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Edited Transcript of PRSC earnings conference call or presentation 10-Mar-17 1:00pm GMT

Thomson Reuters StreetEvents

Q4 2016 Providence Service Corp Earnings Call

TUCSON Mar 10, 2017 (Thomson StreetEvents) -- Edited Transcript of Providence Service Corp earnings conference call or presentation Friday, March 10, 2017 at 1:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Bryan Wong

Providence Service Corporation - Corporate Development

* Jim Lindstrom

The Providence Service Corporation - CEO

* David Shackelton

The Providence Service Corporation - CFO

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Conference Call Participants

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* Dan Moore

CJS Securities - Analyst

* Shane Svenpladsen

Avondale Partners - Analyst

* Mike Petusky

Barrington Research Associates, Inc. - Analyst

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Presentation

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Operator [1]

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Good day, ladies and gentlemen, and welcome to the Providence Service fourth-quarter 2016 earnings conference call.

(Operator Instructions)

As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Mr. Bryan Wong. Sir, you may begin.

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Bryan Wong, Providence Service Corporation - Corporate Development [2]

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Good morning and thank you for joining Providence's fourth-quarter and fiscal year ended 2016 conference call and webcast. On the call from Providence today is Jim Lindstrom, Chief Executive Officer, and David Shackelton, Chief Financial Officer. We have arranged for a replay of this call which will be available approximately one hour after today's call on our website, www.prscholdings.com.

The replay will also be available until March 24 by dialing 855-859-2056 or 404-537-3406 and using the passcode 61212113. During this call, Mr. Lindstrom and Mr. Shackelton will be referencing the presentation that can be found on the investor relations portion of our website under the event calendar and in our current report on Form 8-K which was furnished to the SEC earlier today.

Before we get started, I'd like to remind everyone that during the course of this call, the Company's management may make certain statements which may be characterized as forward-looking statements under the Private Securities Litigation Reform Act. Those statements involve risks, uncertainties, and other factors which may cause actual results or events to differ materially. Information regarding these factors is contained in yesterday's press release and the Company's filing with the SEC.

The Company will also discuss certain non-GAAP financial measures in an effort to provide additional information to investors. A definition of these non-GAAP measures and reconciliation to the most comparable GAAP measures can be found in our press release, investor presentation and today's current report on Form 8-K.

Finally, for simplicity, we will be speaking in US dollars when referring to such things as contracts and revenue. Amounts translated from other currencies, including the British pound, have been translated at the exchange rates in effect for the corresponding time period. I'd now like to turn the call over to Jim Lindstrom.

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Jim Lindstrom, The Providence Service Corporation - CEO [3]

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Great. Thanks, Bryan, and thank you all for joining today. Hopefully all of you have the slides that we posted this morning covering the quarter and the year. One thing that you won't see in the slides is anything about the recent healthcare legislation. So if anyone has questions about that, I can answer those in the Q&A.

Turning to slide 3, first of all, as we always do every quarter, we would like to thank our 9,000 colleagues around the globe who make a difference in over 25 million people's lives every year. We have managed some pretty large networks, primarily through our 9,000 colleagues, particularly in the US healthcare services businesses, and those networks are unique in scale and service delivery and we really want to thank our teams for driving forward our leadership positions there.

Moving onto the first bucket here on revenue growth, as you can see, revenues grew almost 7% on a consolidated basis in 2016 and what was driving that was really driving that and was really driving a little bit of margin expansion as well was the pace and rigor in which we are building the foundation for future growth.

On margins, we accelerated a lot of value creation strategies through strategic partnerships, operational improvement initiatives, technological innovation. And finally, through disciplined capital allocation, we repurchased over 17% of our outstanding common stock since the summer 2015 and had the sale of a 53% stake in Matrix during the fourth quarter.

Diving into the segments, and we'll start with any NET, or Logisticare. Logisticare's revenues increased 14% to $1.2 billion in 2016 and grew 12.9% in the fourth quarter. The revenue growth was primarily driven by contract adjustments due to program utilization acuity as well as increases to the population through existing and new contracts. In terms of volume, Logisticare managed over 69 million lives in 2016. Adjusted EBITDA was $92 million in 2016, resulting in a 7.5% EBITDA margin, a modest increase from 2015. CapEx remained under 1% of revenue and working capital, excluding cash, remained negligible.

On a strategic front, I am pleased to report that we made solid progress since our last call. The member experience initiative which we referenced on the last call, consists of 20 work streams designed to both lower costs and improve service for our clients and managed populations and it is well underway.

