EX-99.1 2 tnet-ex991_201410316.htm EX-99.1

Exhibit 99.1

 

TriNet Announces Third Quarter Fiscal 2014 Results

 

24% Growth in Total Revenues and 22% Growth in Net Service Revenues

25% Increase in Worksite Employees (WSEs), to 273,000

 

SAN LEANDRO, Calif. November 4, 2014 TriNet Group, Inc. (NYSE: TNET), a leading provider of a comprehensive human resources solution for small to medium-sized businesses, today announced financial results for the third quarter of 2014. Highlights include:

·

Total revenues for the third quarter increased 24% to $556.0 million and Net Service Revenues increased 22% to $127.8 million from the same period last year.  

·

Total Worksite Employees (WSEs) at September 30, 2014 increased 25% from September 30, 2013, to approximately 273,000.  

·

Net income for the third quarter was $0.7 million, or $0.01 per diluted share, compared to a net loss of $7.7 million, or $(0.60) per diluted share, in the same period last year.

·

Adjusted Net Income for the third quarter was $20.2 million, or $0.28 per diluted share on a pro forma basis, compared to Adjusted Net Income of $9.3 million, or $0.13 per diluted share, in the same period last year.

·

Adjusted EBITDA for the third quarter was $41.5 million, a 50% increase from the same period last year.

“Our third quarter results highlight the unique value delivered by our bundled HR solution and continued strong execution of our strategic plan,” said Burton M. Goldfield, TriNet’s President and CEO.  “The momentum generated in the first half of the year has continued into the third quarter as our growing professional salesforce drives client adoption of our solutions across our target verticals.   With a strong sales engine, disciplined operating strategy and proven solution offering, we believe we’re well positioned to drive robust returns in a large, underpenetrated market of small and medium-sized businesses facing increasing HR complexities.”

 

Results for the third quarter of 2014 reflect the 25% growth in WSEs as TriNet continued to leverage its growing salesforce to increase penetration of targeted customer verticals.  TriNet’s total revenues increased 24% to $556.0 million, while Net Service Revenues increased 22% to $127.8 million in the third quarter of 2014.  Net Service Revenues consisted of professional service revenues of $86.9 million and Net Insurance Service Revenues of $40.9 million.  Net Insurance Service Revenues consisted of insurance service revenues of $469.1 million, less insurance costs of $428.2 million.  Professional service revenues increased 15% and Net Insurance Service Revenues increased 41% over the third quarter of 2013. TriNet ended the third quarter of 2014 with 391 Total Sales Representatives, up from 301 at the end of the third quarter of 2013.

 

At September 30, 2014, TriNet had cash and equivalents of $98.0 million and total debt of $550.2 million.

 

Earnings Conference Call and Audio Webcast

TriNet will host a conference call at 2:00 p.m. PT (5:00 p.m. ET) today to discuss its quarterly results and the outlook for the full 2014 fiscal year. TriNet encourages participants to pre-register for the conference call. Callers who pre-register will be given a unique PIN to gain immediate access to the call and bypass the live operator. To pre-register, go to: http://dpregister.com/10054271. For those who would like to join the call but have not pre-registered, they can do so by dialing +1 (412) 902-6510 and requesting the “TriNet Conference Call.”  The live webcast of the conference call can be accessed on the Investor Relations section of TriNet’s website at http://investor.trinet.com. A replay of the webcast will be available on this site for approximately one year. A telephonic replay will be available for one week following the conference call at +1 (412) 317-0088 conference ID: 10054271.

 

About TriNet

TriNet is a leading provider of a comprehensive human resources solution for small to medium-sized businesses, or SMBs. We enhance business productivity by enabling our clients to outsource their human resources, or HR, function to one strategic partner and allowing them to focus on operating and growing their core businesses. Our HR solution includes services such as payroll processing, human capital consulting, employment law compliance and employee benefits, including health insurance, retirement plans and workers compensation insurance. Our services are delivered by our expert team of HR professionals and enabled by our proprietary, cloud-based technology platform, which allows our clients and their employees to efficiently conduct their HR transactions anytime and anywhere.

