Ft. Lauderdale, FL – Patriot National, Inc. (NYSE: PN) recently announced its financial results for the quarter ended June 30, 2016, and confirmed that the special committee of its Board of Directors is in the final stages of its consideration of possible strategic opportunities.
The Special Committee, which is comprised of independent directors, is working collaboratively with Ebix, Inc. to explore the possible combination of the two businesses, while continuing to explore other available strategic opportunities for Patriot National to maximize value for shareholders. Ebix is expected to complete its due diligence by August 31, 2016, as the Special Committee nears the conclusion of its evaluation of the prospects it has received and expects to make a recommendation to the Board of Directors soon on whether the Company should enter into any transaction or pursue another alternative. As announced August 1, 2016, Ebix made an improved offer to acquire 100% of the outstanding stock of the Company.
For the quarter ended June 30, 2016:
(Comparisons to the corresponding prior-year period)
- Total Revenues increased 19% to $56.5 million
- Total Fee Income increased 19% to $56.5 million
- GAAP Net Income was $14.2 million, or $0.45 per diluted share
- Adjusted Earnings of $2.8 million, or $0.11 per diluted share
- Adjusted EBITDA of $10.7 million, down 6%
- Operating Cash Flow1of $8.5 million, down 7%
Launched operating efficiency initiatives that will generate an additional $5.3 million annualized savings
1See Reconciliation of GAAP net income to Adjusted EBITDA, Adjusted Earnings and Operating Cash Flow in the accompanying financial tables.
“During the second quarter, we continued to execute on our strategy of becoming the leading end-to-end technology-enabled services provider to the insurance industry. While the second quarter is always a seasonably low quarter for our company, we continue to be extremely optimistic about our ability to drive significant organic revenue and EBITDA growth through the second half of 2016, as well as full year 2017,” said Steven M. Mariano, Chief Executive Officer of Patriot National. “Our sales pipeline remains strong and we are focused on driving top-line growth and profitability by expediting new carrier agreements and technology wins as well as significantly reducing our cost structure.”
“We have built a powerful operating platform to support our long-term growth, with comprehensive technology and outsourcing solutions that are highly valued by our customers. Our roadmap for the future focuses on leveraging our deep customer relationships and broad product portfolio to serve a greater share of our customers’ needs. We are also focused on continuing to deliver innovative technology solutions such as our InsurePay automated payroll solution and our Insurance Expert software platform.”
Three Months Ended June 30, 2016
Total fee income was $56.5 million for the second quarter of 2016, an increase of 19.2% compared with $47.4 million in the second quarter of 2015. The increase in fee income during the second quarter of 2016 was primarily due to the Company’s acquisitions in the trailing twelve months ended June 30, 2016. Organic fee income of $47.3 million did not change significantly year-over-year.
Total expenses for the second quarter of 2016 were $52.3 million, compared with $46.0 million in the second quarter of 2015. The increase was largely attributable to the acquisitions closed during the trailing twelve months ended June 30, 2016.
Second quarter 2016 GAAP net income was $14.2 million, or $0.45 per diluted share, which included an income tax benefit as a result of the release of the valuation adjustment for Deferred Tax Asset of $12.5 million. This compares with $1 million, or $0.04 per diluted share, in the second quarter of 2015. The weighted average diluted shares were 31.6 million on a GAAP basis, which includes 5.0 million shares relating to the warrants associated with the PIPE financing as discussed in the Company’s previous 10-Q (the “Warrants”); and 26.6 million shares excluding the Warrants on a non-GAAP basis respectively. It is important to note that pursuant to the Back-to-Back Agreement between the Company and Mr. Mariano, Mr. Mariano has agreed to tender any shares back to the Company for any shares delivered by the Company pursuant to the Warrant Agreement.
Adjusted earnings for the second quarter of 2016 were $2.8 million, or $0.11 per diluted share, compared with Adjusted earnings of $4.5 million, or $0.17 per diluted share, in the second quarter of 2015. In calculating the weighted average diluted shares, the Warrants mentioned above have been excluded. Patriot National defines Adjusted earnings and Adjusted earnings per share as net income (loss) adjusted for cost for debt payoff, non-cash stock compensation costs, net realized gains (losses) on investments, increase (decrease) in fair value of warrant redemption liability, acquisition costs, severance expense, public offering costs and the income tax effect related to reconciling items.
Adjusted EBITDA for the second quarter of 2016 was $10.7 million, compared to Adjusted EBITDA of $11.4 million for the second quarter of 2015. Patriot National defines Adjusted EBITDA as net income (loss) adjusted for income tax, interest, depreciation and amortization, net realized gains (losses) on investments, increase (decrease) in fair value of warrant redemption liability, costs for debt payoff, non-cash stock compensation costs, acquisition costs, severance expense and public offering costs.
Operating Cash Flow for the second quarter of 2016 was $8.5 million, compared to $9.2 million for the second quarter of 2015. Patriot National defines Operating Cash Flow as Adjusted EBITDA less income tax expense, interest expense and capital expenditures.
The complete results release is available here: Patriot National Second Quarter 2016 Results
Source: Patriot National