income (6,058) (20,480) 966  (18,825)
Net income (loss) from discontinued operations attributable to noncontrolling interest —  130  —  (156)
Net (loss) income attributable to Providence $(6,058) $(20,350) $966  $(18,981)
         
Net loss attributable to common stockholders $(7,167) $(21,462) $(3,437) $(25,257)
         
Basic (loss) earnings per common share:        
Continuing operations $(0.97) $(0.20) $(0.72) $0.92 
Discontinued operations 0.42  (1.47) 0.46  (2.87)
Basic loss per common share $(0.55) $(1.67) $(0.26) $(1.95)
         
Diluted (loss) earnings per common share:        
Continuing operations $(0.97) (0.20) $(0.72) $0.92 
Discontinued operations 0.42  (1.47) 0.46  (2.86)
Diluted loss per common share $(0.55) $(1.67) $(0.26) $(1.94)
         
Weighted-average number of common        
shares outstanding:        
Basic 12,982,731  12,867,169  12,958,713  12,960,837 
Diluted 12,982,731  12,867,169  12,958,713  13,033,247 


The Providence Service Corporation
Condensed Consolidated Balance Sheets
(in thousands)
     
  December 31,
2019		 December 31,
2018
Assets    
Current assets:    
Cash and cash equivalents $61,365  $5,678 
Accounts receivable, net of allowance 180,416  147,756 
Other current assets (1) 14,491  50,495 
Current assets of discontinued operations (2) 155  7,051 
Total current assets 256,427  210,980 
Operating lease right-of-use assets 20,095  — 
Property and equipment, net 23,243  22,965 
Goodwill and intangible assets, net 155,127  161,362 
Equity investment 130,869  161,503 
Other long-term assets (3) 11,620  12,835 
Total assets $597,381  $569,645 
     
Liabilities, redeemable convertible preferred stock and stockholders' equity
Current liabilities:    
Current portion of long-term obligations $308  $718 
Current portion of operating lease liabilities 6,730  — 
Other current liabilities (4) 141,718  138,908 
Current liabilities of discontinued operations (2) 1,430  3,257 
Total current liabilities 150,186  142,883 
Long-term obligations, less current portion 45  353 
Operating lease liabilities, less current portion 14,502  — 
Other long-term liabilities (5) 37,936  38,019 
Total liabilities 202,669  181,255 
     
Mezzanine and stockholders' equity    
Convertible preferred stock, net 77,120  77,392 
Stockholders' equity 317,592  310,998 
Total liabilities, redeemable convertible preferred stock and stockholders' equity $597,381  $569,645 

(1) Includes other receivables, prepaid expenses and other, and short-term restricted cash.
(2) Includes assets or liabilities primarily related to WD Services' former Saudi Arabian operation.
(3) Includes other assets and long-term restricted cash.
(4) Includes accounts payable, accrued expenses, accrued transportation costs, deferred revenue and self-funded insurance programs.
(5) Includes other long-term liabilities and deferred tax liabilities.


The Providence Service Corporation
Condensed Consolidated Statements of Cash Flows
(in thousands) (1)
     
  Year ended December 31,
  2019 2018
Operating activities    
Net income (loss) $966  $(18,825)
Depreciation and amortization 16,816  27,677 
Stock-based compensation 5,414  8,993 
Asset impairment charge —  23,378 
Equity in net loss of investee 29,685  6,072 
Gain on remeasurement of cost method investment —  (6,577)
Other non-cash items 4,442  5,676 
Loss on sale of business, net of tax —  1,831 
Changes in working capital 3,617  (40,326)
Net cash provided by operating activities 60,940  7,899 
Investing activities    
Purchase of property and equipment (10,858) (17,521)
Acquisition, net of cash acquired —  (43,711)
Dispositions, net of cash sold —  12,780 
Proceeds from note receivable —  3,130 
Net cash used in investing activities (10,858) (45,322)
Financing activities    
Preferred stock dividends (4,403) (4,413)
Repurchase of common stock, for treasury (6,797) (56,088)
Proceeds from common stock issued pursuant to stock option exercise 11,142  12,413 
Capital lease payments and other (718) (3,467)
Net cash used in financing activities (776) (51,555)
Effect of exchange rate changes on cash —  (261)
Net change in cash and cash equivalents 49,306  (89,239)
Cash, cash equivalents and restricted cash at beginning of period 12,367  101,606 
Cash, cash equivalents and restricted cash at end of period $61,673  $12,367 

(1) Includes both continuing and discontinued operations.