 


1

 


 

Use of Non-GAAP Financial Measures

Reconciliations of non-GAAP financial measures to TriNets financial results as determined in accordance with GAAP are included at the end of this press release following the accompanying financial data. For a description of these non-GAAP financial measures, including the reasons management uses each measure, please see the section of the tables titled “Non-GAAP Financial Results.”

 

Forward-Looking Statements

This press release contains, and statements made during the above referenced conference call will contain, forward-looking statements including, among other things, TriNet’s expectations regarding the growth of its salesforce and its customer base; its ability to generate returns through penetration of the SMB market; and future total revenues, Net Service Revenues, professional service revenues, insurance service revenues, Net Insurance Service Revenues, expenses, net income, Adjusted Net Income and Adjusted EBITDA. These statements are not guarantees of future performance, but are based on management’s expectations as of the date hereof and assumptions that are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements. Important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements include: risks associated with the market acceptance of outsourcing the HR function, and the anticipated benefits associated with the use of a bundled HR solution; our ability to continue to expand our direct sales force and the efficacy of our sales and marketing efforts; our ability to gain new clients, and our clients’ ability to grow and gain more employees; our ability to effectively acquire and integrate new businesses; the effects of seasonal trends on our results of operations; changes to and our ability to comply with laws and regulations, including both those applicable to the co-employment relationship as well as those applicable to our clients’ businesses and their employees; the implementation of the Patient Protection and Affordable Care Act, as modified by the Health Care and Education Reconciliation Act, and its application to the co-employer relationship; our ability to effectively manage our growth; the effects of increased competition and our ability to compete effectively; and our ability to comply with the restrictions of our credit facility and meet our debt obligations.

 

Further information on risks that could affect TriNets results is included in our filings with the Securities and Exchange Commission, including our Quarterly Report on Form 10-Q filed with the Commission on August 6, 2014, which could cause actual results to vary from expectations. Except as required by law, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements.

 

Contacts:

 

Investors:

Media:

Alex Bauer

Jock Breitwieser

TriNet

TriNet

Investorrelations@TriNet.com

Jock.Breitwieser@TriNet.com

(510) 875-7201

(510) 875-7250

 

TriNet, Ambitions Realized and the TriNet logo are registered trademarks of TriNet. All other trademarks, service marks, registered trademarks, or registered service marks are the property of their respective owners.

 

 

2

 


 

TriNet Group, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share data)

(Unaudited)

 

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

 

2014

 

 

 

2013

 

 

 

2014

 

 

 

2013

 

Professional service revenues

 

$

86,864

 

 

$

75,641

 

 

$

251,999

 

 

$

195,952

 

Insurance service revenues

 

 

469,087

 

 

 

372,476

 

 

 

1,337,870

 

 

 

966,667

 

Total revenues

 

 

555,951

 

 

 

448,117

 

 

 

1,589,869

 

 

 

1,162,619

 

Costs and operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Insurance costs

 

 

428,184

 

 

 

343,464

 

 

 

1,209,536

 

 

 

866,593

 

Cost of providing services (exclusive of depreciation and

   amortization of intangible assets)

 

 

32,575

 

 

 

27,556

 

 

 

100,252

 

 

 

74,042

 

Sales and marketing

 

 

37,396

 

 

 

31,367

 

 

 

104,225

 

 

 

79,387

 

General and administrative

 

 

13,766

 

 

 

14,593

 

 

 

40,785

 

 

 

39,821

 

Systems development and programming costs

 

 

6,776

 

 

 

5,052

 

 

 

19,235

 

 

 

15,140

 

Amortization of intangible assets

 

 

12,743

 

 

 

15,442

 

 

 

39,559

 

 

 

35,926

 

Depreciation

 

 

3,265

 

 

 

3,356

 

 

 

9,725

 

 

 

8,908

 

Total costs and operating expenses

 

 

534,705

 

 

 

440,830

 

 

 

1,523,317

 

 

 

1,119,817

 

Operating income

 

 

21,246

 

 

 

7,287

 

 

 

66,552

 

 

 

42,802

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense and bank fees

 

