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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Providence Service Corp | NASDAQ:PRSC | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 155.58 | 132.65 | 158.55 | 0 | 01:00:00 |
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☒
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
Delaware
|
|
86-0845127
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(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
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|
Page
|
|
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|
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Condensed Consolidated Balance Sheets – March 31, 2018 (unaudited) and December 31, 2017
|
|
|
|
|
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Unaudited Condensed Consolidated Statements of Income – Three months ended March 31, 2018 and 2017
|
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|
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Unaudited Condensed Consolidated Statements of Comprehensive Income – Three months ended March 31, 2018 and 2017
|
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|
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|
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Unaudited Condensed Consolidated Statements of Cash Flows – Three months ended March 31, 2018 and 2017
|
|
|
|
|
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Notes to the Unaudited Condensed Consolidated Financial Statements – March 31, 2018
|
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Item 1A.
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
2018 |
|
December 31,
2017 |
||||
|
(Unaudited)
|
|
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
86,229
|
|
|
$
|
95,310
|
|
Accounts receivable, net of allowance of $5,784 in 2018 and $5,762 in 2017
|
173,176
|
|
|
158,926
|
|
||
Other receivables
|
4,542
|
|
|
5,759
|
|
||
Prepaid expenses and other
|
52,646
|
|
|
35,243
|
|
||
Restricted cash
|
1,597
|
|
|
1,091
|
|
||
Total current assets
|
318,190
|
|
|
296,329
|
|
||
Property and equipment, net
|
50,447
|
|
|
50,377
|
|
||
Goodwill
|
122,540
|
|
|
121,668
|
|
||
Intangible assets, net
|
42,962
|
|
|
43,939
|
|
||
Equity investments
|
166,276
|
|
|
169,912
|
|
||
Other assets
|
11,206
|
|
|
12,028
|
|
||
Restricted cash, less current portion
|
4,267
|
|
|
5,205
|
|
||
Deferred tax asset
|
4,355
|
|
|
4,632
|
|
||
Total assets
|
$
|
720,243
|
|
|
$
|
704,090
|
|
Liabilities, redeemable convertible preferred stock and stockholders' equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Current portion of long-term obligations
|
$
|
1,712
|
|
|
$
|
2,400
|
|
Accounts payable
|
19,009
|
|
|
15,404
|
|
||
Accrued expenses
|
105,258
|
|
|
103,838
|
|
||
Accrued transportation costs
|
100,270
|
|
|
83,588
|
|
||
Deferred revenue
|
28,745
|
|
|
17,381
|
|
||
Reinsurance and related liability reserves
|
4,802
|
|
|
4,319
|
|
||
Total current liabilities
|
259,796
|
|
|
226,930
|
|
||
Long-term obligations, less current portion
|
644
|
|
|
584
|
|
||
Other long-term liabilities
|
20,499
|
|
|
21,386
|
|
||
Deferred tax liabilities
|
40,704
|
|
|
41,627
|
|
||
Total liabilities
|
321,643
|
|
|
290,527
|
|
||
Commitments and contingencies (Note 13)
|
|
|
|
||||
Redeemable convertible preferred stock
|
|
|
|
||||
Convertible preferred stock, net: Authorized 10,000,000 shares; $0.001 par value; 803,200 and 803,200 issued and outstanding; 5.5%/8.5% dividend rate
|
77,546
|
|
|
77,546
|
|
||
Stockholders' equity
|
|
|
|
||||
Common stock: Authorized 40,000,000 shares; $0.001 par value; 17,710,006 and 17,473,598 issued and outstanding (including treasury shares)
|
18
|
|
|
17
|
|
||
Additional paid-in capital
|
323,966
|
|
|
313,955
|
|
||
Retained earnings
|
214,869
|
|
|
204,818
|
|
||
Accumulated other comprehensive loss, net of tax
|
(23,879
|
)
|
|
(25,805
|
)
|
||
Treasury shares, at cost, 4,712,937 and 4,126,132 shares
|
(191,970
|
)
|
|
(154,803
|
)
|
||
Total Providence stockholders' equity
|
323,004
|
|
|
338,182
|
|
||
Noncontrolling interest
|
(1,950
|
)
|
|
(2,165
|
)
|
||
Total stockholders' equity
|
321,054
|
|
|
336,017
|
|
||
Total liabilities, redeemable convertible preferred stock and stockholders' equity
|
$
|
720,243
|
|
|
$
|
704,090
|
|
|
Three months ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Service revenue, net
|
$
|
406,046
|
|
|
$
|
399,494
|
|
|
|
|
|
||||
Operating expenses:
|
|
|
|
||||
Service expense
|
371,235
|
|
|
369,410
|
|
||
General and administrative expense
|
18,413
|
|
|
17,027
|
|
||
Depreciation and amortization
|
6,798
|
|
|
6,269
|
|
||
Total operating expenses
|
396,446
|
|
|
392,706
|
|
||
|
|
|
|
||||
Operating income
|
9,600
|
|
|
