ATLANTA--(BUSINESS WIRE)--The Providence Service Corporation (Nasdaq: PRSC), the nation’s largest provider of non-emergency medical transportation programs and holder of a minority interest in Matrix Medical Network, today reported financial results for the three months ended September 30, 2020.

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.”

Third Quarter 2020 Results

For the third quarter of 2020, the Company reported revenue of $320.6 million, a decrease of 18.5% from $393.4 million in the third quarter of 2019.

Operating income was $43.3 million, or 13.5% of revenue, in the third quarter of 2020, compared to operating income of $17.0 million, or 4.3% of revenue, in the third quarter of 2019. Income from continuing operations, net of tax, in the third quarter of 2020 was $38.9 million, or $2.51 per diluted common share, compared to income from continuing operations, net of tax, of $8.6 million, or $0.50 per diluted common share, in the third quarter of 2019.

Adjusted EBITDA was $55.3 million, or 17.2% of revenue, in the third quarter of 2020, compared to $23.1 million, or 5.9% of revenue, in the third quarter of 2019.

Adjusted Net Income in the third quarter of 2020 was $38.2 million, or $2.69 per diluted common share, compared to $13.3 million, or $0.81 per diluted common share, in the third quarter of 2019.

The quarter-over-quarter decrease in revenue was primarily due to lower trip volume caused by the impact of COVID-19. This lower volume resulted in a reduction of revenue in the current quarter in line with margin limitations that govern some of our profit corridor and reconciliation payor contracts. Additionally, revenue was negatively impacted by our exit from certain contracts for which we no longer provide services. The decreases were partially offset by $27.7 million of incremental revenue from National MedTrans.

Adjusted EBITDA increased in the third quarter of 2020 due to cost savings and productivity initiatives associated with the Company's six-pillar growth strategy in addition to incremental margin from National MedTrans and lower utilization and contact center activity due to COVID-19. This was partially offset by higher corporate general and administrative cost as the Company continued to make investments in its employees and technology.

Matrix - Equity Investment

For the third quarter of 2020, Matrix’s revenue was $140.7 million, an increase of 96.4% from $71.7 million in the third quarter of 2019. Matrix had operating income of $35.5 million for the third quarter of 2020, compared to an operating loss of $2.6 million for the third quarter of 2019.

Providence recorded income of $10.3 million related to its Matrix equity investment compared to a loss of $3.2 million for the third quarter of 2019. For the third quarter of 2020, Matrix recorded Adjusted EBITDA of $54.3 million, or 38.6% of revenue, compared to $10.0 million, or 14.0% of revenue, for the third quarter of 2019.

Matrix’s Adjusted EBITDA for the quarter was positively impacted by its continued success with its new Employee Health and Wellness solution, signing several new contracts with well-known employers and organizations. Matrix’s in-home and telehealth comprehensive health assessments continued to ramp during the quarter.

On October 2, 2020, Matrix announced the acquisition of Biocerna, a CLIA-certified and CAP-accredited laboratory dedicated to delivering clinical diagnostics tests to improve patients’ safety and quality of care. Biocerna has developed innovative assays, including for COVID-19 testing, that will allow Matrix to provide safe and expedient testing services to Matrix's clients. Biocerna is located in Fulton, Maryland and has significant clinical diagnostics and testing support for clinical trials.

As of September 30, 2020, Matrix had $255.0 million in net debt and Providence's ownership interest was 43.6%.

About Providence

The Providence Service Corporation, through its fully-owned subsidiary LogistiCare Solutions, LLC, 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.