The Providence Service Corporation
Reconciliation of Non-GAAP Financial Measures
Segment Information and Adjusted EBITDA
(in thousands) (Unaudited)
 
 Quarter ended December 31, 2019
 NET
Services		 Matrix
Investment		 Total
Continuing
Operations
      
Service revenue, net$384,833  $—  $384,833 
      
Operating expenses:     
Service expense358,436  —  358,436 
General and administrative expense15,003  —  15,003 
Depreciation and amortization3,840  —  3,840 
Total operating expenses377,279  —  377,279 
      
Operating income7,554  —  7,554 
      
Other expenses (income):     
Interest expense, net57  —  57 
Other income(78) —  (78)
Equity in net loss of investee—  23,526  23,526 
Income (loss) from continuing     
operations before income taxes7,575  (23,526) (15,951)
Provision (benefit) for income taxes1,392  (5,905) (4,513)
Income (loss) from continuing operations, net of taxes6,183  (17,621) (11,438)
      
Interest expense, net57  —  57 
Provision (benefit) for income taxes1,392  (5,905) (4,513)
Depreciation and amortization3,840  —  3,840 
      
EBITDA11,472  (23,526) (12,054)
      
Restructuring and related charges (1)1,321  —  1,321 
Transaction cost benefits (2)(2,595) —  (2,595)
Equity in net loss of investee—  23,526  23,526 
      
Adjusted EBITDA$10,198  $—  $10,198 

(1) Restructuring and related charges include professional services costs of $853, organizational consolidation costs of $312 and severance costs of $156.
(2) Transaction cost benefits related to a positive adjustment from the amendment of the Circulation management incentive plan ("MIP").

 

The Providence Service Corporation
Reconciliation of Non-GAAP Financial Measures
Segment Information and Adjusted EBITDA
(in thousands) (Unaudited)
 
 Quarter ended December 31, 2018
 NET
Services 		 Matrix
Investment		 Total
Continuing
Operations
      
Service revenue, net$360,762  $—  $360,762 
      
Operating expenses:     
Service expense319,241  —  319,241 
General and administrative expense24,011  —  24,011 
Asset impairment charge13,497  —  13,497 
Depreciation and amortization4,706  —  4,706 
Total operating expenses361,455  —  361,455 
      
Operating loss(693) —  (693)
      
Other expenses:     
Interest expense, net976  —  976 
Equity in net loss of investee—  2,052  2,052 
Loss from continuing     
operations, before income tax(1,669) (2,052) (3,721)
Benefit for income taxes(1,487) (780) (2,267)
Loss from continuing operations, net of taxes(182) (1,272) (1,454)
      
Interest expense, net976  —  976 
Benefit for income taxes(1,487) (780) (2,267)
Depreciation and amortization4,706  —  4,706 
      
EBITDA4,013  (2,052) 1,961 
      
Asset impairment charge13,497  —  13,497 
Restructuring and related charges (1)4,424  —  4,424 
Transaction costs (2)5,417  —  5,417 
Equity in net loss of investee—  2,052  2,052 
Other(8) —  (8)
      
      
Adjusted EBITDA$27,343  $—  $27,343 

(1) Restructuring and related charges include organizational consolidation costs of $3,489, value enhancement initiative implementation costs of $587 and severance costs of $348.
(2) Transaction costs include deal costs and MIP related to the acquisition of Circulation and certain other transaction related expenses.