6,788
|
|
||
|
|
|
|
||||
Other expenses:
|
|
|
|
||||
Interest expense, net
|
326
|
|
|
352
|
|
||
Equity in net (gain) loss of investees
|
2,321
|
|
|
2,060
|
|
||
Loss (gain) on foreign currency transactions
|
(623
|
)
|
|
(62
|
)
|
||
Income from continuing operations before income taxes
|
7,576
|
|
|
4,438
|
|
||
Provision for income taxes
|
1,842
|
|
|
2,523
|
|
||
Income from continuing operations, net of tax
|
5,734
|
|
|
1,915
|
|
||
Discontinued operations, net of tax
|
(8
|
)
|
|
(5,866
|
)
|
||
Net income (loss)
|
5,726
|
|
|
(3,951
|
)
|
||
Net loss (income) attributable to noncontrolling interests
|
(296
|
)
|
|
(374
|
)
|
||
Net income (loss) attributable to Providence
|
$
|
5,430
|
|
|
$
|
(4,325
|
)
|
|
|
|
|
||||
Net income (loss) available to common stockholders (Note 11)
|
$
|
3,762
|
|
|
$
|
(5,473
|
)
|
|
|
|
|
||||
Basic earnings (loss) per common share:
|
|
|
|
||||
Continuing operations
|
$
|
0.29
|
|
|
$
|
0.03
|
|
Discontinued operations
|
—
|
|
|
(0.43
|
)
|
||
Basic earnings (loss) per common share
|
$
|
0.29
|
|
|
$
|
(0.40
|
)
|
|
|
|
|
||||
Diluted earnings (loss) per common share:
|
|
|
|
||||
Continuing operations
|
$
|
0.29
|
|
|
$
|
0.03
|
|
Discontinued operations
|
—
|
|
|
(0.43
|
)
|
||
Diluted earnings (loss) per common share
|
$
|
0.29
|
|
|
$
|
(0.40
|
)
|
|
|
|
|
||||
Weighted-average number of common shares outstanding:
|
|
|
|
||||
Basic
|
13,105,965
|
|
|
13,704,272
|
|
||
Diluted
|
13,199,440
|
|
|
13,768,524
|
|
|
Three months ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Net income (loss)
|
$
|
5,726
|
|
|
$
|
(3,951
|
)
|
Net income attributable to noncontrolling interest
|
(296
|
)
|
|
(374
|
)
|
||
Net income (loss) attributable to Providence
|
5,430
|
|
|
(4,325
|
)
|
||
Other comprehensive income:
|
|
|
|
||||
Foreign currency translation adjustments, net of tax
|
1,926
|
|
|
1,201
|
|
||
Other comprehensive income:
|
1,926
|
|
|
1,201
|
|
||
Comprehensive income (loss)
|
7,652
|
|
|
(2,750
|
)
|
||
Comprehensive income attributable to noncontrolling interest
|
(215
|
)
|
|
(351
|
)
|
||
Comprehensive income (loss) attributable to Providence
|
$
|
7,437
|
|
|
$
|
(3,101
|
)
|
|
Three months ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Operating activities
|
|
|
|
||||
Net (loss) income
|
$
|
5,726
|
|
|
$
|
(3,951
|
)
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation
|
4,728
|
|
|
4,306
|
|
||
Amortization
|
2,070
|
|
|
1,963
|
|
||
Provision for doubtful accounts
|
16
|
|
|
198
|
|
||
Stock-based compensation
|
933
|
|
|
1,466
|
|
||
Deferred income taxes
|
(447
|
)
|
|
(2,795
|
)
|
||
Amortization of deferred financing costs and debt discount
|
166
|
|
|
175
|
|
||
Equity in net loss of investees
|
2,321
|
|
|
2,060
|
|
||
Other non-cash charges (credits)
|
(611
|
)
|
|
(61
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
(12,414
|
)
|
|
1,063
|
|
||
Prepaid expenses and other
|
(3,232
|
)
|
|
(1,906
|
)
|
||
Reinsurance and related liability reserve
|
(820
|
)
|
|
(1,404
|
)
|
||
Accounts payable and accrued expenses
|
2,250
|
|
|
12,339
|
|
||
Accrued transportation costs
|
16,683
|
|
|
18,599
|
|
||
Deferred revenue
|
7,660
|
|
|
2,007
|
|
||
Other long-term liabilities
|
589
|
|
|
2,139
|
|
||
Net cash provided by operating activities
|
25,618
|
|
|
36,198
|
|
||
Investing activities
|
|
|
|
||||
Purchase of property and equipment
|
(4,987
|
)
|
|
(5,738
|
)
|
||
Net increase from short-term investments
|
—
|
|
|
(3
|
)
|
||
Loan to joint venture
|
—
|
|
|
(566
|
)
|
||
Net cash used in investing activities
|
(4,987
|
)
|
|
(6,307
|
)
|
||
Financing activities
|
|
|
|
||||
Preferred stock dividends
|
(1,089
|
)
|
|
(1,090
|
)
|
||
Repurchase of common stock, for treasury
|
(37,167
|
)
|
|
(18,753
|
)
|
||
Proceeds from common stock issued pursuant to stock option exercise
|
9,301
|
|
|
99
|
|
||
Capital lease payments and other
|
(1,304
|
)
|
|
(670
|
)
|
||
Net cash used in financing activities
|
(30,259
|
)
|
|
(20,414
|
)
|
||
Effect of exchange rate changes on cash
|
115
|
|
|
548
|
|
||
Net change in cash and cash equivalents
|
(9,513
|
)
|
|
10,025
|
|
||
Cash, cash equivalents and restricted cash at beginning of period
|
101,606
|
|
|
86,392
|
|
||
Cash, cash equivalents and restricted cash at end of period
|
$
|
92,093
|
|
|
$
|
96,417
|
|
|
|
|
|
||||
Supplemental cash flow information:
|
|
|
|
||||
Cash paid for interest
|
$
|
221
|
|
|
$
|
254
|
|
Cash paid for income taxes
|
$
|
463
|
|
|
$
|
454
|
|
Purchase of equipment through capital lease obligation
|
$
|
677
|
|
|
$
|
—
|
|
•
|
Non-Emergency Transportation Services (“NET Services”) – Nationwide manager of non-emergency medical transportation (“NET”) programs for state governments and managed care organizations.
