Modivcare Inc. (the “Company” or “Modivcare”) (Nasdaq: MODV), a
technology-enabled healthcare services company that provides a
platform of integrated supportive care solutions focused on
improving health outcomes, today reported financial results for the
three and nine months ended September 30, 2023.
Third Quarter 2023
Highlights:
- Service revenue of $686.9 million, a 6.0% increase as compared
to $647.8 million in the third quarter of 2022
- Net loss of $4.3 million or $0.30 per diluted common share
- Adjusted EBITDA(1) of $51.3 million, adjusted net income(1) of
$20.5 million and adjusted EPS(1) of $1.44 per diluted common
share
- Cash provided by operating activities during the quarter of
$53.5 million and free cash flow(2) of $44.7 million
- Contract receivables increased by $9.5 million to $129.3
million and contract payables increased by $24.5 million to $133.6
million, resulting in net contract payables of $4.3 million as of
September 30, 2023
- Repaid $43.5 million on the $325.0 million revolving credit
facility, reducing the balance drawn to $83.0 million as of
September 30, 2023
- $138.0 million of NEMT managed Medicaid total contract value
(TCV) won during third quarter 2023; awarded a state Medicaid
expansion in the northeast that will be implemented in mid-2024
once finalized; national MCO contract won earlier in 2023
implemented during the quarter
(1) Non-GAAP financial measure
reconciliations and other related information about non-GAAP
financial measures provided below
(2) Free cash flow, a non-GAAP financial
measure, is calculated by us as cash flow from operations less our
capital expenditures during the period of $8.9 million that is
included in our purchase of property and equipment line in our
Statements of Cash Flows provided below.
"We're pleased to announce strong Q3 2023 results, highlighted
by adjusted EBITDA of $51 million, $54 million of cash flow from
operations, and $45 million of free cash flow," said L. Heath
Sampson, President and CEO. "We have addressed internal
inefficiencies in our operations and are now leveraging new
technologies to deliver high quality care at a lower cost. The net
result can be seen in our strong profitability and cash flow this
quarter, which enabled us to reduce our outstanding revolver
balance by one-third and improved our leverage ratio. Since taking
on the role of CEO a year ago, our transformation has been
comprehensive. We've initiated foundational shifts in our operating
model, transitioning to a more unified, customer-centric strategy.
While making these pivotal investments, we've maintained focus on
our balance sheet. By generating cash, we aim to demonstrate to the
market that our platform is not only resilient in the face of
short-term challenges but also well-positioned for sustainable
growth and margin expansion."
Mr. Sampson continued, "In our NEMT business, we've achieved
meaningful operational improvements, including a notable sequential
uptick in our margins. While navigating near-term complexities like
Medicaid redetermination, we've excelled in customer service level
agreements, leading to significant new contract wins. Our personal
care services segment has made rapid strides in 2023, setting the
stage for improved growth and margins in 2024. Our remote patient
monitoring segment continues to grow with high margins and acts as
a digital gateway for members to access care. When integrated with
our NEMT and personal care services, we can unlock unique customer
value and diversify our revenue streams. In summary, our
transformation is not merely aspirational; it's a tangible reality
that is driving measurable outcomes and positioning us for
long-term success. I want to extend my deepest gratitude to our
dedicated team, many of whom are managing multiple change-oriented
roles in addition to their core responsibilities."
2023 Guidance
We maintained our revenue and adjusted EBITDA guidance ranges as
follows ($ in millions):
2023 Guidance
Low
High
Revenue
$
2,750
$
2,800
Adjusted EBITDA
$
200
$
210
Guidance excludes the effects of any future merger or
acquisition activity and is based on the current operating
environment.
Third Quarter 2023 Results
For the third quarter of 2023, the Company reported $686.9
million in revenue, a 6.0% increase from $647.8 million in the
third quarter of 2022. The revenue growth was driven by a 9.7%
increase in total paid trips in our NEMT segment coupled with a
2.3% increase in hours worked and a 3.9% increase in rate per hour
in our personal care services segment, partially offset by a 3.6%
decrease in revenue per paid trip in our NEMT segment.
Our operating income was $12.0 million, or 1.8% of revenue, in
the third quarter of 2023, compared to operating income of $12.4
million, or 1.9% of revenue, in the third quarter of 2022. Net loss
in the third quarter of 2023 was $4.3 million, or $0.30 per diluted
common share, compared to net loss of $28.5 million, or $2.03 per
diluted common share, in the third quarter of 2022. While our
operating income remained relatively flat period over period, the
net loss in 2022 is higher due to our allocated percentage of a
one-time impairment taken at our Matrix investment.