 

(18,462

)

 

 

(19,902

)

 

 

(49,174

)

 

 

(32,091

)

Other, net

 

 

179

 

 

 

75

 

 

 

257

 

 

 

309

 

Income (loss) before provision for (benefit from) income taxes

 

 

2,963

 

 

 

(12,540

)

 

 

17,635

 

 

 

11,020

 

Provision for (benefit from) income taxes

 

 

2,238

 

 

 

(4,800

)

 

 

9,149

 

 

 

3,880

 

Net income (loss)

 

$

725

 

 

$

(7,740

)

 

$

8,486

 

 

$

7,140

 

Net income (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.01

 

 

$

(0.60

)

 

$

0.13

 

 

$

0.14

 

Diluted

 

$

0.01

 

 

$

(0.60

)

 

$

0.13

 

 

$

0.13

 

Weighted average shares:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

69,134,908

 

 

 

12,835,295

 

 

 

51,654,608

 

 

 

11,501,581

 

Diluted

 

 

72,954,352

 

 

 

12,835,295

 

 

 

55,003,651

 

 

 

15,196,398

 

 


3

 


 

TriNet Group, Inc. and Subsidiaries

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

 

 

September 30,

 

 

December 31,

 

 

2014

 

 

2013

 

Assets

(unaudited)

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

$

97,952

 

 

$

94,356

 

Restricted cash

 

14,538

 

 

 

15,267

 

Prepaid income taxes

 

32,973

 

 

 

3,331

 

Deferred income taxes

 

68

 

 

 

68

 

Prepaid expenses

 

9,636

 

 

 

7,849

 

Deferred loan costs and other current assets

 

5,273

 

 

 

5,238

 

Worksite employee related assets

 

697,047

 

 

 

772,437

 

Total current assets

 

857,487

 

 

 

898,546

 

Workers compensation receivable

 

38,142

 

 

 

25,381

 

Restricted cash and investments

 

62,454

 

 

 

36,968

 

Property and equipment, net

 

32,353

 

 

 

25,690

 

Goodwill

 

288,857

 

 

 

288,857

 

Other intangible assets, net

 

94,461

 

 

 

134,020

 

Deferred income taxes

 

7,621

 

 

 

1,000

 

Deferred loan costs and other assets

 

11,930

 

 

 

24,276

 

Total assets

$

1,393,305

 

 

$

1,434,738

 

Liabilities and stockholders’ deficit

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable

$

11,422

 

 

$

7,315

 

Accrued corporate wages

 

31,538

 

 

 

26,264

 

Deferred income taxes

 

73,121

 

 

 

16,535

 

Current portion of notes payable and borrowings under capital leases

 

20,694

 

 

 

6,669

 

Other current liabilities

 

12,736

 

 

 

9,078

 

Worksite employee related liabilities

 

690,703

 

 

 

767,624

 

Total current liabilities

 

840,214

 

 

 

833,485

 

Notes payable and borrowings under capital leases, less current portion

 

529,542

 

 

 

812,208

 

Workers compensation liabilities

 

67,273

 

 

 

45,309

 

Deferred income taxes

 

 

 

 

8,888

 

Other liabilities

 

5,189

 

 

 

5,210

 

Total liabilities

 

1,442,218

 

 

 

1,705,100

 

Commitments and contingencies

 

 

 

 

 

 

 

Series G convertible preferred stock, $.0001 per share stated value

   (aggregate liquidation preference of $59,306); no shares authorized, issued and outstanding

   at September 30, 2014; 5,391,441 shares authorized, issued and outstanding at December 31, 2013

 

 

 

 

59,059

 

Series H convertible preferred stock, $.0001 per share stated value

   (aggregate liquidation preference of $60,000); no shares authorized, issued and outstanding

   at September 30, 2014; 4,124,986 shares authorized, issued and outstanding at December 31, 2013

 

 

 

 

63,819

 

Stockholders’ deficit:

 

 

 

 

 

 

 

Preferred stock, $.000025 per share stated value; 20,000,000 shares authorized;

   no shares issued and outstanding at September 30, 2014 and December 31, 2013

 