|
•
|
Workforce Development Services (“WD Services”) – Global provider of employment preparation and placement services, legal offender rehabilitation services, youth community service programs and certain health related services to eligible participants of government sponsored programs.
|
•
|
Matrix Investment – Minority interest in CCHN Group Holdings, Inc. and its subsidiaries (“Matrix”), a nationwide provider of in-home care optimization and management solutions, including comprehensive health assessments (“CHAs”), to members of managed care organizations, accounted for as an equity method investment. On February 16, 2018, Matrix acquired HealthFair, expanding its service offerings to include mobile health assessments, advanced diagnostic testing, and additional care optimization services.
|
|
Balance at December 31, 2017
|
|
Adjustments due to ASU 2014-09
|
|
Balance at January 1, 2018
|
||||||
Assets
|
|
|
|
|
|
||||||
Prepaid expenses and other
|
$
|
35,243
|
|
|
$
|
11,182
|
|
|
$
|
46,425
|
|
|
|
|
|
|
|
||||||
Liabilities
|
|
|
|
|
|
||||||
Accrued expenses
|
103,838
|
|
|
2,330
|
|
|
106,168
|
|
|||
Deferred revenue
|
17,381
|
|
|
3,112
|
|
|
20,493
|
|
|||
Deferred tax liability
|
41,627
|
|
|
30
|
|
|
41,657
|
|
|||
|
|
|
|
|
|
||||||
Equity
|
|
|
|
|
|
||||||
Retained earnings, net of tax
|
204,818
|
|
|
5,710
|
|
|
210,528
|
|
|
Three months ended March 31, 2018
|
||||||
Statement of Income
|
As Reported
|
|
Pro forma as if the previous accounting guidance was in effect
|
||||
Service revenue, net
|
$
|
406,046
|
|
|
$
|
415,348
|
|
Service expense
|
371,235
|
|
|
377,086
|
|
||
Operating income
|
9,600
|
|
|
13,052
|
|
||
Income from continuing operations before taxes
|
7,576
|
|
|
11,028
|
|
||
Net income attributable to Providence
|
5,430
|
|
|
8,099
|
|
||
Diluted earnings per share
|
0.29
|
|
|
0.46
|
|
||
|
|
|
|
||||
|
March 31, 2018
|
||||||
Balance Sheet
|
As Reported
|
|
Pro forma as if the previous accounting guidance was in effect
|
||||
Prepaid expenses and other
|
$
|
52,646
|
|
|
$
|
41,177
|
|
Accrued expenses
|
105,258
|
|
|
103,325
|
|
||
Deferred revenue
|
28,745
|
|
|
21,603
|
|
||
Deferred tax liabilities
|
40,704
|
|
|
41,356
|
|
||
Retained earnings, net of tax
|
214,869
|
|
|
211,823
|
|
State Medicaid agency contracts
|
$
|
177,289
|
|
Managed care organization contracts
|
159,407
|
|
|
Total NET Services revenue, net
|
$
|
336,696
|
|
|
|
||
Capitated contracts
|
$
|
284,402
|
|
Non-capitated contracts
|
52,294
|
|
|
Total NET Services revenue, net
|
$
|
336,696
|
|
Employment preparation and placement services
|
$
|
42,023
|
|
Legal offender rehabilitation services
|
23,212
|
|
|
Other
|
4,115
|
|
|
Total WD Services revenue, net
|
$
|
69,350
|
|
|
United
States |
|
United
Kingdom |
|
Other
Foreign |
|
Total
|
||||||||
NET Services
|
$
|
336,696
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
336,696
|
|
WD Services
|
4,412
|
|
|
40,086
|
|
|
24,852
|
|
|
69,350
|
|
||||
Total
|
$
|
341,108
|
|
|
$
|
40,086
|
|
|
$
|
24,852
|
|
|
$
|
406,046
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
Accounts receivable
|
$
|
132,125
|
|
|
$
|
122,634
|
|
Allowance for doubtful accounts
|
(5,784
|
)
|
|
(5,762
|
)
|
||
NET Services' reconciliation contract receivable
|
46,835
|
|
|
42,054
|
|
||
|
$
|
173,176
|
|
|
$
|
158,926
|
|
|
March 31, 2018
|
|
March 31, 2017
|
||||
Cash and cash equivalents
|
$
|
86,229
|
|
|
$
|
82,882
|
|
Restricted cash, current
|
1,597
|
|
|
2,624
|
|
||
Restricted cash, less current portion
|
4,267
|
|
|
10,911
|
|
||
Cash, cash equivalents and restricted cash
|
$
|
92,093
|
|
|
$
|
96,417
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
Current assets
|
$
|
54,901
|
|
|
$
|
37,563
|
|
Long-term assets
|
745,136
|
|
|
597,613
|
|
||
Current liabilities
|
28,365
|
|
|
27,718
|
|
||