So first on the technology side, and really overarching the member experience initiative, is the rollout of our next generation of our own software called [Logisitcad]. Logisticad provides a great member-centric focus throughout our business processes. It creates efficiencies, it connects our transportation providers, populations, call centers and other third parties. So, piloting starts in April and will largely be implemented by year end.

Second, on our call centers, we have largely implemented our workforce management system in 18 call centers out of our 20 to seamlessly handle spikes in demand and redistribute volume during our inclement weather scenarios. Centralized oversight of our workforce management system makes us more effective and we are well on our way to call center best practices by the end of 2017.

Third, on our nationwide transportation network, we've initiated efforts to improve our network capacity and efficiency. We are approximately a third of the way through our rollout of our real-time tracking system, or AVL, and we'll complete this largely by the end of third quarter. With this capability, we have real-time insight into some of our most important areas of focus, such as on-time performance and capacity utilization. If any of you want to check this out, you can actually go to wellrydeinfo.com. That's W-E-L-L-R-Y-D-E info.com and you can see some demonstration videos on how this works.

On our transportation network work streams, which are part of the member experience initiative, we are rolling out tools aimed at ensuring optimal network contracting and spend practices. In one of the first states to rule out this work stream, we're seeing our spend across 10 provider partners declining by double-digit percentages, which will equate to over $1 million annualized and that's just, again, on 10 of our provider partners. Obviously, we don't see that kind of benefit rolling out across our network, but we are happy to start. We expect to have this fully rolled out by the end of Q3 or Q4 of this year.

Also related to transportation network optimization, we are increasing our focus where appropriate on utilizing on-demand networks. You may have seen our announcement with Lyft. We have also been piloting our version of Lyft, but with drivers who have highly credentialed healthcare backgrounds, and on this pilot, you can check it out further at www.provadocarepro.com.

So to summarize on NET, we have 20 work streams in progress that we expect to complete over the next 18 to 24 months and, once completed, we expect the initiative to result in annual savings of over $30 million, which is consistent with what we mentioned last quarter. Looking at NET's financials in 2017, we really don't see our thoughts changing versus what we conveyed last quarter. The loss of our ASO contract in New York City and a few other contracts will bring revenue growth for the year below our multi-year 5% to 7% CAGR target that we've talked about previously.

Retaining our contract in New Jersey is obviously key to keeping the top-line growth positive in 2017. And besides being extended through May, we have no news on the New Jersey contract at this time.

On margins, we continue to expect adjusted EBITDA margins to be in the low 6% range in 2017 due to the replacement of lost higher-margin contracts with lower ones. However, we expect our member experience initiative to offset these lower margin contracts, particularly in the second half of 2017, where much of this margin contraction should be recouped. So, by the second half of 2018, we expect the initiative to be regenerating over $31 million of run rate annual savings.

Lastly, in looking into the latter half of 2017 into 2018, we're very focused on building the foundations for other complementary services for our network and business development strategies at Logisticare. So, from the recruitment of a new CEO with a healthcare and technology background to investments in our sales and analytical resources, we're pretty optimistic that we continue to have untapped potential that we will be able to communicate more extensively on throughout the year.

So, moving on to Matrix, our second US healthcare business, during the quarter, we recognized a $109 million gain associated with the sale of the 53% stake in the business to Frazier Healthcare. In 2016, we predicted sales growth would be tough, and although sales decreased slightly, we remain, during the year, focused operationally and expanded our sales team and resources. As a result, on the sales resource investment, we ended the year with the strongest pipeline that I've seen at Matrix since I joined Providence. I'll comment on that a little bit more in a little bit.

Regarding profitability, Matrix generated adjusted EBITDA of $51.7 million, or a 24.9% EBITDA margin, surpassing last year's margin by over 1%. I should also note this EBITDA came along with CapEx under 25% of EBITDA and had negligible working capital for most of the year.

We continue to view our operating platform and network of over 1,000 nurse practitioners as the core value in the Matrix business. To supplement this network in 2016, we launched ancillary services, again, invested in our sales capability and chronic care initiative, and drove operational efficiency initiatives to expand margins. We on-boarded six new clients, further demonstrated that our chronic care initiative is lowering costs and improving outcomes, and again, launched some new products.

As we look into 2017, again, our investment in sales resources appears to be paying off as we expect enhanced revenue growth in 2017, surpassing our long-term goal of 8% to 10%. I will say it probably will be back-end loaded, though.