 

 

 

 

Common stock, $.000025 per share stated value; 750,000,000 shares authorized;

   69,383,359 and 15,259,540 shares issued and outstanding at September 30, 2014

   and December 31, 2013

 

411,449

 

 

 

74,160

 

Accumulated deficit

 

(460,120

)

 

 

(467,209

)

Accumulated other comprehensive loss

 

(242

)

 

 

(191

)

Total stockholders’ deficit

 

(48,913

)

 

 

(393,240

)

Total liabilities and stockholders’ deficit

$

1,393,305

 

 

$

1,434,738

 

4

 


 

 

TriNet Group, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

 

Nine Months Ended September 30,

 

 

 

 

2014

 

 

 

2013

 

Operating activities

 

 

 

 

 

 

 

 

Net income

 

$

8,486

 

 

$

7,140

 

Adjustments to reconcile net income to net cash provided by  operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

67,754

 

 

 

56,313

 

Deferred income taxes

 

 

27,180

 

 

 

(9,534

)

Stock-based compensation

 

 

8,251

 

 

 

4,360

 

Excess tax benefit from equity incentive plan activity

 

 

 

 

 

(14,281

)

Accretion of workers compensation and leases fair value adjustment

 

 

(969

)

 

 

(1,244

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Restricted cash

 

 

(7,968

)

 

 

(6,522

)

Prepaid expenses and other current assets

 

 

(7,899

)

 

 

(8,049

)

Workers compensation receivables

 

 

(11,775

)

 

 

3,624

 

Other assets

 

 

8,166

 

 

 

3,995

 

Accounts payable

 

 

4,826

 

 

 

1,598

 

Income tax payable/receivable

 

 

(29,057

)

 

 

12,314

 

Other current liabilities

 

 

11,321

 

 

 

7,447

 

Other liabilities

 

 

22,196

 

 

 

1,968

 

Worksite employee related assets

 

 

75,390

 

 

 

(41,062

)

Worksite employee related liabilities

 

 

(76,921

)

 

 

44,013

 

Net cash provided by operating activities

 

 

98,981

 

 

 

62,080

 

Investing activities

 

 

 

 

 

 

 

 

Acquisition of businesses

 

 

 

 

 

(193,727

)

Proceeds from sale and maturity of debt securities

 

 

 

 

 

500

 

Purchase of debt securities

 

 

(16,789

)

 

 

(7,253

)

Purchase of property and equipment

 

 

(17,082

)

 

 

(6,314

)

Net cash used in investing activities

 

 

(33,871

)

 

 

(206,794

)

Financing activities

 

 

 

 

 

 

 

 

Proceeds from issuance of common stock

 

 

218,572

 

 

 

 

Proceeds from issuance of common stock on exercised options

 

 

1,146

 

 

 

6,889

 

Excess tax benefit from equity incentive plan activity

 

 

 

 

 

14,281

 

Borrowings under notes payable

 

 

 

 

 

970,000

 

Repayment of notes payable

 

 

(268,425

)

 

 

(450,104

)

Payment of debt issuance costs

 

 

(11,060

)

 

 

(24,611

)

Payments of special dividend

 

 

 

 

 

(310,922

)

Repayments under capital leases

 

 

(263

)

 

 

(620

)

Repurchase of common stock

 

 

(1,422

)

 

 

(11,767

)

Net cash provided by (used in) financing activities

 

 

(61,452

)

 

 

193,146

 

Effect of exchange rate changes on cash and cash equivalents

 

 

(62

)

 

 

(20

)

Net increase in cash and cash equivalents

 

 

3,596

 

 

 

48,412

 

Cash and cash equivalents at beginning of period

 

 

94,356

 

 

 

63,749

 

Cash and cash equivalents at end of period

 

$

97,952

 

 

$

112,161

 

 


5

 


 

Key Operating Metrics

 

We regularly review certain key operating metrics to evaluate growth trends, measure our performance and make strategic decisions. Our key operating metrics were as follows:

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2014

 

 

2013

 

 

2014

 

 

2013

 

Net Insurance Service Revenues (in thousands)

