ModivCare Inc (MODV) 2014 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the first-quarter 2014 Providence Service Corporation earnings conference call. My name is Tony and I will be operator for today. At this time, all participants are in listen-only mode. Later, we will conduct a Q&A session. (Operator Instructions) As a reminder, this conference is being recorded for replay purposes.

I would now like to turn the conference over to your host for today, Ms. Alison Ziegler of Cameron Associates. Please proceed.

Thanks, Tony. Good morning, everyone, and thank you for joining us this morning for Providence's conference call and webcast to discuss financial results for the first quarter ended March 31, 2014. The press release was issued yesterday after the market closed.

Before we begin, please note that we have arranged for a replay of this call. The replay will be available approximately one hour after the call's conclusion, and will remain available until May 15. The replay number is 888-286-8010 with the pass code 34840827. This call is also being webcast live with a replay available. To access the webcast, go to www.provcorp.com and look under the Investor tab, as well as the Event Calendar.

Before we get started, I'd like to remind everyone of the Safe Harbor statement included in the press release, and that the cautionary statements apply to today's conference call, as well. During the course of this call, the Company may make projections or other forward-looking statements regarding future events or the Company's beliefs about its financial results for 2014 and beyond. We wish to caution you that such statements are just predictions, and involve risks and uncertainties. Actual results may differ materially. Factors which may affect actual results are detailed in the Company's recent filings with the SEC, including the Company's 10-K for the year ended December 31, 2013.

The Company's forward-looking statements are dynamic and subject to change. Therefore, these statements speak only as of the date of this webcast, May 8, 2014. The Company may choose from time to time to provide updates. And, if they do, we will disseminate them -- the updates to the investing public.

In addition to the financial results prepared in accordance with Generally Accepted Accounting Principles or GAAP stated in the press release and provided throughout our call today, the Company has also provided EBITDA and adjusted EBITDA non-GAAP measurements, which present its earnings on a pro forma basis. Providence's management utilizes these non-GAAP measurements as a means to measure overall operating performance, and to better compare current operating results with other companies within this industry.

Both EBITDA and adjusted EBITDA are measurements not determined in accordance with or an alternative for Generally Accounted Accounting Principles, and may be different from pro forma measures used by some companies. A definition, calculation, and reconciliation to the financial statements of each can be found in our press release. Items excluded in the non-GAAP measures pertain to certain items that are considered to be material, so the exclusion of these items would, in management's belief, enhance the readers' ability to compare the results of the Company's business after excluding these items.

I would now like to turn the call over to Warren Rustand, Chief Executive Officer. Go ahead, Warren.

Thank you, Alison, and good morning. After our scripted remarks, we will be available to take your questions. With us today on the call we have Bob Wilson, our CFO; Herman Schwarz, CEO of LogistiCare; and Mike Fidgeon, Chief Operating Officer of our Human Services division. Bob is in London; Herman in Wisconsin; Mike in Washington, D.C.; and I'm here at corporate headquarters in Tucson.

We reported solid financial results in the first quarter, including modest revenue growth in both our NET and Human Services division. While net income and EPS declined quarter over quarter, after backing out costs associated with the pending acquisition of Ingeus, we saw adjusted EBITDA rise nearly 8% and continued positive growth in cash flow.

Our NET Services segment saw continued improvement in margins in the first quarter of 2014 over the year-ago period as a result of business growth, favorable transportation utilization rates primarily due to weather, negotiated rate adjustments, and the exit from certain less profitable(technical difficulties). Our management team (technical difficulty) and is committed to a (technical difficulty) on margin improvement over the next several months.

We remain optimistic about opportunities ahead and are committed to expanding our operating segments (technical difficulties). In addition to our robust pipeline of tuck-in acquisitions, we are actively working to close the recently announced acquisition of Australia-based Ingeus Limited, a sale anticipated during the second quarter of 2014.