Long-term liabilities
|
376,141
|
|
|
240,513
|
|
|
Three months ended
March 31, 2018 |
|
Three months ended
March 31, 2017 |
||||
Revenue
|
$
|
67,429
|
|
|
$
|
55,855
|
|
Operating (loss) income
|
(789
|
)
|
|
1,008
|
|
||
Net loss
|
(8,518
|
)
|
|
(1,857
|
)
|
|
March 31,
2018 |
|
December 31,
2017 |
||||
Prepaid income taxes
|
$
|
885
|
|
|
$
|
1,106
|
|
Escrow funds
|
10,000
|
|
|
10,000
|
|
||
Contract asset
|
8,739
|
|
|
—
|
|
||
Prepaid insurance
|
1,224
|
|
|
2,121
|
|
||
Prepaid taxes and licenses
|
3,258
|
|
|
906
|
|
||
Note receivable
|
3,130
|
|
|
3,224
|
|
||
Prepaid rent
|
1,933
|
|
|
2,268
|
|
||
Deposits held for leased premises and bonds
|
3,012
|
|
|
2,849
|
|
||
Costs to fulfill a contract
|
8,059
|
|
|
2,543
|
|
||
Other
|
12,406
|
|
|
10,226
|
|
||
Total prepaid expenses and other
|
$
|
52,646
|
|
|
$
|
35,243
|
|
|
March 31,
2018 |
|
December 31, 2017
|
||||
Accrued compensation
|
$
|
24,574
|
|
|
$
|
33,653
|
|
NET Services accrued contract payments
|
18,845
|
|
|
17,487
|
|
||
Accrued settlement
|
15,000
|
|
|
15,000
|
|
||
Income taxes payable
|
5,423
|
|
|
3,723
|
|
||
Other
|
41,416
|
|
|
33,975
|
|
||
Total accrued expenses
|
$
|
105,258
|
|
|
$
|
103,838
|
|
|
January 1,
2018 |
|
Costs
Incurred
|
|
Cash Payments
|
|
Foreign Exchange
Rate Adjustments
|
|
March 31, 2018
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Ingeus Futures Program
|
$
|
482
|
|
|
$
|
1,380
|
|
|
$
|
(1,172
|
)
|
|
$
|
(10
|
)
|
|
$
|
680
|
|
Delivery First Program
|
1,287
|
|
|
(20
|
)
|
|
(795
|
)
|
|
44
|
|
|
516
|
|
|||||
Total
|
$
|
1,769
|
|
|
$
|
1,360
|
|
|
$
|
(1,967
|
)
|
|
$
|
34
|
|
|
$
|
1,196
|
|
|
January 1,
2017 |
|
Costs
Incurred
|
|
Cash Payments
|
|
Foreign Exchange
Rate Adjustments
|
|
March 31, 2017
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Ingeus Futures Program
|
$
|
2,486
|
|
|
$
|
553
|
|
|
$
|
(152
|
)
|
|
$
|
29
|
|
|
$
|
2,916
|
|
Offender Rehabilitation Program
|
1,380
|
|
|
—
|
|
|
(1,120
|
)
|
|
9
|
|
|
269
|
|
|||||
UK Restructuring Program
|
50
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
51
|
|
|||||
Total
|
$
|
3,916
|
|
|
$
|
553
|
|
|
$
|
(1,272
|
)
|
|
$
|
39
|
|
|
$
|
3,236
|
|
|
Common Stock
|
|
Additional Paid-In Capital
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive Loss
|
|
Treasury Stock
|
|
Non-controlling Interest
|
|
Total
|
||||||||||||||||||||
|
Shares
|
|
Amount
|
|
|
|
|
Shares
|
|
Amount
|
|
|
|||||||||||||||||||||
Balance at December 31, 2017
|
17,473,598
|
|
|
$
|
17
|
|
|
$
|
313,955
|
|
|
$
|
204,818
|
|
|
$
|
(25,805
|
)
|
|
4,126,132
|
|
|
$
|
(154,803
|
)
|
|
$
|
(2,165
|
)
|
|
$
|
336,017
|
|
Stock-based compensation
|
—
|
|
|
—
|
|
|
993
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
993
|
|
|||||||
Exercise of employee stock options
|
212,789
|
|
|
1
|
|
|
8,819
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,820
|
|
|||||||
Restricted stock issued
|
20,904
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,778
|
|
|
(237
|
)
|
|
—
|
|
|
(237
|
)
|
|||||||
Performance restricted stock issued
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Shares issued for bonus settlement and director stipend
|
2,715
|
|
|
|
|
|
150
|
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
150
|
|
|||||||
Stock repurchase plan
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
583,027
|
|
|
(36,930
|
)
|
|
—
|
|
|
(36,930
|
)
|
|||||||
Conversion of convertible preferred stock to common stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Foreign currency translation adjustments, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,926
|
|
|
—
|
|
|
—
|
|
|
(81
|
)
|
|
1,845
|
|
|||||||
Reclassification of translation loss realized upon sale of equity investment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Convertible preferred stock dividends