Moving on to WD Services, or Ingeus. Revenue declined 12.8% in 2016 and 25.5% in Q4. Much of this was due to currency changes, but a large portion was also due to the continued wind down of the work program and unfavorable volume mix under our new offender rehabilitation program.

Offsetting this decline was growth in a few of our international operations and in NCS, or our youth citizenship program, which has grown to almost $30 million of revenues over the past couple of years with strong profitability. 2016 profitability, particularly in Q4, was tough and slightly off of 2015. The loss was entirely due to continued challenges in France and in our probationary services contract, which experienced structural contractual changes in late 2016, as we mentioned last quarter.

We do see some light at the end of the tunnel for these two challenges. First, in France, which contributed a negative $4.6 million to adjusted EBITDA in 2016, we have started to see volume improvements in breakeven profitability in early 2017. Second, our offender rehabilitation program loss of almost $6 million for the year, mostly in Q4, was simply due to an increased case load that is not reflected appropriately in how we are paid. This structural mismatch also contributed significantly to our current projections and resulted in much of the $20 million impairment during the quarter.

The new Interim CEO for offender rehabilitation program, who joined us from Maximus, along with the Ingeus leadership team and other industry participants are currently in discussions with the Ministry of Justice about recouping certain costs incurred and restructuring the payment structure, which we hope to report on next quarter. These two challenges, France and our offender rehabilitation program, are not indicative of our 2017 outlook.

First, in the UK, we submitted bids on four of six regional frameworks in the UK's next version of the Work Program, called the Work and Health Program, and I'm pleased to report that we are successful in moving to the next round on three out of the four regions where we bid. These three regions represent GBP38 million of potential annual revenue, exceeding the $15 million of annual revenue we communicated to you in our long-term thoughts on the contract last quarter. We have submitted our updated proposals and look forward to hearing back from the government on the next shortlist in April with final awards in September of 2017.

Second, our UK operations are undergoing a significant restructuring program called the Ingeus Futures Program, of which you can see the restructuring costs in our quarterly numbers. In general, the cost reductions will reflect fewer positions through both redundancies and attrition and result in cost savings of over GBP10 million in 2017 and GBP18 million in 2018.

These efforts are well underway with most of the redundancies being implemented by the end of Q2. Please note that these reductions and the cost benefits associated with them were built into our long-term thoughts on profitability communicated last quarter and a few comments we will make in a couple minutes.

In Mission Providence, we significantly reduced our losses to $317,000 in Q4 2016, including pretax profitability in December. As in the UK, we are undergoing a reduction of approximately 50 positions to ensure profitability this year and beyond.

Finally, I would like to remind you that most of WD's services today are focused on employability services for governments in what continues to be a low unemployment environment, made more challenging by both fiscal pressures that have intensified over the last six months, particularly in our UK operations. In response, we are moving quickly to offer new health and training services, reducing our costs, and exiting operations where we do not see future acceptable returns.

As a result, and consistent with last quarter, we continue to see modest low- to mid-single-digit EBITDA margins in 2017 for the segment, with potential upside from current contract renegotiations in the UK. Finally, I will now turn the time, the rest the time over to David for a few other points on our financials.

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David Shackelton, The Providence Service Corporation - CFO [4]

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Thanks, Jim. Before I begin, I would like to remind everyone that the results of Matrix prior to our transaction with Frazier in October presented in dist ops, while the results of Matrix after the transaction are accounted for under the equity method. Thus, the only impact Matrix has on our results from continuing ops in 2016 is through the loss and equity line, where we are picking up 46.8% of Matrix's net income for less than 2.5 months.

Matrix's results are excluded from our consolidated revenue, adjusted EBITDA and adjusted EPS. However, because our retained interest in Matrix represents substantial value for our shareholders, we have provided Matrix's revenue and adjusted EBITDA in our earnings press release.

Back on the presentation on page 7, we've shown revenue and adjusted EBITDA by segment and total for Q4 and the full year. Segment level adjusted EBITDA, which excludes our holding company corporate costs, was $24.2 million in Q4 2016, a 51.7% increase over Q4 of last year. For the full year, adjusted EBITDA from our segments was $97.8 million versus $91 million last year. Total adjusted EBITDA was $72.2 million, or 4.6% of revenue, in 2016 versus $66.3 million, or 4.5% of revenue, in 2015.

Jim already went through the major revenue and adjusted EBITDA trends for 2016 by segment as well as our high-level 2017 expectations by segment. So I will just reiterate a few items and make some additional comments about 2017. On NET, our current expectation for the segment's adjusted EBITDA margin in 2017 to be in the low 6% range is consistent with the margin contraction of 50 to 75 basis points I referenced on our last call, as 2016 margins came in approximately 50 basis points higher than we were previously expecting.