We have been busy holding due diligence meetings in London with the Ingeus team to work on the integration of the two companies, and to discuss how we can best work together going forward. The more we get to know about Ingeus, the more enthusiastic we are about this combination. With both an excellent strategic and cultural fit for our Company, Ingeus not only complements our existing business, but expands our footprints into new markets, diversifies our customer base, and enhances our workforce development experience.

In addition to opportunities for international growth and workforce development that we see emerging over time, we also remain hopeful that we will benefit from current healthcare trends here in the US, including an increased Medicaid enrollment, the trend toward home and community-based care, and the industrywide focus on the reduction and total cost of care. We are fortunate to have a strong balance sheet and an excellent debt capacity, which should serve us well as we continue to position the Company for its future.

Let me now turn to call over to Bob Wilson, who will provide more detail on the first-quarter results reported in our press release. Bob?

Thank you, Warren. Revenue for the first quarter of 2014 was $289.4 million, an increase of 2.8% from $281.5 million in the first quarter of 2013. Revenue for our NET Services segment increased 2.6% to $198.1 million in the first quarter, up from $193.1 million in the first quarter of the prior year. Revenue from the Human Services segment grew through 3.4% to $91.3 million compared to $88.4 million in the first quarter of 2013. Mike Fidgeon and Herman Schwarz of our Human Services and NET business segments will provide more details around this in just a moment.

We had net income of $6.3 million or $0.44 per diluted share in the first quarter of 2014 compared to net income of $6.7 million or $0.49 per diluted share in the first quarter last year. EBITDA for the first quarter of 2014 was $15.8 million compared to $16.8 million in the same period last year, and adjusted EBITDA for the first quarter of 2014 was $18.1 million compared to $16.8 million in the same period last year.

Impacting the first quarter of this year was -- were acquisition-related charges of approximately $1.8 million, and severance-related costs of approximately $511,000, net of stock-based compensation forfeitures, related to the separation of executive officers. These items are included as add-back items for adjusted EBITDA. EBITDA margin decreased 5.5% in the first quarter of 2014 from 6% in the first quarter of 2013. However, adjusted EBITDA margin increased to 6.3% in the first quarter of 2014, up from 6.0% in the first quarter of 2013.

In the first quarter of 2014, our effective tax rate was approximately 40.1%, compared to 41.2% in the first quarter of 2013. We do continue to expect our effective tax rate will be between 40% and 41% for 2014, which we have communicated in the past, excluding consideration of the Ingeus transaction.

At March 31, 2014, we had unrestricted cash and cash equivalents of $105.8 million, compared to $99 million at December 31, 2013. Our strong cash flow from operations, as well as our strong position, coupled with our borrowing capacity of approximately $142.3 million that we put in place in connection with our debt refinancing during 2013, significantly enhances our financial flexibility, as we continue to focus on growing our operations.

I will now turn it over to Mike to discuss the performance of the Human Services business for the quarter. Mike?

Thank you, Bob. For the first quarter of 2014, our client census in Human Services was approximately 57,400 clients. This is up approximately 5% for 2900 clients from the prior-year quarter. And these census gains were evident across many markets within the Human Service segment. All clients are being served from 349 local offices in 24 states, the District of Columbia, and Canada.

There are approximately 6600 employees serving 511 contracts. Revenue for the quarter in Human Services increased 3.4% to $91.3 million from $88.4 million in the first quarter of 2013, primarily related to the impact of the continuing ramp-up of the foster care management contract in Texas, the workforce development contract in Wisconsin, and particular revenue streams in certain other markets.

We did experience revenue softness in the mid-Atlantic markets during the quarter due to repeated episodes of severe weather. This is particularly true with respect to school-based services. In addition, we continue to have challenges in certain other markets due to a variety of factors, chiefly the expansion of managed care. However, as these markets continue to drive consolidation of provider networks, we believe Providence is well-positioned to take advantage of emerging market dynamics that should favor larger organizations like ours that can offer a broader range of services under fewer contracts with the managing entities, with the potential to drive future volumes.