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,089
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,089
|
)
|
|||||||
Noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
296
|
|
|
296
|
|
|||||||
Other
|
—
|
|
|
—
|
|
|
49
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
49
|
|
|||||||
Net income attributable to Providence
|
—
|
|
|
—
|
|
|
—
|
|
|
5,430
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,430
|
|
|||||||
Cumulative effect adjustment from change in accounting principle
|
—
|
|
|
—
|
|
|
—
|
|
|
5,710
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,710
|
|
|||||||
Balance at March 31, 2018
|
17,710,006
|
|
|
$
|
18
|
|
|
$
|
323,966
|
|
|
$
|
214,869
|
|
|
$
|
(23,879
|
)
|
|
4,712,937
|
|
|
$
|
(191,970
|
)
|
|
$
|
(1,950
|
)
|
|
$
|
321,054
|
|
|
Three months ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Service expense
|
$
|
56
|
|
|
$
|
124
|
|
General and administrative expense
|
877
|
|
|
1,342
|
|
||
Equity in net loss of investees
|
60
|
|
|
27
|
|
||
Total stock-based compensation
|
$
|
993
|
|
|
$
|
1,493
|
|
|
Three months ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Numerator:
|
|
|
|
||||
Net income attributable to Providence
|
$
|
5,430
|
|
|
$
|
(4,325
|
)
|
Less dividends on convertible preferred stock
|
(1,089
|
)
|
|
(1,090
|
)
|
||
Less income allocated to participating securities
|
(579
|
)
|
|
(58
|
)
|
||
Net income (loss) available to common stockholders
|
$
|
3,762
|
|
|
$
|
(5,473
|
)
|
|
|
|
|
||||
Continuing operations
|
$
|
3,770
|
|
|
$
|
394
|
|
Discontinued operations
|
(8
|
)
|
|
(5,867
|
)
|
||
|
$
|
3,762
|
|
|
$
|
(5,473
|
)
|
|
|
|
|
||||
Denominator:
|
|
|
|
||||
Denominator for basic earnings per share -- weighted-average shares
|
13,105,965
|
|
|
13,704,272
|
|
||
Effect of dilutive securities:
|
|
|
|
||||
Common stock options
|
88,791
|
|
|
58,313
|
|
||
Performance-based restricted stock units
|
4,684
|
|
|
5,939
|
|
||
Denominator for diluted earnings per share -- adjusted weighted-average shares assumed conversion
|
13,199,440
|
|
|
13,768,524
|
|
||
|
|
|
|
||||
Basic earnings (loss) per share:
|
|
|
|
||||
Continuing operations
|
$
|
0.29
|
|
|
$
|
0.03
|
|
Discontinued operations
|
—
|
|
|
(0.43
|
)
|
||
|
$
|
0.29
|
|
|
$
|
(0.40
|
)
|
Diluted earnings (loss) per share:
|
|
|
|
||||
Continuing operations
|
$
|
0.29
|
|
|
$
|
0.03
|
|
Discontinued operations
|
—
|
|
|
(0.43
|
)
|
||
|
$
|
0.29
|
|
|
$
|
(0.40
|
)
|
|
Three months ended March 31,
|
||||
|
2018
|
|
2017
|
||
Stock options to purchase common stock
|
12,142
|
|
|
165,371
|
|
Convertible preferred stock
|
803,200
|
|
|
803,398
|
|
|
Three months ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
|
|
|
|
||||
Operating expenses:
|
|
|
|
||||
General and administrative expense
|
$
|
11
|
|
|
$
|
9,406
|
|
Total operating expenses
|
11
|
|
|
9,406
|
|
||
Loss from discontinued operations before income taxes
|
(11
|
)
|
|
(9,406
|
)
|
||
Income tax benefit
|
3
|
|
|
3,540
|
|
||
Discontinued operations, net of tax
|
$
|
(8
|
)
|
|
$
|
(5,866
|
)
|
•
|
NET Services – Nationwide manager of NET programs for state governments and managed care organizations.
|
•
|
WD Services – Global provider of employment preparation and placement services, legal offender rehabilitation services, youth community service programs and certain health related services to eligible participants of government sponsored programs.
|
•
|
Matrix Investment – Minority interest in Matrix, a nationwide provider of in-home care optimization and management solutions, including CHAs, to members of managed care organizations, accounted for as an equity method investment. On February 16, 2018, Matrix acquired HealthFair, expanding its service offerings to include mobile health assessments, advanced diagnostic testing, and additional care optimization services.