 

$

40,903

 

 

$

29,012

 

 

$

128,334

 

 

$

100,074

 

Net Service Revenues (in thousands)

 

$

127,767

 

 

$

104,653

 

 

$

380,333

 

 

$

296,026

 

Total WSEs

 

 

272,846

 

 

 

218,577

 

 

 

 

 

 

 

 

 

Total Sales Representatives

 

 

391

 

 

 

301

 

 

 

 

 

 

 

 

 

 

Non-GAAP Financial Results

 

We use Net Insurance Service Revenues, Net Service Revenues, Adjusted EBITDA, Adjusted Net Income and, in 2014, Pro forma Adjusted Net Income per share – diluted to provide an additional view of our operational performance. Net Insurance Service Revenues, Net Service Revenues, Adjusted EBITDA, Adjusted Net Income and Pro forma Adjusted Net Income per share – diluted are financial measures that are not prepared in accordance with GAAP. We define Net Insurance Service Revenues as insurance service revenues less insurance costs, which include the premiums we pay to insurance carriers for the health and workers compensation insurance coverage provided to our clients and WSEs and the reimbursements we pay to the insurance carriers for claim payments within our insurance deductible layer. We define Net Service Revenues as the sum of professional service revenues and Net Insurance Service Revenues. We define Adjusted EBITDA as net income (loss), excluding the effects of our income tax provision (benefit), interest expense, depreciation, amortization of intangible assets, stock-based compensation expense and, in 2014, the expenses of the registered secondary offering of our common stock that was completed in September 2014. We define Adjusted Net Income as net income (loss), excluding the effects of stock-based compensation, amortization of intangible assets, non-cash interest expense and, in 2014, a debt prepayment premium paid in connection with the repayment of our second lien debt facility using proceeds from our initial public offering, as well as the expenses of the registered secondary offering of our common stock that was completed in September 2014 and the income tax effect of these pre-tax adjustments at our effective tax rate. In 2014, the effective tax rate is adjusted to 39.5% to exclude income tax on non-deductible stock-based compensation and discrete items including the cumulative effect of state law changes. Non-cash interest expense represents amortization and write-off of our debt issuance costs and, in 2014, a debt prepayment premium. We define Pro Forma Adjusted Net Income per share – diluted as Adjusted Net Income per basic share adjusted to reflect the equity structure as if our initial public offering and associated conversion of preferred stock had occurred at the beginning of the period and all option exercises that occurred during the period occurred at the beginning of the period, and then giving effect to all remaining potential shares of common stock issuable upon exercise of options or settlement of restricted stock units, to the extent dilutive.

We believe that the use of Net Insurance Service Revenues provides useful information as it presents a measure of revenues from our provision of insurance services to our clients that eliminates the cost of insurance. We believe that Net Service Revenues provides a useful measure of total revenues for the two main components of our revenues calculated on a consistent basis. We believe that the use of Adjusted EBITDA, Adjusted Net Income and Pro Forma Adjusted Net Income per share – diluted provides additional period-to-period comparisons and analysis of trends in our business, as they exclude certain one-time and non-cash expenses. We believe that Net Insurance Service Revenues, Net Service Revenues, Adjusted EBITDA, Adjusted Net Income, and Pro Forma Adjusted Net Income per share – diluted are useful for our stockholders and board of directors by helping them to identify trends in our business and understand how our management evaluates our business. We use Net Insurance Service Revenues, Net Service Revenues, Adjusted EBITDA, Adjusted Net Income and Pro Forma Adjusted Net Income per share – diluted to monitor and evaluate our operating results and trends on an ongoing basis and internally for operating, budgeting and financial planning purposes, in addition to allocating our resources to enhance the financial performance of our business and evaluating the effectiveness of our business strategies. We also use Net Service Revenues and Adjusted EBITDA in determining the incentive compensation for management.