We stated on the last quarterly call that in September 2013, the Texas foster care contract officially started transitioning over clients from the state system. That transition is substantially complete, although for the quarter, on average, we've remained below projected census. We continue to focus on placing children in the appropriate level of care, and continue to partner with the state to implement and operationalize certain aspects of the new system of care. This includes ongoing discussions with the state on various changes to the contract that we believe are necessary to achieve better outcomes for children in the state's care, while improving the overall financial viability of the contract.

We remain hopeful we will be able to work with the state to bring this program up to critical target levels in the months to come, as we collectively pursue the highest goals for the foster care redesign plan in Texas. Effectively operationalizing the Texas contract and taking actions in the markets most challenged by the managed care changes, as mentioned, are the subjects of intense management focus right now. And we expect to see significant improvements throughout this year.

We continue to operate in a period of unprecedented transformation in healthcare, and continue to see opportunities for growth. In the last five months, we have closed two strategic tuck-in acquisitions. The third and larger acquisition is imminent, and our pipeline remains strong.

Now I will hand it off to Herman Schwarz for more details on the LogistiCare operation. Herman?

Thank you, Mike. Good morning. Revenues in the NET segment grew from $193.1 million in last year's first-quarter to $198.1 million in the first quarter of this year. This 2.6% increase resulted in spite of a significant loss in comparable quarterly revenue from the mid-2013 termination of the program here in Wisconsin, and the impact of having one month of at-risk capitated revenue in Connecticut in last year's numbers.

We were able to offset these declines and post positive revenue growth, primarily due to a significant increase in membership in New Jersey, which was already our largest single contract in terms of revenue, plus new managed care programs in Michigan, and expansion of existing managed care programs in California, New Mexico, and Hawaii. Aside from the profitable revenue growth in the quarter, the financial performance in the quarter was equally benefited by a much improved spend on transportation expense as a percent of revenue.

We are all aware of the very harsh winter experienced this year, especially in the northeastern region of the country, which led to unusually high cancellation rates. But even as far south as South Carolina and Georgia, we canceled a significant volume of trips in the quarter due to ice and snow. Additionally, while it is difficult to assess with all the winter weather impact, we suspect the new membership in New Jersey has yet to avail themselves of the transportation benefit, which would also result in a much lower rate of spend when compared to last year. As a result, our transportation expense ran at an exceptionally low 72.7% of revenue in the quarter versus 76.1% in the same period last year.

Operating expenses did go up slightly as a percent of revenue from 16.0% to 16.6%, due to an increased percentage of revenue from ASO contracts, as well as the training investment made to bring on the new business in Michigan and New Mexico. Our census is now 17.6 million eligible beneficiaries versus 16.8 million a year ago. We operate in 41 states, and now have physical operation centers in 20 of those states, with the opening of Rhode Island this quarter.

We have recently received positive RFP results. You will recall that Texas already has two regions being managed under the at-risk broker model. We serve the Dallas region, and MTM has the Houston region. The remainder of the state was divided into 11 regions and the state issued an RFP for each region. We are the successful bidder in two of these regions, the Austin and Waco markets, with the potential to secure one or two more regions.

While only winning two regions may appear to be a setback, it actually is a function of Texas maintaining the status quo in the state. I say this because all of the winning bidders are active in providing NET services in some form to the state today.

In Maine, it was recently published that LogistiCare was the winning bidder in four of the six regions previously managed by CTS. We are very pleased by this result, as we picked up the bulk of the available market, including the very attractive Portland area. We also recently secured from a competitor a significant portion of a managed care account in Ohio that we have been attempting to win for a number of years. We are now serving nearly 300,000 members for this account in southeastern Ohio.

We continue to await a statewide RFP award in West Virginia. This decision was expected weeks ago, and the state did post the price bids for each competitor. While we were the high bidder by a slight margin, we are hopeful we can prevail when technical capability is considered.