Adjusted EBITDA was $51.3 million, or 7.5% of revenue, in the
third quarter of 2023, compared to $51.8 million, or 8.0% of
revenue, in the third quarter of 2022. Our Adjusted EBITDA was
largely consistent, primarily related to a $4.1 million decrease in
adjusted EBITDA at our NEMT segment, offset by a $4.1 million
increase in adjusted EBITDA at our corporate segment. The NEMT
segment's decrease was driven by increased payroll and other
expense per trip and higher than expected trip volume. Accordingly,
adjusted net income in the third quarter of 2023 was $20.5 million,
or $1.44 per diluted common share, compared to $22.7 million, or
$1.61 per diluted common share, in the third quarter of 2022.
Cash generated from operations during the quarter was $53.5
million as compared to $5.7 million of cash used in operations
during the third quarter of 2022. The primary source of cash during
the quarter was a $24.5 million build in contract payables, coupled
with a $21.3 million decrease in accounts receivable. We used $43.5
million of this cash to pay down our revolving credit facility and
ended the quarter with $83.0 million drawn.
Third Quarter Earnings Conference Call
Modivcare will hold a conference call to discuss its financial
results on Friday, November 3, 2023 at 8:30 a.m. ET. To access the
call, please dial:
US toll-free: 1 (877) 407-8037 International: 1
(201) 689-8037
You may also access the conference call via webcast at
investors.modivcare.com, where the call will also be archived.
About Modivcare
Modivcare Inc. ("Modivcare" or the "Company") is a
technology-enabled healthcare services company that provides a
suite of integrated supportive care solutions for public and
private payors and their members. Our value-based solutions address
the social determinants of health (SDoH) by connecting members to
essential care services. By doing so, Modivcare helps health plans
manage risks, reduce costs, and improve overall health outcomes.
Modivcare is a provider of non-emergency medical transportation
(NEMT), personal care services (PCS), and remote patient monitoring
(RPM) solutions. To learn more about Modivcare, please visit
www.modivcare.com.
Non-GAAP Financial Measures and Adjustments
In addition to the financial measures prepared in accordance
with generally accepted accounting principles in the United States
("GAAP"), this press release includes (as applicable) EBITDA,
Adjusted EBITDA and Adjusted G&A expense for the Company and
its segments, Adjusted EBITDA margin for the Company's segments
(other than its Corporate segment), and Adjusted Net Income and
Adjusted EPS for the Company, all of which are performance measures
that are not recognized under GAAP, and also free cash flow for the
Company, which is a liquidity measure that is not recognized under
GAAP. EBITDA is defined as net income (loss) before: (1) interest
expense, net, (2) provision (benefit) for income taxes, and (3)
depreciation and amortization. Adjusted EBITDA is calculated as
EBITDA before (as applicable): (1) restructuring and related costs,
(2) transaction and integration costs, (3) settlement related
costs, (4) stock-based compensation, (5) impairment of goodwill, as
applicable, (6) equity in net (income) loss of investee, net of
tax, and (7) COVID-19 related costs, net of grant income. Adjusted
EBITDA margin is calculated as Adjusted EBITDA, divided by service
revenue, net. Adjusted Net Income is calculated as net income
(loss) before: (1) restructuring and related costs, (2) transaction
and integration costs, (3) settlement related costs, (4)
stock-based compensation, (5) impairment of goodwill, as
applicable, (6) equity in net (income) loss of investee, net of tax
(7) intangible asset amortization expense, (8) COVID-19 related
costs, net of grant income, and (9) the income tax impact of such
adjustments. Adjusted EPS is calculated as Adjusted Net Income
divided by the diluted weighted-average number of common shares
outstanding as calculated for Adjusted Net Income. Adjusted G&A
expense is calculated as G&A expense before (as applicable):
(1) restructuring and related costs, (2) transaction and
integration costs, (3) settlement related costs and (4) stock-based
compensation. Free cash flow is calculated as cash flow from
operations less our applicable capital expenditures included in our
purchase of property and equipment line in our Statements of Cash
Flows. Reconciliations of the non-GAAP financial measures to their
most directly comparable GAAP financial measures that are not
included in the discussion above are included below. We do not
provide guidance for net income (loss) in this presentation on a
basis consistent with GAAP or a reconciliation of forward-looking
non-GAAP financial measures to their most directly comparable GAAP
financial measures on a forward-looking basis because we are unable
to predict items contained in the GAAP financial measures without
unreasonable efforts. Our non-GAAP performance measures exclude
expenses and amounts that are not driven by our core operating
results and may be one time in nature. Excluding these expenses
makes comparisons with prior periods as well as to other companies
in our industry more meaningful. We believe such measures allow
investors to gain a better understanding of the factors and trends
affecting the ongoing operations of our business. We consider our
core operations to be the ongoing activities to provide services
from which we earn revenue, including direct operating costs and
indirect costs to support these activities. As a result, our net
income or loss in equity investee is excluded from these measures,
as we do not have the ability to manage the venture, allocate
resources within the venture, or directly control its operations or
performance. Our non-GAAP liquidity measure is included because it
reflects an additional way of viewing our liquidity that, when
viewed together with our GAAP results, provides management,
investors, and other users of our financial information with a more
complete understanding of factors and trends affecting our cash
flows. Our use of the term free cash flow is not intended to imply,
and no inference should be made, however, that the reported amounts
are free to be used without restriction for discretionary
expenditures, as our use of these funds may be restricted by the
terms of our outstanding indebtedness, including our credit
facility, and otherwise earmarked for other non-discretionary
expenditures.