|
|
Three months ended March 31, 2018
|
||||||||||||||||||
|
NET Services
|
|
WD Services
|
|
Matrix
Investment
|
|
Corporate and
Other
|
|
Total
|
||||||||||
Service revenue, net
|
$
|
336,696
|
|
|
$
|
69,350
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
406,046
|
|
Service expense
|
310,701
|
|
|
60,534
|
|
|
—
|
|
|
—
|
|
|
371,235
|
|
|||||
General and administrative expense
|
2,937
|
|
|
7,613
|
|
|
—
|
|
|
7,863
|
|
|
18,413
|
|
|||||
Depreciation and amortization
|
3,494
|
|
|
3,218
|
|
|
—
|
|
|
86
|
|
|
6,798
|
|
|||||
Operating income (loss)
|
$
|
19,564
|
|
|
$
|
(2,015
|
)
|
|
$
|
—
|
|
|
$
|
(7,949
|
)
|
|
$
|
9,600
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Equity in net gain (loss) of investee
|
$
|
—
|
|
|
$
|
23
|
|
|
$
|
(2,344
|
)
|
|
$
|
—
|
|
|
$
|
(2,321
|
)
|
|
Three months ended March 31, 2017
|
||||||||||||||||||
|
NET Services
|
|
WD Services
|
|
Matrix
Investment
|
|
Corporate and
Other
|
|
Total
|
||||||||||
Service revenue, net
|
$
|
324,034
|
|
|
$
|
75,460
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
399,494
|
|
Service expense
|
306,192
|
|
|
63,203
|
|
|
—
|
|
|
15
|
|
|
369,410
|
|
|||||
General and administrative expense
|
2,891
|
|
|
7,044
|
|
|
—
|
|
|
7,092
|
|
|
17,027
|
|
|||||
Depreciation and amortization
|
3,151
|
|
|
3,040
|
|
|
—
|
|
|
78
|
|
|
6,269
|
|
|||||
Operating income (loss)
|
$
|
11,800
|
|
|
$
|
2,173
|
|
|
$
|
—
|
|
|
$
|
(7,185
|
)
|
|
$
|
6,788
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Equity in net gain (loss) of investee
|
$
|
—
|
|
|
$
|
(1,400
|
)
|
|
$
|
(660
|
)
|
|
$
|
—
|
|
|
$
|
(2,060
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
•
|
Non-Emergency Transportation Services (“NET Services”) – Nationwide manager of non-emergency medical transportation (“NET”) programs for state governments and managed care organizations.
|
•
|
Workforce Development Services (“WD Services”) – Global provider of employment preparation and placement services, legal offender rehabilitation services, youth community service programs and certain health related services to eligible participants of government sponsored programs.
|
•
|
Matrix Investment – Minority interest in CCHN Group Holdings, Inc. and its subsidiaries (“Matrix”), a nationwide provider of in-home care optimization and management solutions, including comprehensive health assessments (“CHAs”), to members of managed care organizations, accounted for as an equity method investment. On February 16, 2018, Matrix acquired HealthFair, expanding its service offerings to include mobile health assessments, advanced diagnostic testing, and additional care optimization services.
|
•
|
an aging population, which will increase demand for healthcare services;
|
•
|
a movement towards value-based versus fee for service care and budget pressure on governments, both of which may increase the use of private corporations to provide necessary and innovative services;
|
•
|
increasing demand for in-home care provision, driven by cost pressures on traditional reimbursement models and technological advances enabling remote engagement;
|
•
|
technological advancements, which may be utilized by us to improve service and lower costs, but also by others which may increase industry competitiveness;
|
•
|
changes in UK government policy driven by opposition to the government’s outsourcing of the services provided by WD Services to private companies, which opposition may increase in light of recent events in the UK, including the liquidation of the UK government contractor Carillion plc;
|
•
|
the results of the referendum on the UK’s exit from the European Union and related political and economic uncertainty in the UK; and
|
•
|
proposals by the President of the United States and Congress to change the Medicaid program, including considering converting the Medicaid program to a block grant format or capping the federal contribution to state Medicaid programs to a fixed amount per beneficiary, and CMS’s grant of waivers to states relative to the parameters of their Medicaid programs. Enactment of adverse legislation, regulation or agency guidance, may reduce the demand for our services, our ability to conduct some or all of our business and/or reimbursement rates for services performed within our segments.
|
|