I will now turn to call back over to Warren.

Herman, thank you very much. Well, we're off to a solid start in 2014, with a strong cash position coupled with increased financial capacity. We are pursuing growth-oriented initiatives and investments to further position Providence for its future, while at the same time focusing efforts to improve operating efficiencies. The favorable trends we see in healthcare today continue to be opportunities for Providence, including Medicaid expansion, the need to coordinate physical and behavioral healthcare, and the importance of facilitated non-emergency access to preventative services.

Our broad geographic region collective expertise makes us an excellent partner for managed care organizations and others to meet the anticipated growth and needs of high-risk, high-cost Medicaid populations in a cost-effective way. And, finally, we are working hard to close the Ingeus acquisition and couldn't be more positive about the opportunities ahead for the combined company. We will close the Ingeus transaction in the second quarter and continue to anticipate Ingeus being accretive to 2014 earnings.

We are now happy to take your questions. Operator?

(Operator Instructions) Bob Labick, CJS Securities.

Good morning and congratulations on a nice start to 2014. I wanted to start with Human Services. Thanks for some of the detail there. I was wondering if it would be possible to parse out a little further -- obviously, tough gross margins. How much of that maybe came from weather? How much is from Texas? And how is the rest of the business doing? And then maybe some sense of timing of recovery in margins as we go through the year?

Sure, Bob. This is Mike Fidgeon. Thanks for your question. I think I can help with that as far as parsing it down in a few buckets here. So, approximately $3.75 million was the miss -- the budgeted EBITDA for the quarter. And of that amount, $1 million or about 27% was weather-related from the impact along the Eastern Seaboard in the mid-Atlantic, as referenced in the script.

The Texas contract accounted for $1.2 million, roughly, of that miss, or about 32%. And then what we've been referencing as managed care challenges somewhat broadly is another $800,000, approximately quantified, or 21%. And then another $750,000, about 20% is somewhat miscellaneous. There's a few one-time anomalies, as well as some diminished contracts as a result of programs phasing out -- like the A to Z business under No Child Left Behind, from executive severance that was paid would be an example of a one-time anomaly that's in that miscellaneous amount. And a few management agreements that were scheduled to come to a termination point that did not review.

Okay, great. That's very helpful color on that. And then in terms -- obviously, the weather impact is not likely to continue there. The timing of the recovery from Texas and then the ability to overcome the MCO challenge and further restore margins this year?

Sure. Although you didn't ask, I think on the weather impact, you are absolutely right. We are expecting strength to return to the Mid-Atlantic in the second quarter. And that's an area where we've had historic strength in our business.

As related to the managed care challenges, those are a little bit longer in the future because the timing is set by the state. And the managed care entity in terms of their timing for implementing contracts and how that puts pressure on the providers to respond, we all can see, as new contracts start, a period of change in the regulatory environment as the managed care organizations are able to make changes, both in terms of services -- things as simple as how they code services, as well as redirecting money to certain desired services based on their experience in managing care for large populations.

And the providers often have to manage their existing books of business while they shift in response to those implementations that come from managed care. We're seeing that in environments like Florida, where Magellan has historically been on the child welfare side, with contracts that we've been heavily involved in. They are coming out and Simpatico is coming in, so we are going to be experiencing that push that started in May. And it's an area that we are experiencing some pressure.

On the mental health side in that same state, we have a number of managed care contracts that have been let and awarded, and also start in May. And we are going to see a similar phenomenon there where we provide targeted case management and mental health services -- both licensed clinicians doing outpatient as well as psychiatric services and medication management types of services.

Other environments with managed care that we also see a consolidation of -- first, in some cases like -- I'll use an example -- North Carolina; consolidation of the actual managed care entities. We have about 10 or 11 of them now and the plan by the state is to consolidate down to three or four. And they are in the process of doing that.