The Providence Service Corporation
Reconciliation of Non-GAAP Financial Measures
Segment Information and Adjusted EBITDA
(in thousands) (Unaudited)
 
 Year ended December 31, 2019
 NET
Services		 Matrix
Investment		 Total
Continuing
Operations
      
Service revenue, net$1,509,944  $—  $1,509,944 
      
Operating expenses:     
Service expense1,401,152  —  1,401,152 
General and administrative expense67,244  —  67,244 
Depreciation and amortization16,816  —  16,816 
Total operating expenses1,485,212  —  1,485,212 
      
Operating income24,732  —  24,732 
      
Other expenses (income):     
Interest expense, net850  —  850 
Other income(277) —  (277)
Equity in net loss of investee—  29,685  29,685 
Income (loss) from continuing     
operations before income tax24,159  (29,685) (5,526)
Provision (benefit) for income taxes6,877  (7,450) (573)
Income (loss) from continuing operations, net of taxes17,282  (22,235) (4,953)
      
Interest expense, net850  —  850 
Provision (benefit) for income taxes6,877  (7,450) (573)
Depreciation and amortization16,816  —  16,816 
      
EBITDA41,825  (29,685) 12,140 
      
Restructuring and related charges (1)6,691  —  6,691 
Transaction costs (2)2,693  —  2,693 
Equity in net loss of investee—  29,685  29,685 
Litigation expense9  —  9 
      
Adjusted EBITDA$51,218  $—  $51,218 

(1) Restructuring and related charges include organizational consolidation costs of $4,027, severance costs of $1,673, and professional services of $991.
(2) Transaction costs include certain transaction-related expenses and Circulation MIP.


The Providence Service Corporation
Reconciliation of Non-GAAP Financial Measures
Segment Information and Adjusted EBITDA
(in thousands) (Unaudited)
 
 Year ended December 31, 2018
 NET
Services		 Matrix
Investment		 Total
Continuing
Operations
      
Service revenue, net$1,384,965  $—  $1,384,965 
      
Operating expenses:     
Service expense1,253,608  —  1,253,608 
General and administrative expense77,093  —  77,093 
Asset impairment charge14,175  —  14,175 
Depreciation and amortization15,813  —  15,813 
Total operating expenses1,360,689  —  1,360,689 
      
Operating income24,276  —  24,276 
      
Other expenses:     
Interest expense, net1,783  —  1,783 
Equity in net loss of investee—  6,158  6,158 
Gain on remeasurement of cost method investment(6,577) —  (6,577)
Income (loss) from continuing     
operations, before income tax29,070  (6,158) 22,912 
Provision (benefit) for income taxes6,248  (1,564) 4,684 
Income (loss) from continuing operations, net of taxes22,822  (4,594) 18,228 
      
Interest expense, net1,783  —  1,783 
Provision (benefit) for income taxes6,248  (1,564) 4,684 
Depreciation and amortization15,813  —  15,813 
      
EBITDA46,666  (6,158) 40,508 
      
Asset impairment charge14,175  —  14,175 
Restructuring and related charges (1)11,546  —  11,546 
Transaction costs (2)7,231  —  7,231 
Equity in net loss of investee—  6,158  6,158 
Gain on remeasurement of cost investment(6,577) —  (6,577)
Litigation income (3)(226) —  (226)
      
      
Adjusted EBITDA$72,815  $—  $72,815 

(1) Restructuring and related charges include organizational consolidation costs of $8,361, value enhancement initiative implementation costs of $2,837 and severance costs of $348.
(2) Transaction costs include deal costs and MIP related to the acquisition of Circulation and certain other transaction related expenses.
(3) Resolution of accruals related to defense cost for a putative stockholder class action derivative complaint.