Three months ended March 31,
|
||||||||||
|
2018
|
|
2017
|
||||||||
|
$
|
|
Percentage
of Revenue
|
|
$
|
|
Percentage
of Revenue
|
||||
Service revenue, net
|
406,046
|
|
|
100.0
|
%
|
|
399,494
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||
Service expense
|
371,235
|
|
|
91.4
|
%
|
|
369,410
|
|
|
92.5
|
%
|
General and administrative expense
|
18,413
|
|
|
4.5
|
%
|
|
17,027
|
|
|
4.3
|
%
|
Depreciation and amortization
|
6,798
|
|
|
1.7
|
%
|
|
6,269
|
|
|
1.6
|
%
|
Total operating expenses
|
396,446
|
|
|
97.6
|
%
|
|
392,706
|
|
|
98.3
|
%
|
|
|
|
|
|
|
|
|
||||
Operating income
|
9,600
|
|
|
2.4
|
%
|
|
6,788
|
|
|
1.7
|
%
|
|
|
|
|
|
|
|
|
||||
Non-operating expense:
|
|
|
|
|
|
|
|
||||
Interest expense, net
|
326
|
|
|
0.1
|
%
|
|
352
|
|
|
0.1
|
%
|
Equity in net (gain) loss of investees
|
2,321
|
|
|
0.6
|
%
|
|
2,060
|
|
|
0.5
|
%
|
Loss (gain) on foreign currency transactions
|
(623
|
)
|
|
(0.2
|
)%
|
|
(62
|
)
|
|
—
|
%
|
Income from continuing operations before income taxes
|
7,576
|
|
|
1.9
|
%
|
|
4,438
|
|
|
1.1
|
%
|
Provision for income taxes
|
1,842
|
|
|
0.5
|
%
|
|
2,523
|
|
|
0.6
|
%
|
Income from continuing operations, net of tax
|
5,734
|
|
|
1.4
|
%
|
|
1,915
|
|
|
0.5
|
%
|
Discontinued operations, net of tax
|
(8
|
)
|
|
—
|
%
|
|
(5,866
|
)
|
|
(1.5
|
)%
|
Net income (loss)
|
5,726
|
|
|
1.4
|
%
|
|
(3,951
|
)
|
|
(1.0
|
)%
|
Net income attributable to noncontrolling interest
|
(296
|
)
|
|
(0.1
|
)%
|
|
(374
|
)
|
|
(0.1
|
)%
|
Net income (loss) attributable to Providence
|
5,430
|
|
|
1.3
|
%
|
|
(4,325
|
)
|
|
(1.1
|
)%
|
|
Three Months Ended March 31,
|
||||||||||
|
2018
|
|
2017
|
||||||||
|
$
|
|
Percentage of
Revenue
|
|
$
|
|
Percentage of
Revenue
|
||||
Service revenue, net
|
336,696
|
|
|
100.0
|
%
|
|
324,034
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
||||
Service expense
|
310,701
|
|
|
92.3
|
%
|
|
306,192
|
|
|
94.5
|
%
|
General and administrative expense
|
2,937
|
|
|
0.9
|
%
|
|
2,891
|
|
|
0.9
|
%
|
Depreciation and amortization
|
3,494
|
|
|
1.0
|
%
|
|
3,151
|
|
|
1.0
|
%
|
Operating income
|
19,564
|
|
|
5.8
|
%
|
|
11,800
|
|
|
3.6
|
%
|
|
Three Months Ended March 31,
|
||||||||||
|
2018
|
|
2017
|
||||||||
|
$
|
|
Percentage of
Revenue
|
|
$
|
|
Percentage of
Revenue
|
||||
Purchased services
|
253,063
|
|
|
75.2
|
%
|
|
252,457
|
|
|
77.9
|
%
|
Payroll and related costs
|
45,195
|
|
|
13.4
|
%
|
|
42,383
|
|
|
13.1
|
%
|
Other operating expenses
|
12,393
|
|
|
3.7
|
%
|
|
11,194
|
|
|
3.5
|
%
|
Stock-based compensation
|
50
|
|
|
—
|
%
|
|
158
|
|
|
—
|
%
|
Total service expense
|
310,701
|
|
|
92.3
|
%
|
|
306,192
|
|
|
94.5
|
%
|
|
Three Months Ended March 31,
|
||||||||||
|
2018
|
|
2017
|
||||||||
|
$
|
|
Percentage of
Revenue
|
|
$
|
|
Percentage of
Revenue
|
||||
Service revenue, net
|
69,350
|
|
|
100.0
|
%
|
|
75,460
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
||||
Service expense
|
60,534
|
|
|
87.3
|
%
|
|
63,203
|
|
|
83.8
|
%
|
General and administrative expense
|
7,613
|
|
|
11.0
|
%
|
|
7,044
|
|
|
9.3
|
%
|
Depreciation and amortization
|
3,218
|
|
|
4.6
|
%
|
|
3,040
|
|
|
4.0
|
%
|
Operating income (loss)
|
(2,015
|
)
|
|
-2.9
|
%
|
|
2,173
|
|
|
2.9
|
%
|
|
Three Months Ended March 31,
|
||||||||||
|
2018
|
|
2017
|
||||||||
|
$
|
|
Percentage of
Revenue
|
|
$
|
|
Percentage of
Revenue
|
||||
Payroll and related costs
|
45,674
|
|
|
65.9
|
%
|
|
44,971
|
|
|
59.6
|
%
|
Purchased services
|
7,005
|
|
|
10.1
|
%
|
|
8,789
|
|
|
11.6
|
%
|
Other operating expenses
|
7,849
|
|
|
11.3
|
%
|
|
9,429
|
|
|
12.5
|
%
|
Stock-based compensation
|
6
|
|
|
—
|
%
|
|
14
|
|
|
—
|
%
|
Total service expense
|
60,534
|
|
|
87.3
|
%
|
|
63,203
|
|
|
83.8
|
%
|
|
Three Months Ended March 31,
|
||||
|
2018
|
|
2017
|
||
|
$
|
|
$
|
||
Service expense
|
—
|
|
|
15
|
|
General and administrative expense
|
7,863
|
|
|
7,092
|
|
Depreciation and amortization
|
86
|
|
|
78
|
|
Operating loss
|
(7,949
|
)
|
|
(7,185
|
)
|
•
|
Accounts receivable generated a cash outflow for Q1 2018 of
$12.4 million
as compared to an inflow of
$1.1 million
for
Q1 2017
. The increase in cash outflow of
$13.5 million
is partially attributable to NET Services due to the timing of collections, partially offset by the impact of changes in accounts receivable for WD Services.