The Provider network is also consolidating, in turns. And, of course, the managed care organizations want to deal with fewer providers, which means that they will deal with the largest providers first. And so we are seeing the same types of pressures that I exampled with the Florida example.

If I move to Texas, to the other part of your question, that particular area you will notice that we did year -- or quarter-over-quarter, year-over-year, have a significant uptick in the revenue side -- $5.6 million in Q1 of 2014 compared to 2013. The most significant reason for that is we moved, over a course of six months, 1200 kids from state care into our network in the western side of the state, and did that in a very heroic way with our staff in that particular part of the state.

We currently -- after that transition, which finished at the end of the quarter, at the end of March -- we now have about a rolling average of 1000 kids in care, give or take a few. And the reason that the 200 are not accounted for in the total for 1200 is, some kids have aged out of care and other kids have perhaps moved out of the locality or out of the state altogether in which we are providing services.

But in that particular area, we are, as we mentioned in our opening remarks, taking some aggressive actions. We have assigned a 30-year veteran from our Midwest region to do an operational internal review of our processes. We've engaged support from behavioral health experts on the subject in Rhode Island and Florida that will be introduced to our state partners, as they bring their experiences of the state. And Providence wants to be successful with this first contract of its type in Western Canada out of the chute.

And we've also created some internal virtual teams of sort, bringing in our financial and operational and political expertise from different parts of the state to team first internally with our folks that are front and client-facing in the trenches in Western Texas, as well as trying to bring our state partners in. I'm reluctant to share much more than that because we are in ongoing progress with those state partners.

We do have a timeline for end of quarter-three to see our head above water, and starting to build speed and find direction. But right now, we're struggling to get our feet back underneath us as a result of the startup expense against revenue and some challenges that we're dealing with, and the full realization of 1200 consumers, and additional administrative expense creep that we are discussing with the state.

Okay, great. That was fantastic color. Really appreciate that. Jumping over to LogistiCare, congratulations on the Texas and Maine and Ohio wins there. You are obviously already in Texas and Maine -- I don't know about Ohio. Are there any startup expenses that you may be experiencing before these contracts launch? Or -- and what are the expectations on timing?

Hey, Bob. It's Herman. Thank you for the congratulations. We are -- obviously, we have operations in Texas and in Maine, currently. So we don't have the normal startup investment that would be required, in terms of building out and securing space and what-have-you. We have that -- in Texas, in particular, we -- actually, I think you might recall -- we built out that operation center in anticipation of hopefully picking up additional business in the state at some point.

So in Texas, the real expense is just going to be training the 70-plus people that we've got to hire for the two regions that we won, which is three weeks' investment in those folks, to train them and get them up to speed prior to go live. So it's not a significant investment, as we might have had in other operations.

In Maine, we do need to find additional office space, because our current location there is not big enough. So we've got a little bit more expense there, and we have to hire 60-plus people there very quickly and get them up to speed. So that one will take a little bit more investment. But again, it won't have the same impact that we had the year when we were bringing on New York and Texas, originally.

Ohio, we currently serve out of a couple of other operations. And again, that's just a few folks that we've got to bring on. So, not significant. And the timing of these -- Ohio is already up and running, so that investment was done here in Q2. Maine, the date is still up in the air. It will either be July 1 or probably 30 days later. And Texas, probably late summer -- but that's still being decided, as well.

Great. And then any updates you can provide on -- I guess you still have renewals in South Carolina, and then you had other growth opportunities and -- I guess some in Florida, some -- just from the newly eligible population coming in. Any way to quantify particularly that last point? Because that's hard for us to see.

I wish -- I know I have been promising you hopefully more color for a while now; I wish we could do it. We are trying to work with our states on the membership growth to try to identify where that's coming from; whether that's expansion population or the woodwork population that we've talked about in the past. We're still not there yet with our states. They are still working through that with their own systems in trying to provide us with some kind of marker or some indication where this population growth is coming from.

