Providence Service (PRSC) Tops Q3 EPS by $1.21, Revenues Miss

Providence Service (NASDAQ: PRSC) reported Q3 EPS of $2.63, $1.21 better than the analyst estimate of $1.42. Revenue for the quarter came in at $320.6 million versus the consensus estimate of $341.98 million.

Third Quarter 2020 Highlights:

• Revenue of $320.6 million
• Income from continuing operations, net of tax, of $38.9 million or $2.51 per diluted common share
• Adjusted EBITDA of $55.3 million, Adjusted Net Income of $38.2 million and Adjusted EPS of $2.69
• Net cash provided by operating activities during the quarter of $140.0 million
• Cash and cash equivalents of $183.3 million at September 30, with no debt outstanding
• Matrix, on a standalone basis, achieved net income of $21.4 million and Adjusted EBITDA of $54.3 million
• On September 28, 2020, Providence entered into a definitive agreement to acquire Simplura Health Group, a leading provider of non-medical home care services, in an all-cash deal for $575 million

Daniel E. Greenleaf, President and Chief Executive Officer, said, “Providence’s third quarter Adjusted EBITDA of $55.3 million exceeded the prior year comparable figure primarily due to lower operating expenses driven by our six-pillar growth strategy, meaningful contribution from National MedTrans and lower utilization under our capitated contracts. During the quarter we continued to make excellent operational and strategic progress in our transformation of the business. Of note, we advanced key technology and contact center optimization initiatives that will enhance the member experience and streamline operations. And, in September 2020, we took a major step to drive transformational growth by entering into a definitive agreement to acquire Simplura Health Group, a leader in non-medical personal care in the home. With financing in place, this acquisition remains on target to close in the fourth quarter of 2020.”

Mr. Greenleaf continued, “Simplura participates in an estimated $55 billion market that is highly fragmented and rapidly expanding, providing us a complementary growth platform that dovetails well with non-emergency medical transportation. We both are focused on social determinants of health, providing value-based care and solutions to similar vulnerable patient populations while partnering with many of the same payor groups. We believe that Simplura stands at the forefront of an exciting long-tailed growth opportunity, particularly as networks continue to narrow and the industry consolidates. Going forward, through a combination of smart capital allocation and operational excellence, we aim to build substantial long-term value for our customers and shareholders.”

Mr. Greenleaf concluded, “Finally, we commend the team at Matrix for their success turning around their business. For the third quarter of 2020, Matrix’s revenue was $140.7 million compared to $71.7 million in the third quarter of 2019, operating income was $35.5 million compared to an operating loss of $2.6 million and Adjusted EBITDA was $54.3 million compared to $10.0 million. During the first nine months of 2020 Matrix generated revenue of $292.7 million, up from $210.8 million in the same period last year, operating income of $49.1 million, up from an operating loss of $0.5 million, and Adjusted EBITDA of $97.0 million, up from $37.7 million. In addition, Matrix announced the acquisition of Biocerna, a certified and accredited laboratory that will provide a meaningful opportunity for continued growth.”

For earnings history and earnings-related data on Providence Service (PRSC) click here.

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