Our non-GAAP financial measures may not provide information that
is directly comparable to that provided by other companies in our
industry, as other companies in our industry may calculate non-GAAP
financial measures differently. In addition, there are limitations
in using non-GAAP financial measures because they are not prepared
in accordance with GAAP, may be different from non-GAAP financial
measures used by other companies, and exclude expenses that may
have a material impact on our reported financial results. The
presentation of non-GAAP financial measures is not intended to be
considered in isolation from or as a substitute for the most
directly comparable financial measures prepared in accordance with
GAAP. We urge you to review the reconciliations of our non-GAAP
financial measures to the most directly comparable GAAP financial
measures included below, and not to rely on any single financial
measure to evaluate our business.
Forward-Looking Statements
Certain statements contained in this press release constitute
“forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements are
predictive in nature and are frequently identified by the use of
terms such as “may,” “will,” “should,” “expect,” “believe,”
“estimate,” “intend,” and similar words indicating possible future
expectations, events or actions. The updated guidance discussed
herein constitutes forward-looking statements. Such forward-looking
statements are based on current expectations, assumptions,
estimates and projections about our business and our industry, and
are not guarantees of our future performance. These statements are
subject to a number of known and unknown risks, uncertainties and
other factors, many of which are beyond our ability to control or
predict, which may cause actual results to be materially different
from those expressed or implied herein, including but not limited
to: government or private insurance program funding reductions or
limitations; implementation of alternative payment models or the
transition of Medicaid and Medicare beneficiaries to Managed Care
Organizations; our inability to control reimbursement rates
received for our services; cost containment initiatives undertaken
by private third-party payors and an inability to maintain or
reduce our cost of services below rates set forth by our payors;
the effects of a public health emergency; inadequacies in our
information technology systems; changes in the funding, financial
viability or our relationships with our payors; pandemics and other
infectious diseases; disruptions to our contact center operations
caused by health epidemics or pandemics; delays in collection of
our accounts receivable; any impairment of our goodwill and
long-lived assets; any failure to maintain or to develop reliable,
efficient and secure information technology systems; any inability
to attract and retain qualified employees; any disruptions from
acquisition or acquisition integration efforts; estimated income
taxes being different from income taxes that we ultimately pay; our
contracts not surviving until the end of their stated terms, or not
being renewed or extended; our failure to compete effectively in
the marketplace; our not being awarded contracts through the
government’s requests for proposals process, or our awarded
contracts not being profitable; any failure to satisfy our
contractual obligations or to maintain existing pledged performance
and payment bonds; any failure to estimate accurately the cost of
performing our contracts; any misclassification of the drivers we
engage as independent contractors rather than as employees;
significant interruptions in our communication and data services;
not successfully executing on our strategies in the face of our
competition; any inability to maintain relationships with existing
patient referral sources; certificates of need laws or other
regulatory and licensure obligations that may adversely affect our
personal care integration efforts and expansion into new markets;
any failure to obtain the consent of the New York Department of
Health to manage the day to day operations of our licensed in-home
personal care services agency business; changes in the case-mix of
our personal care patients, or changes in payor mix or payment
methodologies; our loss of existing favorable managed care
contracts; our experiencing labor shortages in qualified employees
and management; labor disputes or disruptions, in particular in New
York; becoming subject to malpractice or other similar claims; our
operating in the competitive remote patient monitoring industry,
and failing to develop and enhance related technology applications;
any failure to innovate and provide services that are useful to
customers and to achieve and maintain market acceptance; our lack
of sole decision-making authority with respect to our minority
investment in Matrix and any failure by Matrix to achieve positive
financial position and results of operations; the cost of our
compliance with laws; changes to the regulatory landscape
applicable to our businesses; changes in budgetary priorities of
the government entities or private insurance programs that fund our
services; regulations relating to privacy and security of patient
and service user information; actions for false claims or
recoupment of funds; civil penalties or loss of business for
failing to comply with bribery, corruption and other regulations
governing business with public organizations; changes to, or
violations of, licensing regulations; our contracts being subject
to audit and modification by the payors with whom we contract; a
loss of Medicaid coverage by a significant number of Medicaid
beneficiaries following the expiration of the COVID-19 public
health emergency under the Families First Coronavirus Response Act
(2020); our existing debt agreements containing restrictions that
limit our flexibility in operating our business; our substantial
indebtedness and lease obligations; any loss of available financing
alternatives; our ability to incur substantial additional
indebtedness; and the results of the remediation of our identified
material weaknesses in internal control over financial
reporting.