So I can't really give you any color yet on terms of whether this is newly eligible Medicaid or folks that would typically have been eligible for standard Medicaid, and just -- are just now finding out or deciding to take advantage of the benefit. As soon as we can work through that with our clients, I'll certainly share with you what that mix looks like.

In terms of South Carolina, we have agreed in principle to an extension. Those agreements are in the final stages of being documented and waiting for signature. It looks like that that's going to run probably on a month-to-month until the state can put out an RFP and go through the process. As you know, that typically can't happen any faster than, at best, four to five months. And in some cases, it can take up to a year to get done.

So we are anticipating that we will have South Carolina through the balance of 2014 at minimum and maybe even into early 2015. New Jersey, we have signed an extension of that agreement through June of next year, so that is done. And then in terms of Florida, the changes in Florida are all a function of the state shifting to a 100% managed care in this, and the Medicaid program moving to all managed care. That implementation is just starting this month. So we will now start seeing some of that movement in membership between now and August. And it's depending on which region is being brought in and at what time it will impact us differently.

So -- and there is still some moving parts in Florida, as they keep changing the way that program is going to go -- probably every week. So, you will start seeing, as we get into the end of Q2 and early Q3, some of that impact in Florida, as well.

Okay. Fantastic. Thank you very much. I will jump back in queue now. Thanks.

Thanks, Bob.

Brian Hoffman, Avondale Partners.

Congrats on the nice quarter. My first question is on Ingeus. I know that one of the positives on Ingeus is -- are the RFPs that the Company is currently bidding on. So do you have any type pipeline figure you can provide with respect to the opportunities that Ingeus is going after?

And secondly, can you help us out with some sort of a timeline as to what RFPs or what opportunities we could expect to be awarded, either this year or next?

Brian, this is Warren. Just to give you a little flavor for that, I was recently this past week in London, and we spent some time looking at business development. And I would suggest to you that the pipeline approximates a billion pounds as we look out to the future of those opportunities in which tenders will be submitted or have been submitted by Ingeus.

So, it looks very favorable in the context of there are lots of opportunities out there. There are several of those that will be determined and the winning bidders selected before the end of 2014. So, as we began to look toward the future with Ingeus as we close the transaction, we think there is a strong pipeline and we believe there will be some contracts decided this year, and some tenders determined this year. Does that help?

It does. And those contracts -- are they generally awarded to multiple contractors? Or are they the types of contracts that Ingeus would operate on their own as a sole vendor?

I would suggest to you that there is at least one that is a sole vendor contract. There are others where there will be only a handful of vendors chosen. And then there is a contract, for instance, like the Ministry of Work and Pensions, which is the workforce contract currently. As they rebid that, there will be multiple vendors that will be chosen for that.

Okay. Thank you. And then regarding transaction costs for Ingeus, how much more do you anticipate incurring over the rest of the year? I assume there might be more than the $1.8 million in the first quarter?

Brian, this is Bob Wilson. So we did incur $1.8 million. We really think that that's the lion's share of the costs that we'll be incurring and running through our income statement. So but there will be a tail, of course, I would say a few-hundred-thousand perhaps; no more than that. And we expect to pick all of that up in the second quarter.

Okay. Great. And then lastly -- sorry if I missed this -- can you give us an update on the timing of the West Virginia RFP?

We don't know, Brian. It's -- we expected it a few weeks ago. They are not forthcoming with where they are in the process and their timing, so we really don't have any idea at this point. I can tell you that this is the second time they have gone through the process in the past year. The first time, they posted the pricing, which -- and indicated that a decision was likely, imminently, and then came out and pulled the whole RFP.

They posted the pricing a couple of weeks ago. They've gone radio silent since then, so we really don't know what they're working on or what they're doing.

Okay. Great. Congrats on a good quarter.

Thanks, Brian.

Mitra Ramgopal, Sidoti.

Could you quickly remind us for the opportunity of West Virginia bid?