On WD, Jim spoke the challenges with our offender rehabilitation program and our French operations. As a point of reference, excluding offender rehabilitation and France, as well as costs related to closing our operations in Sweden and Poland, WD's full-year adjusted EBITDA margin was approximately 7.5% in 2016, an almost 200 basis point improvement over 2015.

Looking forward to 2017 for WD, we expect revenue to decline approximately $60 million, primarily due to the depreciation of the pound to the dollar, the continued wind-down of the Work Program and reduced fee per service revenue under the offender rehabilitation program, partially offset by modest net growth elsewhere. This revenue outlook could improve depending upon the outcome of the Ministry of Justice's review of the transforming rehabilitation program's funding model.

On our corporate holding company costs, expenses increased slightly in 2016 over 2015, primarily due to a $4.5 million decrease in benefits associated with favorable claims experiences on our reinsurance and self-insured programs compared with 2015. This decreased insurance claims benefit was partially offset by decreased third-party professional expenses of approximately $4 million.

Lastly, on our Matrix investments, what's presented on the slide is 100% of Matrix's results. In Providence's P&L, only the portion of Matrix's net income or loss relating to our 46.8% retained interest for the period post the transaction with Frazier and through year-end is captured. During this post transaction period, Matrix generated a net loss of $4.2 million, which included $6.3 million of transactional-related expenses. The negative $4.2 million of total Matrix net loss translate into a loss in equity earnings of $1.8 million related to our retained interest, which is the number that flows into our P&L in the press release.

Flipping the page to page 8, cash flow from operations, excluding approximately $22 million of taxes paid on the sale of our human services segment, was $53.4 million in 2016, a substantial increase over the $13.2 million in 2015. Our CapEx from continuing operations in 2016 was $32 million, of which, approximately $14 million was related to new program-specific CapEx within WD services. In 2017, we expect a significant drop in new program-specific CapEx, partially offset by implementation CapEx for the Logisticare member experience and Ingeus Futures initiatives, the net result being approximately $20 million of expected total CapEx spend in 2017.

On taxes, which aren't broken out on this page, our provision for 2016 was $17 million despite generating a loss from continuing operations before income taxes. There are a number of factors driving this result, including our losses and equity earnings line, already containing an embedded tax benefit, as well as our inability to recognize a benefit to our provision in foreign jurisdictions, such as France and, to some extent, the UK, where we are generating losses and have not yet demonstrated a history of generating gains.

Turning to page 9, we ended the year with no debt and approximately $72 million in cash. We have also called out on this page the carrying value of our retained interest in Matrix. Given we do not include Matrix in our adjusted EBITDA or adjusted net income, it is important not to overlook this significant component of the Company's overall value.

Turning to page 10, we have our familiar one-pager on capital allocation. We've viewed this page many times, but we keep recycling it because it speaks to one of the most important decisions we make as a Management Team, that being the use of your capital. Starting with CapEx on the left, we should see an approximately 40% decline in CapEx from continuing operations from $32 million in 2016 to approximately $20 million in 2017. The $20 million is still above where we ultimately want to get CapEx, but given the attractive returns we are seeing on implementation CapEx dollars related to Logisticare's member experience initiative, we're happy to keep CapEx elevated for another year.

Moving to share repurchases, we continue to believe buying back shares is an attractive use of your capital over a multi-year period. Given where our shares are currently trading versus our assessment of the value of our Matrix investment and the value of Logisticare Ingeus, which are being further enhanced through their respective value enhancement initiatives.

Lastly, on acquisitions, we have and will continue to seek out actionable targets. However, until we are confident we have found an opportunity that meets our specific criteria and risk return thresholds, we will not put your capital at risk. That takes us through the pages in the deck.

I'll conclude by saying that, overall, we are pleased with both the financial and operational performance at Providence in 2016. We've highlighted the various strategic initiatives that we've worked hard on last year and will continue to focus on this year, each of which, we believe will contribute to margin expansion beginning tin he second half of 2017 and stronger top-line growth moving into 2018. I'll now turn the call back over to Jim.

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Jim Lindstrom, The Providence Service Corporation - CEO [5]

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Great. Thanks, David. So, in summary, hopefully we conveyed our challenges and opportunities transparently and the progress of our longer-term initiatives. And, as we saw at Matrix, these initiatives can take time, but they can also generate significant value as you saw in Q4 with the substantial gain from the sale to Frazier. With that, I will now open up to questions. Operator?

