STAMFORD, CT--(Marketwired - May 05, 2016) -  The Providence Service Corporation (the "Company") (NASDAQ: PRSC), a holding company whose subsidiaries provide critical healthcare and workforce development services, today reported financial results for the first quarter ended March 31, 2016.

"We are pleased with our first quarter results and the progress made by our vertical leadership teams towards their strategic objectives," said James Lindstrom, President and Chief Executive Officer. "Consistent with our goal of creating value for both clients and stockholders, we deployed significant resources in such areas as new contracts, service delivery optimization and business development as well as capital in share repurchases."

First Quarter 2016 Results

For the first quarter of 2016, the Company reported consolidated revenue of $432.7 million, an increase of 3.1% from $419.8 million in the first quarter of 2015.

Income from continuing operations, net of tax, in the first quarter of 2016 was $2.1 million, or $0.07 per diluted common share, compared to $5.9 million, or $0.30 per diluted common share, in the first quarter of 2015. Adjusted Net Income (non-GAAP) in the first quarter of 2016 was $9.3 million, or $0.48 per diluted common share, compared to $14.2 million, or $0.78 per diluted common share, in the first quarter of 2015. Income from continuing operations, net of tax, in the first quarter of 2016 included a $2.7 million loss on WD Services' equity investment in Mission Providence.

Adjusted EBITDA (non-GAAP) for the first quarter of 2016 was $25.3 million, compared to $33.0 million in the first quarter of 2015. The negative impact of Mission Providence to Adjusted EBITDA (non-GAAP) in the first quarter of 2016 was $3.1 million.

During the first quarter of 2016, the Company repurchased 435,735 common shares for $19.5 million, or for an average price of $44.71 per share. After giving effect to these repurchases, $45.4 million of additional repurchase capacity remains under the Company's $70.0 million share repurchase program. 

A reconciliation of Adjusted EBITDA and Adjusted Net Income to income from continuing operations, net of tax, and the calculation of Adjusted EPS are presented below.

Segment Results

For analysis purposes, we provide revenue, expenses, operating income (loss), income (loss) from continuing operations, net of taxes, and Adjusted EBITDA (non-GAAP) on a segment basis. Segment results include revenue and expenses incurred by the segment, as well as an allocation of direct expenses incurred by Corporate on behalf of the segment. Indirect expenses, including unallocated corporate functions and expenses, such as executive, finance, human resources, information technology and legal, as well as the results of our captive insurance company and elimination entries recorded in consolidation are reflected in Corporate and Other.

US Healthcare Services

NET Services

NET Services revenue was $291.0 million for the first quarter of 2016, an increase of 14.2% compared to the first quarter of 2015. Operating income was $18.3 million, or 6.3% of revenue, in the first quarter of 2016, compared to $20.7 million, or 8.1% of revenue, in the first quarter of 2015. Adjusted EBITDA (non-GAAP) was $21.2 million, or 7.3% of revenue, in the first quarter of 2016, compared to $23.0 million, or 9.0% of revenue, in the first quarter of 2015.

NET Services 2016 revenue was favorably impacted by new contracts that commenced in 2015 as well as increased membership and favorable rate adjustments in certain existing markets. Adjusted EBITDA (non-GAAP) as a percentage of revenue declined as a result of increased utilization and additional compensation expense related to historical and current long-term incentive plans tied to value creation.

HA Services

HA Services revenue was $50.6 million in the first quarter of 2016, a decrease of 11.9% compared to the first quarter of 2015. Operating income was $4.4 million, or 8.6% of revenue, in the first quarter of 2016, compared to $6.5 million, or 11.3% of revenue, in the first quarter of 2015. Adjusted EBITDA (non-GAAP) was $12.1 million, or 24.0% of revenue, in the first quarter of 2016, compared to $13.7 million, or 23.8% of revenue, in the first quarter of 2015.

The decrease in HA Services revenue in the first quarter of 2016 was primarily due to reduced annual volume demand from a single large client and a different quarterly phasing of demand in 2016 as compared to 2015. Partially offsetting this decline in revenue was increased demand from other clients. Adjusted EBITDA (non-GAAP) as a percentage of revenue increased primarily due to a decrease in direct costs per health assessment, partially offset by additional compensation related to a long-term incentive plan for management put into place in the fourth quarter of 2015.