|
•
|
Prepaid expense and other generated a cash outflow for Q1 2018 of
$3.2 million
as compared to an outflow of
$1.9 million
for
Q1 2017
. The increase in cash outflow of
$1.3 million
is partially attributable to the adoption of ASC 606 as of January 1, 2018. This resulted in recording inflows for contract assets of $1.0 million in Q1 2018 and cash outflows for costs to fulfill contracts of $1.5 million in Q1 2018 related to revenue which is deferred as of March 31, 2018, but which would have been recognized under the previous accounting standard. Additionally, outflows related to prepaid taxes and licenses for WD Services were $2.4 million in Q1 2018 as compared to cash inflows in Q1 2017 of $0.8 million.
|
•
|
Accounts payable and accrued expenses generated a cash inflow of
$2.3 million
in
Q1 2018
, as compared to a cash inflow of
$12.3 million
in
Q1 2017
. The decrease in cash inflow of
$10.1 million
between Q1 2017 and Q1 2018 is due primarily to the increase in the accrued settlement related to our former Human Services segment of $9.0 million during Q1 2017 as well as the impact of NET Services accrued contract payments of $3.8 million. These changes were partially offset by increased cash inflows related to income taxes payable for Q1 2018 compared to Q1 2017.
|
•
|
Accrued transportation costs of NET Services generated a cash inflow of
$16.7 million
in
Q1 2018
, as compared to a cash inflow of
$18.6 million
in
Q1 2017
. The decrease in cash inflow of
$1.9 million
is due primarily to the timing of payments.
|
•
|
Deferred revenue generated cash inflow of
$7.7 million
in
Q1 2018
, as compared to a cash inflow of
$2.0 million
in
Q1 2017
. The increase in cash inflow of
$5.7 million
is due primarily to WD Services. Approximately $3.9 million of the increase is attributable to change in deferred revenue as a result of the adoption of ASC 606. Other increases in deferred revenue are a result of the timing of cash payments received under certain WD Services’ contracts in advance of services being performed.
|
Period
|
|
Total Number
of Shares of
Common Stock
Purchased (1)
|
|
Average Price
Paid per
Share
|
|
Total Number of
Shares of Common Stock
Purchased as Part of
Publicly Announced
Plans or Program
|
|
Maximum Dollar Value of
Shares of Common Stock
that May Yet Be Purchased
Under the Plans or Program (2)
|
||||||
Month 1:
|
|
|
|
|
|
|
|
|
||||||
January 1, 2018
|
|
|
|
|
|
|
|
|
||||||
to
|
|
|
|
|
|
|
|
|
||||||
January 31, 2018
|
|
297,981
|
|
|
$
|
62.62
|
|
|
295,762
|
|
|
$
|
40,607
|
|
|
|
|
|
|
|
|
|
|
||||||
Month 2:
|
|
|
|
|
|
|
|
|
||||||
February 1, 2018
|
|
|
|
|
|
|
|
|
||||||
to
|
|
|
|
|
|
|
|
|
||||||
February 28, 2018
|
|
203,918
|
|
|
$
|
63.73
|
|
|
203,356
|
|
|
$
|
27,648
|
|
|
|
|
|
|
|
|
|
|
||||||
Month 3:
|
|
|
|
|
|
|
|
|
||||||
March 1, 2018
|
|
|
|
|
|
|
|
|
||||||
to
|
|
|
|
|
|
|
|
|
||||||
March 31, 2018
|
|
84,906
|
|
|
$
|
64.90
|
|
|
83,909
|
|
|
$
|
100,000
|
|
|
|
|
|
|
|
|
|
|
||||||
Total
|
|
586,805
|
|
|
|
|
|
583,027
|
|
|
|
|
(1)
|
Includes shares repurchased from employees in connection with the settlement of income tax and related benefit withholding obligations arising from vesting of restricted stock grants.
|
(2)
|
On October 26, 2016, our Board authorized a new repurchase program, under which the Company may repurchase up to $100.0 million in aggregate value of the Company’s Common Stock during the twelve-month period following October 26,
|
Exhibit
Number
|
|
Description
|
|
|
|
10.1
|
|
|
|
|
|
10.2+
|
|
|
|
|
|
10.3+
|
|
|
|
|
|
10.4+
|
|
|
|
|
|
10.5+
|
|
|
|
|
|
10.6
|
|
|
|
|
|
31.1*
|
|
|
|
|
|
31.2*
|
|
|
|
|
|
32.1*
|
|
|
|
|
|
32.2*
|
|
|
|
|
|
101. INS
|
|
XBRL Instance Document
|
|
|
|
101.SCH
|
|
XBRL Schema Document
|
|
|
|
101.CAL
|
|
XBRL Calculation Linkbase Document
|
|
|
|
101.LAB
|
|
XBRL Label Linkbase Document
|
|
|
|
101.PRE
|
|
XBRL Presentation Linkbase Document
|
|
|
|
101.DEF
|
|
XBRL Definition Linkbase Document
|
+
|
Management contract of compensatory plan or arrangement.
|
*
|
Filed herewith.
|
|
THE PROVIDENCE SERVICE CORPORATION
|
|
|
|
|
Date: May 10, 2018
|
By:
|
/s/ R. Carter Pate
|
|
|
R. Carter Pate
Interim Chief Executive
Officer
|
|
|
(Principal Executive Officer)
|
|
|
|
Date: May 10, 2018
|
By:
|
/s/ William Severance
|
|
|
William Severance
Interim Chief Financial Officer
|
|
|
(Principal Financial Officer)
|
1 Year Providence Service Chart |
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