6

 


 

Net Insurance Service Revenues, Net Service Revenues, Adjusted EBITDA, Adjusted Net Income and Pro Forma Adjusted Net Income per share – diluted are not prepared in accordance with, and should not be considered in isolation of, or as an alternative to, measurements required by GAAP. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. As non-GAAP measures, Net Insurance Service Revenues, Net Service Revenues, Adjusted EBITDA, Adjusted Net Income and Pro Forma Adjusted Net Income per share – diluted have limitations in that they do not reflect all of the amounts associated with our results of operations as determined in accordance with GAAP. In particular:

Net Insurance Service Revenues and Net Service Revenues are reduced by the insurance costs that we pay to the insurance carriers;

Adjusted EBITDA does not reflect interest expense, or the cash requirements necessary to service interest or principal payments on our debt;

Adjusted EBITDA does not reflect the amounts we paid in taxes or other components of our tax provision;

Adjusted EBITDA does not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments;

Adjusted EBITDA and Adjusted Net Income do not reflect changes in, or cash requirements for, our working capital needs;

Adjusted EBITDA and Adjusted Net Income do not reflect the expenses we incurred in connection with the registered offering of our common stock during the third quarter of 2014;

Adjusted EBITDA, Adjusted Net Income and Pro Forma Adjusted Net Income per share – diluted do not reflect the non-cash component of employee compensation;

Although depreciation and amortization of intangible assets are non-cash charges, the assets being depreciated and amortized often will have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements; and

 

Other companies in our industry may calculate these measures or similar measures differently than we do, limiting their usefulness as a comparative measure.

 

Because of these limitations, you should consider Net Insurance Service Revenues, Net Service Revenues, Adjusted EBITDA, Adjusted Net Income and Pro Forma Adjusted Net Income per share – diluted alongside other financial performance measures, including total revenues, net income (loss) and our financial results presented in accordance with GAAP.

 

The table below sets forth a reconciliation of GAAP insurance service revenues to Net Insurance Service Revenues:

 

 

Three months ended

 

 

Change

 

 

Nine months ended

 

 

Change

 

 

September 30,

 

 

2014 vs. 2013

 

 

September 30,

 

 

2014 vs. 2013

 

 

2014

 

 

2013

 

 

$

 

 

%

 

 

2014

 

 

2013

 

 

$

 

 

%

 

 

(in thousands, except percentages)

 

Insurance service revenues

$

469,087

 

 

$

372,476

 

 

$

96,611

 

 

 

26%

 

 

$

1,337,870

 

 

$

966,667

 

 

$

371,203

 

 

 

38%

 

Less:  Insurance costs

 

428,184

 

 

 

343,464

 

 

 

84,720

 

 

 

25%

 

 

 

1,209,536

 

 

 

866,593

 

 

 

342,943

 

 

 

40%

 

Net Insurance Service Revenues

$

40,903

 

 

$

29,012

 

 

$

11,891

 

 

 

41%

 

 

$

128,334

 

 

$

100,074

 

 

$

28,260

 

 

 

28%

 

 

The table below sets forth a reconciliation of GAAP total revenues to Net Service Revenues:

 

 

Three months ended

 

 

Change

 

 

Nine months ended

 

 

Change

 

 

September 30,

 

 

2014 vs. 2013

 

 

September 30,

 

 

2014 vs. 2013

 

 

2014

 

 

2013

 

 

$

 

 

%

 

 

2014

 

 

2013

 

 

$

 

 

%

 

 

(in thousands, except percentages)

 

Total revenues

$

555,951

 

 

$

448,117

 

 

$

107,834

 

 

 

24%

 

 

$

1,589,869

 

 

$

1,162,619

 

 

$

427,250

 

 

 

37%

 

Less:  Insurance costs

 

428,184

 

 

 

343,464

 

 

 

84,720

 

 

 

25%

 

 

 

1,209,536

 

 

 

866,593

 

 

 

342,943

 

 

 

40%

 

Net Service Revenues

$

127,767

 

 

$

104,653

 

 

$

23,114

 

 

 

22%

 

 

$

380,333

 

 

$

296,026

 

 

$

84,307

 

 

 

28%

 

 


7

 


 

The table below sets forth a reconciliation of GAAP net income to Adjusted EBITDA:

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2014

 

 

2013

 

 

2014

 

 

2013

 