Global Workforce Development

WD Services

WD Services revenue for the first quarter of 2016 was $91.0 million, a decrease of 15.4% compared to the first quarter of 2015. WD Services incurred an operating loss of $2.1 million in the first quarter of 2016, compared to operating income of $2.8 million in the first quarter of 2015. The operating loss in the first quarter of 2016 included $1.4 million of redundancy costs related to service delivery redesigns and the anticipated closure of the segment's operations in Poland. Redundancy costs are excluded from the calculation of Adjusted EBITDA, Adjusted Net Income, and Adjusted EPS.

Prior to the impact of the Mission Providence joint venture, WD Services Adjusted EBITDA (non-GAAP) was $2.9 million, or 3.2% of revenue, in the first quarter of 2016 compared to $8.9 million, or 8.3% of revenue, in the first quarter of 2015. The Adjusted EBITDA (non-GAAP) associated with Mission Providence was negative $3.1 million in the first quarter of 2016 and negative $3.5 million in the first quarter of 2015.

The decrease in WD Services revenue for the first quarter of 2016 was primarily due to an anticipated decline in referrals and an altered pricing structure under the segment's primary employability program in the United Kingdom. The decline in Adjusted EBITDA (non-GAAP) at WD Services in the first quarter of 2016 was due to these referral declines and pricing changes as well as the timing of recognition of an annual incentive fee under this same employability program. This incentive fee was recognized in the first quarter of 2015 but is expected to be recognized in a later quarter in 2016.

Corporate and Other

Corporate and Other incurred an operating loss of $7.9 million in the first quarter of 2016 compared to an operating loss of $9.3 million in the first quarter of 2015. Adjusted EBITDA (non-GAAP) was negative $7.8 million in the first quarter of 2016 compared to negative $9.0 million in the first quarter of 2015. This improvement in Adjusted EBITDA (non-GAAP) was primarily due to decreased stock-based compensation and insurance expense, partially offset by $1.2 million of non-recurring expenses resulting from the sale of the Human Services segment in 2015.

Conference Call

Providence will hold a conference call at 8:00 a.m. EST Friday, May 6, 2016 to discuss its financial results and corporate developments. Interested parties are invited to listen to the call live at http://investor.prscholdings.com or by dialing (855) 548-8661, or for international callers (412) 455-6143, and using the passcode 1349659. A replay of the teleconference will be available on http://investor.prscholdings.com. A replay will also be available until May 20, 2016 by dialing (855) 859-2056 or (404) 537-3406 and using passcode 1349659.

About Providence

The Providence Service Corporation is a holding company whose subsidiaries provide critical healthcare and workforce development services, comprised of non-emergency transportation services, workforce development services, legal offender rehabilitation services, health assessment services, and care management services in the United States and abroad. For more information, please visit prscholdings.com.

Non-GAAP Financial Measures and Adjustments

In addition to the financial results prepared in accordance with US generally accepted accounting principles (GAAP), this press release includes EBITDA and Adjusted EBITDA for the Company and our operating segments and Adjusted Net Income and Adjusted EPS for the Company, which are financial measures that are not recognized under GAAP. EBITDA is defined as income (loss) from continuing operations, before: (1) interest expense, net, (2) provision (benefit) for income taxes and (3) depreciation and amortization. Adjusted EBITDA is calculated as EBITDA before certain infrequently occurring items, including restructuring and termination costs and foreign currency adjustments. Adjusted Net Income is defined as income from continuing operations, net of tax before: (1) net loss (income) attributable to non-controlling interests, (2) certain infrequently occurring items, including restructuring and termination costs, and foreign currency adjustments, (3) intangible amortization expense and (4) the income tax impact of such adjustments. Adjusted EPS is calculated as Adjusted Net Income less (as applicable): (1) dividends on convertible preferred stock, (2) accretion of convertible preferred stock discount and (3) income allocated to participating stockholders, divided by the diluted weighted-average number of common shares outstanding. We utilize these non-GAAP measurements, which exclude certain expenses, 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 cash earnings capabilities of our business, for which capital investments are made and debt is serviced.

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

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, 2015 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.