The Providence Service Corporation
Summary Financial Information of Equity Investment in Matrix Medical Network (1)
(in thousands)
(Unaudited)
 
 Quarter ended December 31, Year ended December 31,
 2019 2018 2019 2018
Revenue$64,584  $65,746  $275,391  $282,067 
Operating expense115,122  57,073  292,725  240,134 
Depreciation and amortization9,920  15,150  43,666  43,119 
Operating loss(60,458) (6,477) (61,000) (1,186)
        
Interest expense5,889  3,506  24,902  25,942 
Benefit for income taxes(12,048) (3,758) (16,549) (7,166)
Net loss(54,299) (6,225) (69,353) (19,962)
        
Interest43.6% 43.6% 43.6% 43.6%
Net loss - Equity Investment$(23,665) $(2,714) $(30,226) $(8,703)
Management fee and other139  662  541  2,545 
Equity in net loss of investee$(23,526) $(2,052) $(29,685) $(6,158)
        
Net Debt (2)$294,167  $304,425     

(1) The results of our equity method investment are excluded from the calculation of Providence's Adjusted EBITDA and Adjusted Net Income.
(2) Net debt represents long-term debt, excluding deferred financing costs, less cash.


The Providence Service Corporation
Reconciliation of Non-GAAP Financial Measures
Adjusted EBITDA: Matrix Medical Network (1)
(in thousands) (Unaudited)
 
 Quarter ended December 31, Year ended December 31,
 2019 2018 2019 2018
Revenue$64,584  $65,746  $275,391  $282,067 
Operating expense115,122  57,073  292,725  240,134 
Depreciation and amortization9,920  15,150  43,666  43,119 
Operating loss(60,458) (6,477) (61,000) (1,186)
        
Interest expense5,889  3,506  24,902  25,942 
Benefit for income taxes(12,048) (3,758) (16,549) (7,166)
Net loss(54,299) (6,225) (69,353) (19,962)
        
Depreciation and amortization9,920  15,150  43,666  43,119 
Interest expense5,889  3,506  24,902  25,942 
Benefit for income taxes(12,048) (3,758) (16,549) (7,166)
EBITDA(50,538) 8,673   (17,334) 41,933  
        
Asset impairment charge55,056  —  55,056  — 
Management fees398  550  2,196  4,887 
Acquisition costs—  —  —  2,341 
Integration costs—  2,231  1,488  6,524 
Severance costs1,122  —  1,893  — 
Transaction costs302  1,004  721  1,010 
Adjusted EBITDA$6,340   $12,458   $44,020   $56,695  

(1) Providence accounts for its proportionate share of Matrix's results using the equity method. Matrix's Adjusted EBITDA is not included within Providence's Adjusted EBITDA in any period presented.


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)
 
 Quarter ended December 31, Year ended December 31,
 2019 2018 2019 2018
        
Loss from continuing operations, net of tax$(11,438) $(1,454) $(4,953) $18,228 
        
Asset impairment charge—  13,497  —  14,175 
Restructuring and related charges, including accelerated depreciation related to the organizational consolidation (1)1,321  4,569  7,007  11,984 
Transaction costs (2)(2,595) 5,417  2,693  7,231 
Equity in net loss of investee23,526  2,052  29,685  6,158 
Gain on remeasurement of cost method investment—  —  —  (6,577)
Intangible amortization expense1,558  1,565  6,234  3,755 
Litigation (income) expense, net—  (8) 9  (226)
Tax effected impact of adjustments(4,459) (8,438) (11,448) (9,849)
        
Adjusted Net Income7,913  17,200  29,227  44,879 
   .    
Dividends on convertible preferred stock(1,108) (1,112) (4,403) (4,420)
Income allocated to participating securities(910) (2,174) (3,324) (5,438)
        
Adjusted Net Income available to common stockholders$5,895  $13,914  $21,500  $35,021 
        
Adjusted EPS$0.45  $1.08  $1.65  $2.69 
        
Diluted weighted-average number of common shares outstanding13,032,551  12,926,598  13,009,141  13,033,247 

(1) Restructuring and related charges include value enhancement implementation costs, severance, organization consolidation costs and professional fees. 
(2) Transaction costs include deal costs and MIP related to Circulation acquisition and certain other transaction-related expenses.


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