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Questions and Answers

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Operator [1]

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(Operator Instructions)

Bob Labick with CJS Securities.

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Dan Moore, CJS Securities - Analyst [2]

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It's actually Dan Moore for Bob this morning. Good morning.

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Jim Lindstrom, The Providence Service Corporation - CEO [3]

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Good morning.

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Dan Moore, CJS Securities - Analyst [4]

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In terms of legislation coming out of Washington this week, the repeal/replace legislation currently underway, and the House appears to be making some progress on a bill. What's the latest outlook for the legislation and how it might impact LogistiCare?

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Jim Lindstrom, The Providence Service Corporation - CEO [5]

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Sure. Just to remind everybody, our focus at LogistiCare is helping particularly frail populations, so aged, blind and disabled, those in poverty, and those going to dialysis or some sort of rehabilitation. And the populations that we serve and where they're going, we think the service is largely preventative in nature and has pretty good preventative benefits. So, we're focusing every resource right now, and a lot of it has to do with this member experience initiative, on being the most cost-effective service for them, which I think really resonates with the people that we've met with in Washington and at the Governor level. So, along those lines, we're increasing our research and regulatory resources to prove out that preventative nature of the service.

On the replacement bill itself, obviously there are a lot of different iterations that have been discussed. What is currently out there in the replacement bill, to a high level, there are no Medicaid benefit changes related to NET, which, again, this is largely a reconciliation process, so they can't make those changes at the moment. It is possible they could come in future bills, but as of right now, there are no Medicaid benefit changes.

They are moving towards a federal contribution per category of member in Medicaid, adjusted for inflation in Medicaid. So that actually goes through the end of 2019, and then in 2020 the member contribution is capped. But again, there are no benefit changes on NET after 2020. So, in general, we don't see too many things actually affecting us in the current legislation as it's drafted through 2020.

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Dan Moore, CJS Securities - Analyst [6]

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Very helpful. And just switching gears, you talked in the prepared remarks about this a little. LogistiCare -- expand on your experience so far in ride sharing, the implications for Uber and Lyft for non-emergency transportation, and maybe more specifically, how the experience and feedback received, if the states like it, if the managed care organizations, their receptivity at this stage. Any color would be great, thanks.

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Jim Lindstrom, The Providence Service Corporation - CEO [7]

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Sure. So, we actually launched our pilots with Lyft in the second half of last year. We're now active in 18 states, and it's growing quickly every week. I would still say the overall volume is fairly minimal compared to our overall scale.

In terms of our Provado mobile health pilot, that is in two states. And I think we're approaching the utilization of these services cautiously because we've received different viewpoints on the rollout of these services from both individuals and from our clients at the state and MCO level. I'd say there's a lot of interest, but I think people are very cautious as well.

So, we're looking at -- we're actually undergoing a project right now, and have been for a little bit now, looking at each market and really looking at the population, how it breaks down, who the client is, what are the restrictions in the contract? What are the costs of implementing the network? What are the costs of recruiting drivers, really compiling a detailed business plan and model around that. So, it takes some time because each market is different. But I think over the next few months, we will have a greater view of the penetration.

In terms of specific experiences we've seen so far, we've seen some nice benefits on the service side and on the cost side from the ride sharing. But again, this is in limited markets and limited usage, and so, we wouldn't want to make any -- set out any grand expectations on what this could be in a couple years. But it would certainly be a key part of our transportation network strategy.

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Dan Moore, CJS Securities - Analyst [8]

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Appreciate the color, thank you.

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Jim Lindstrom, The Providence Service Corporation - CEO [9]

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Yes.

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Operator [10]

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Thank you. Shane Svenpladsen with Avondale Partners.

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Shane Svenpladsen, Avondale Partners - Analyst [11]

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Good morning. With respect to the umbrella agreement under which the new Work and Health Program is being procured -- nice to see you guys win, or be selected initially in those three regions -- would you consider subcontracting in the regions you're not currently in? And I guess how would you view the economics there?

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Jim Lindstrom, The Providence Service Corporation - CEO [12]

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That has not come up. Actually, I'm sorry, we do have subcontracting in some of the areas that we do work in. And actually, we have had some discussions about subcontracting in some other areas that we are not in. But in terms of -- those discussions aren't formalized, so I wouldn't see it as a huge opportunity at the minute. And plus with the -- there still are five participants in each, at each stage, so there's some opportunity but I don't think we can give too much clarity into that, the potential opportunity there.

