Discontinued Operations

12 Months Ended

Dec. 31, 2019

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

Discontinued Operations

WD Services Segment

On December 21, 2018, the Company completed the sale of substantially all of the operating subsidiaries of its WD Services segment to APM and APM UK Holdings Limited, an affiliate of APM, except for the segment’s employment services operations in Saudi Arabia. The Company’s contractual counterparties in Saudi Arabia, including an entity owned by the Saudi Arabian government, assumed these operations beginning January 1, 2019.

The total cash consideration of the sale was $46,450, with the buyer retaining existing WD Services cash of $20,993. In addition to the purchase consideration, the Company expects to realize cash tax benefits of approximately $52,877 from the transaction, of which $37,433 ($30,822 of refunds and $6,611 of avoided payments) have been realized as of December 31, 2019. The remaining cash tax benefit of $15,444 is expected to be realized as an offset to tax payments over the following two years, based upon the Company’s current estimate of taxable income. In addition, $867 of benefits related to capital loss carryforwards is available, which amount was reserved as of December 31, 2019.

On June 11, 2018, the Company entered into a Share Purchase Agreement to sell the shares of Ingeus France, its WD Services operation in France, for a de minimis amount. The sale was effective on July 17, 2018, after court approval.

On September 29, 2017, the Company and Mission Australia completed the sale of 100% of the stock of Mission Providence, a joint venture in the WD Services segment, pursuant to a share sale agreement. Upon the sale of Mission Providence, the Company received AUD 20,184, or $15,823 of proceeds, for its equity interest, net of transaction fees. Subsequently, a working capital adjustment was finalized in December 2017 resulting in the return of $229 of the proceeds. The related gain on sale of Mission Providence totaling $12,377 is recorded as “(Loss) income from discontinued operations, net of tax” in the accompanying consolidated statements of operations for the year ended December 31, 2017. Summary financial information for Mission Providence on a standalone basis for the nine months ended September 30, 2017 were as follows:

	Nine months ended September 30, 2017
Revenue	$	30,125
Operating loss	(1,765)
Net loss	(1,934)

In accordance with ASC 205-20, Presentation of Financial Statements-Discontinued Operations, (“ASC 205-20”) a component of an entity is reported in discontinued operations after meeting the criteria for held-for-sale classification if the disposition represents a strategic shift that has (or will have) a major effect on the entity’s operations and financial results. The Company analyzed the quantitative and qualitative factors relevant to the disposition of the WD Services segment and determined that those held for sale conditions for discontinued operations presentation were met during the fourth quarter of 2018. As such, the historical financial results of the Company’s historical WD Services segment, and the related income tax effects have been presented as discontinued operations for all periods presented in the accompanying consolidated financial statements.

HA Services Segment

Effective October 19, 2016, the Company completed the Matrix Transaction. At the closing, (i) cash consideration of $180,614 was paid by the Subscriber to Matrix based upon an enterprise value of $537,500 and (ii) Matrix borrowed approximately $198,000 pursuant to a credit and guaranty agreement providing for term loans in an aggregate principal amount of $198,000 and revolving loan commitments in an aggregate principal amount not to exceed $10,000, which was not drawn at the closing. At the closing, Matrix distributed $381,163 to Providence, in full satisfaction of a promissory note and accumulated interest between Matrix and Providence. At the closing, Providence made a $5,663 capital contribution to Matrix, as described in the Subscription Agreement, as amended, based upon its pro-rata ownership of Matrix, to fund the near-term cash needs of Matrix. On the day that was fifteen days following the closing date, Providence was, to the extent payable pursuant to the terms of the Subscription Agreement, as amended, entitled to receive from Matrix, or required to pay to Matrix, subsequent working capital adjustment payments. Providence received an initial payment of $5,172 from Matrix in November 2016 which is net of the capital contribution of $5,663 described above, based upon the initial working capital calculation as described in the Subscription Agreement. Additionally, in February 2017, the Company received a $75 payment from Matrix representing the final working capital adjustment payment.

The Company has continuing involvement with Matrix through its ownership of 43.6% of the equity interests in Matrix as of December 31, 2019, as well as through a management consulting agreement, not to exceed ten years. Prior to the Matrix Transaction, the Company owned 100% of the equity interest in Matrix. Subsequent to the Matrix Transaction, the Company accounts for its investment in Matrix under the equity method of accounting. The Company’s share of Matrix’s gains and losses subsequent to the Matrix Transaction, which totaled a loss of $29,685, a loss of $6,158 and a gain of $13,445, are recorded as “Equity in net loss (gain) of investee” in its consolidated statements of operations for the years ended December 31, 2019, 2018 and 2017, respectively. Matrix’s pretax loss for the years ended December 31, 2019, 2018 and 2017 totaled $85,902, $27,128 and $2,948, respectively. There have been no cash inflows or outflows from or to Matrix subsequent to the closing of the Matrix Transaction, other than the working capital adjustments discussed above and management and advisory fees associated with its ongoing relationship with Matrix, of which $1,033 and $2,271 were received during the years ended December 31, 2019 and 2018, respectively. Management fees receivable of $175 and $259 are included in “Other receivables” in the consolidated balance sheets at December 31, 2019 and 2018, respectively.

Human Services Segment

On September 3, 2015, the Company entered into a Purchase Agreement, pursuant to which the Company agreed to sell all of the membership interests in Providence Human Services, LLC and Providence Community Services, LLC, comprising the Company’s Human Services segment. On November 1, 2015, the Company completed the sale of its Human Services segment. During the years ended December 31, 2019, 2018 and 2017, the Company recorded additional expenses related to the Human Services segment, principally related to previously disclosed legal proceedings.