I'm sorry. The what on West Virginia?

The West Virginia -- the size of that opportunity to revenue?

Between $20 million and $25 million, statewide.

Okay, thanks. And again, Warren, I know you mentioned you have been spending a lot of time on the Ingeus acquisition. I was wondering if that is one of the benefits from that was sort of to help the workforce development initiative maybe in the US? Is it too early to see any benefits from that?

It's too early to make a judgment about that, Mitra, but we are hopeful that the expertise of Ingeus on a global basis will be favorable to workforce opportunities that we see in the United States over time. And we will have a better assessment of that, I think, as we get into the workforce opportunities more directly here. And as you know, the administration is looking very specifically at workforce development as a key ingredient over the next couple of years here. So we hope to be a player in that and we think Ingeus will help us in that regard.

Thanks. And I don't know if you can give us an update in terms of the logistics you are spending on the tech side -- if it's coming along as scheduled? Or because of the Ingeus acquisition, you're probably going to slow that down a little?

No. We won't be slowing it down any -- and, Herman, if you want to comment on this, I'd be happy to have it. It continues at the pace that we budgeted, and we will continue to invest in LogistiCad as a competitive advantage on the LogistiCare side. And then we will continue with the Ingeus transaction, as we previously stated. But the two are not linked in that way.

Okay. Thanks. And then finally, I don't know if you can give us an update on MediCal -- I believe last time you mentioned that maybe in April you might see some start along the dual eligibles side.

Well, as you know -- and, Mike, you may want to comment on this -- as you know, we've got a series of pilots that have been working. We're now coming to the maturing point of those pilots, at which point we would be -- we will be hopefully negotiating contracts on a more extended basis with our partners in those pilots. And so that remains to be seen. But the evidence coming out of the pilots has been very favorable as to the treatment of dual eligibles, and we're very hopeful that this will result in additional volume for us over time.

Okay. Thanks for taking the questions.

Thank you, Mitra.

(Operator Instructions) Mike Petusky, Noble Financial.

Hi. Most of my questions have been asked and answered. But just in terms of priority for free cash generation, I'm assuming M&A first and debt paydowns second, but maybe I'm wrong in that. Could you just comment on that?

Hi. This is Bob, Mike. Thanks for the question. Yes. You got it right. Our priorities around free cash flow are acquisitions -- that be, of course, the converts do come due next week. We fully anticipate that, depending on how many folks decide to convert their votes to shares, but we're prepared to spend $47.5 million plus interest on both our existing cash as well is if we move to take some of our revolver and take care of that. We don't anticipate any other sort of early retirement of debt option payments this year.

And then, lastly, just to maybe add a little more color to the question that came up -- I think it was from Mitra or maybe Brian, regarding CapEx. We are upping our game with regard to CapEx this year, compared to last year. Not significantly, but we're -- but it's still in the sort of mid-teen-millions range across the entire enterprise, in addition to the costs associated with the Ingeus transaction.

Okay. And then just one other question on Ingeus. When that closes, will you -- will that be segmented out? Or are you going to report that kind of within the rest of the operations?

Yes. So, obviously, we will -- our primary guidance will focus on the GAAP requirements for disclosure. But really, as we understand kind of how that business would operate, vis-a-vis the rest of the organization -- our leanings are strongly towards having that be a separately reported and managed business unit, similar to LogistiCare and Human Services. So, basically, a third leg.

Okay. All right. Very good. Congratulations on a great quarter.

Thank you very much, Mike.

There are no further questions in the queue. I would now like to turn it back over to you, Sir. Please proceed.

Well, thank you very much for your interest in our Company. Thank you for joining us for today's call. For any of you that would like to follow-up or have follow-up discussions in any way, please contact us -- any one of us. We are more than happy to do that. We look forward to updating you after the second quarter and hope you have a great day.

Ladies and gentlemen, that concludes today's conference call. Thank you so much for your participation. You may now disconnect and have a great day.