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Shane Svenpladsen, Avondale Partners - Analyst [13]

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Okay. Fair enough. And then with the London and Manchester regions, which I believe are being procured outside of this umbrella agreement, could you just give us an update on that process and how that's going?

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Jim Lindstrom, The Providence Service Corporation - CEO [14]

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I think we're still waiting to sort of get the framework and how that's going to be laid out, so we're barely into the process at this point.

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Shane Svenpladsen, Avondale Partners - Analyst [15]

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Okay. And then just lastly, 9.1% EBITDA margins in NET services this quarter, pretty nicely above what we were looking for. Is there anything worth calling out there that was unique in the quarter? Or is that something that, those kind of margins -- excluding the New York City headwind in 2017, are those margins that can be sustained?

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Jim Lindstrom, The Providence Service Corporation - CEO [16]

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Well, you may have noticed service expense as a percentage was a little bit lower. David, anything else?

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David Shackelton, The Providence Service Corporation - CFO [17]

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Yes. There was a -- operationally, it was a good quarter, but again, it was definitely higher than we were expecting. And one of the items impacting that was the accrual, or the reversal of accrual, for a long-term incentive plan that we have at the LogistiCare segment, which is based on multi-year performance.

So, a couple of things happened. One, our former CEO did leave that segment, so some of his long-term awards were reversed. And given our outlook for 2017, again, resulting from the loss of the New York City contract, our 2017 projections did come down in the valuation model for that long-term award. So, on the whole, we ended up expensing about $4 million less in the quarter than we were expecting to when we last spoke.

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Shane Svenpladsen, Avondale Partners - Analyst [18]

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All right. That's helpful. I'll get back in the queue.

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Operator [19]

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Thank you. Mike Petusky with Barrington Research.

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Mike Petusky, Barrington Research Associates, Inc. - Analyst [20]

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Good morning. David, I didn't catch it if you mentioned, did you give a margin expectation for WD for 2017?

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David Shackelton, The Providence Service Corporation - CFO [21]

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Yes. Jim actually did in his prepared comments. It was a low- to mid-single digits.

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Mike Petusky, Barrington Research Associates, Inc. - Analyst [22]

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You said you thought corporate overhead would come down a few million dollars in 2017 as well, or no?

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David Shackelton, The Providence Service Corporation - CFO [23]

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Yes, we're still very diligent on corporate costs, and we're trying to take out another couple million dollars of cash costs in 2017.

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Mike Petusky, Barrington Research Associates, Inc. - Analyst [24]

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Okay, and then could you remind me, the timing for Virginia, Pennsylvania, Georgia? Are those mid-year or are those end-of-year decisions? What's the timing? And actually, if you could give aggregate -- New Jersey I think I have some handle on -- but aggregate dollars associated with those three awards?

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David Shackelton, The Providence Service Corporation - CFO [25]

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So, Virginia is mid-year, Philly is new year, and sorry, what was the third one?

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Mike Petusky, Barrington Research Associates, Inc. - Analyst [26]

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Georgia.

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David Shackelton, The Providence Service Corporation - CFO [27]

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Georgia is in the fall. So, aggregate across those three, it's approximately $150 million to $175 million in annual revenue.

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Mike Petusky, Barrington Research Associates, Inc. - Analyst [28]

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Are there any pieces of business that you guys are bidding on that would represent new business that are significant that could be awarded here over the next three, six months?

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Jim Lindstrom, The Providence Service Corporation - CEO [29]

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We recently won some portions of Arkansas. In terms of other new, there are a lot of smaller MCO contracts that we're bidding on. Go ahead, David.

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David Shackelton, The Providence Service Corporation - CFO [30]

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I would say, looking at both state contract opportunities and MCO contract opportunities that we're looking at and bidding on right now, it's approximately represents $75 million to $100 million in annual revenue.

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Mike Petusky, Barrington Research Associates, Inc. - Analyst [31]

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Okay, that's all I've got for now. Thank you.

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Operator [32]

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Thank you. And I'm showing no further questions at this time. I'd like to turn the call back to Mr. Lindstrom for closing remarks.

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Jim Lindstrom, The Providence Service Corporation - CEO [33]

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I didn't have anything else to add, so thank you very much, everyone, for joining. And, as usual, please feel free to reach out to us at any time with any questions or comments. Thank you. Bye.

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Operator [34]

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Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program, and you may all disconnect. Everyone, have a wonderful day.