Results of Operations

The following table summarizes the results of operations classified as income (loss) from discontinued operations, net of tax, for the years ended December 31, 2019, 2018 and 2017.

	Year ended December 31, 2019
	Human Services Segment		WD Services Segment		Total Discontinued Operations
Operating expenses:
General and administrative (income)	$	(6,941)	$	(2,652)	$	(9,593)
Total operating income	(6,941)		(2,652)		(9,593)
Operating income	6,941		2,652		9,593
Other expenses:
Income from discontinued operations before income taxes	6,941		2,652		9,593
Provision for income taxes	(940)		(2,734)		(3,674)
Income (loss) from discontinued operations, net of tax	$	6,001	$	(82)	$	5,919

	Year ended December 31, 2018
	Human Services Segment		WD Services Segment		Total Discontinued Operations
Service revenue, net	$	—	$	264,553	$	264,553
Operating expenses:
Service expense	—		248,824		248,824
General and administrative (income) expense	(495)		26,895		26,400
Asset impairment charge	—		9,203		9,203
Depreciation and amortization	—		11,864		11,864
Total operating (benefit) expenses	(495)		296,786		296,291
Operating income (loss)	495		(32,233)		(31,738)
Other expenses:
Interest expense, net	—		35		35
Gain on foreign currency transactions	—		(388)		(388)
Other gain	—		(87)		(87)
Income (loss) from discontinued operations before gain on disposition and income taxes	495		(31,793)		(31,298)
Loss on disposition	—		(53,692)		(53,692)
(Provision) benefit for income taxes	(545)		48,482		47,937
Loss from discontinued operations, net of tax	$	(50)	$	(37,003)	$	(37,053)

The loss on disposition in the table above includes the reclassification of translation loss realized upon sale of subsidiaries of $29,973. The benefit for income taxes in the table above for the WD Services segment includes tax benefits on the WD Services Sale of $51,861 and income tax expense on WD Services operations of $3,379.

Asset impairment charges

In connection with classifying the assets and liabilities of Ingeus France as held for sale during the year ended December 31, 2018, the carrying value of the assets and liabilities was reduced to its estimated fair value less selling costs. As a result, an impairment charge of $9,203 was recorded during the year ended December 31, 2018 and is included in “Asset impairment charge” in the table above.

Loss on disposition, net of tax

The total loss on disposition, net of tax, related to the sale of WD Services subsidiaries during the year ended December 31, 2018 is calculated as follows:

Total cash received, net of transaction costs and cash sold	$	12,780
Total WD Services net asset value as of transaction date, net of cash sold	(36,499)
Income tax benefit	51,861
Gain on sale before reclassification of currency translation, net of tax	28,142
Adjustment for reclassification of currency translation	(29,973)
Loss on disposition, net of tax	$	(1,831)

	Year ended December 31, 2017
	Human Services Segment		WD Services Segment		Total Discontinued Operations
Service revenue, net	$	—	$	305,662	$	305,662
Operating expenses:
Service expense	—		265,417		265,417
General and administrative expense	9,674		28,845		38,519
Depreciation and amortization	—		12,851		12,851
Total operating expenses	9,674		307,113		316,787
Operating loss	(9,674)		(1,451)		(11,125)
Other expenses:
Interest expense, net	—		74		74
Equity in net loss of investees	—		1,391		1,391
Gain on sale of equity investment	—		(12,377)		(12,377)
Loss on foreign currency transactions	—		345		345
(Loss) income from discontinued operations before income taxes	(9,674)		9,116		(558)
Benefit for income taxes	3,691		(398)		3,293
(Loss) income from discontinued operations, net of tax	$	(5,983)	$	8,718	$	2,735

Assets and liabilities

The following table summarizes the carrying amounts of the major classes of assets and liabilities of discontinued operations in the consolidated balance sheets as of December 31, 2019 and 2018. Amounts as of December 31, 2019 and 2018 represent the accounts of WD Services operations in Saudi Arabia, which were not sold as part of the WD Services Sale.

	December 31,
	2019		2018
Cash and cash equivalents	$	155	$	2,321
Accounts receivable, net of allowance of $0 in 2019 and $3,460 in 2018	—		4,316
Prepaid expenses and other	—		414
Current assets of discontinued operations	$	155	$	7,051
Accounts payable	$	17	$	486
Accrued expenses	1,414		2,771
Current liabilities of discontinued operations	$	1,431	$	3,257

Cash Flow Information

The following table presents depreciation, amortization, capital expenditures and significant operating noncash items of the discontinued operations for the years ended December 31, 2019, 2018 and 2017:

	For the year ended December 31, 2019
	Human Services Segment		WD Services Segment		Total Discontinued Operations
Cash flows from discontinued operating activities:
Deferred income taxes	$	3,165	$	(330)	$	2,835

	For the year ended December 31, 2018
	Human Services Segment		WD Services Segment		Total Discontinued Operations
Cash flows from discontinued operating activities:
Depreciation	$	—	$	6,711	$	6,711
Amortization	—		5,153		5,153
Stock-based compensation	—		6		6
Deferred income taxes	419		(74)		345
Cash flows from discontinued investing activities:
Purchase of property and equipment	$	—	$	6,725	$	6,725

	For the year ended December 31, 2017
	HA Services Segment		WD Services Segment		Total Discontinued Operations
Cash flows from discontinued operating activities:
Depreciation	$	—	$	7,825	$	7,825
Amortization	—		5,026		5,026
Stock-based compensation	—		57		57
Deferred income taxes	(3,433)		(507)		(3,940)
Cash flows from discontinued investing activities:
Purchase of property and equipment	$	—	$	4,527	$	4,527