 

 

(in thousands)

 

Net income (loss)

 

$

725

 

 

$

(7,740

)

 

$

8,486

 

 

$

7,140

 

Provision for (benefit from) income taxes

 

 

2,238

 

 

 

(4,800

)

 

 

9,149

 

 

 

3,880

 

Stock-based compensation

 

 

3,181

 

 

 

1,495

 

 

 

8,251

 

 

 

4,360

 

Interest expense and bank fees

 

 

18,462

 

 

 

19,902

 

 

 

49,174

 

 

 

32,091

 

Depreciation

 

 

3,265

 

 

 

3,356

 

 

 

9,725

 

 

 

8,908

 

Amortization of intangible assets

 

 

12,743

 

 

 

15,442

 

 

 

39,559

 

 

 

35,926

 

Secondary offering costs

 

 

858

 

 

 

-

 

 

 

858

 

 

 

-

 

Adjusted EBITDA

 

$

41,472

 

 

$

27,655

 

 

$

125,202

 

 

$

92,305

 

 

The table below sets forth a reconciliation of GAAP net income to Adjusted Net Income:

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2014

 

 

2013

 

 

2014

 

 

2013

 

 

 

(in thousands)

 

Net income (loss)

 

$

725

 

 

$

(7,740

)

 

$

8,486

 

 

$

7,140

 

Effective income tax rate adjustment

 

 

1,068

 

 

 

-

 

 

 

2,183

 

 

 

-

 

Stock-based compensation

 

 

3,181

 

 

 

1,495

 

 

 

8,251

 

 

 

4,360

 

Amortization of intangible assets

 

 

12,743

 

 

 

15,442

 

 

 

39,559

 

 

 

35,926

 

Non-cash interest expense

 

 

13,602

 

 

 

11,145

 

 

 

21,088

 

 

 

12,442

 

Debt prepayment premium

 

 

-

 

 

 

-

 

 

 

3,800

 

 

 

-

 

Secondary offering costs

 

 

858

 

 

 

-

 

 

 

858

 

 

 

-

 

Income tax impact of pre-tax adjustments at 39.5%

 

 

(12,002

)

 

 

(11,092

)

 

 

(29,055

)

 

 

(20,828

)

Adjusted Net Income

 

$

20,175

 

 

$

9,250

 

 

$

55,170

 

 

$

39,040

 

 

The table below sets forth a reconciliation of GAAP weighted average shares of common stock – basic to pro forma weighted average shares of common stock - diluted and Adjusted Net Income per share – diluted (in thousands, except per share amount) as if the equity structure had been in place at the beginning of the periods presented:

 

Three Months Ended

 

 

Nine Months Ended

 

 

September 30,

 

 

September 30,

 

 

2014

 

 

2013

 

 

2014

 

 

2013

 

GAAP Weighted average shares of common stock - basic

 

69,135

 

 

 

12,835

 

 

 

51,655

 

 

 

11,502

 

Effect of IPO, conversion of preferred stock and

  exercise of stock options during the period included above

 

(31

)

 

 

(1,700

)

 

 

(36,587

)

 

 

(800

)

Adjustments as if the equity structure had occurred at the beginning of the periods:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Conversion of preferred stock

 

 

 

 

38,066

 

 

 

38,066

 

 

 

38,066

 

Common stock issued in connection with IPO

 

 

 

 

15,000

 

 

 

15,000

 

 

 

15,000

 

Common stock issued in connection with stock option exercises

 

280

 

 

 

3,699

 

 

 

1,058

 

 

 

4,125

 

Dilutive effect of outstanding stock options and restricted stock units

 

3,623

 

 

 

2,829

 

 

 

2,917

 

 

 

2,352

 

Pro forma weighted average shares of common stock - diluted

 

73,007

 

 

 

70,729

 

 

 

72,109

 

 

 

70,245

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Net Income

$

20,175

 

 

$

9,250

 

 

$

55,170

 

 

$

39,040

 

Pro forma adjusted net income per share - diluted

$

0.28

 

 

$

0.13

 

 

$

0.77

 

 

$

0.56

 

 

8