The Company has provided additional information about the risks
facing our business in our annual report on Form 10-K and
subsequent periodic and current reports most recently filed with
the Securities and Exchange Commission that could impact future
performance. You are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date the
statement was made and are expressly qualified in their entirety by
the cautionary statements set forth herein and in our filings with
the Securities and Exchange Commission, which you should read in
their entirety before making an investment decision with respect to
our securities. We undertake no obligation to update or revise any
forward-looking statements contained in this release, whether as a
result of new information, future events or otherwise, except as
required by applicable law.
Modivcare Inc.
Unaudited Condensed
Consolidated Statements of Operations
(in thousands, except share and
per share data)
Three months ended September
30,
Nine months ended September
30,
2023
2022
2023
2022
Service revenue, net
$
686,925
$
647,782
$
2,048,338
$
1,850,472
Grant income
551
789
4,649
4,587
Operating expenses:
Service expense
579,214
534,563
1,718,735
1,498,108
General and administrative expense
70,142
75,889
229,095
232,108
Depreciation and amortization
26,077
25,672
77,679
74,376
Impairment of goodwill
—
—
183,100
—
Total operating expenses
675,433
636,124
2,208,609
1,804,592
Operating income (loss)
12,043
12,447
(155,622
)
50,467
Interest expense, net
17,844
15,557
50,769
46,429
Income (loss) before income taxes and
equity method investment
(5,801
)
(3,110
)
(206,391
)
4,038
Income tax (provision) benefit
1,659
1,053
4,362
(877
)
Equity in net income (loss) of investee,
net of tax
(160
)
(26,448
)
2,821
(28,020
)
Net loss
$
(4,302
)
$
(28,505
)
$
(199,208
)
$
(24,859
)
Loss per common share:
Basic
$
(0.30
)
$
(2.03
)
$
(14.06
)
$
(1.77
)
Diluted
$
(0.30
)
$
(2.03
)
$
(14.06
)
$
(1.77
)
Weighted-average number of common shares
outstanding:
Basic
14,182,839
14,051,794
14,169,537
14,041,224
Diluted
14,182,839
14,051,794
14,169,537
14,041,224
Modivcare Inc.
Unaudited Condensed
Consolidated Balance Sheets
(in thousands)
September 30, 2023
December 31, 2022
Assets
Current assets:
Cash and cash equivalents
$
8,070
$
14,451
Accounts receivable, net
202,701
223,210
Contract receivables
129,275
71,131
Other current assets(1)
47,895
37,362
Total current assets
387,941
346,154
Property and equipment, net
81,419
69,138
Goodwill
785,554
968,654
Intangible assets, net
380,591
439,409
Equity investment
45,207
41,303
Operating lease right-of-use assets
39,744
39,405
Other long-term assets
42,630
40,209
Total assets
$
1,763,086
$
1,944,272
Liabilities and stockholders'
equity
Current liabilities:
Accounts payable
41,834
54,959
Accrued contract payables
133,576
194,287
Accrued expenses and other current
liabilities
146,564
135,860
Accrued transportation costs
102,974
96,851
Current portion of operating lease
liabilities
8,902
9,640
Short-term borrowings
83,000
—
Total current liabilities
516,850
491,597
Long-term debt, net of deferred financing
costs
982,630
979,361
Operating lease liabilities, less current
portion
33,397
32,088
Other long-term liabilities(2)
71,348
86,670
Total liabilities
1,604,225
1,589,716
Stockholders' equity
Stockholders' equity
158,861
354,556
Total liabilities and stockholders'
equity
$
1,763,086
$
1,944,272
(1)
Includes other receivables, prepaid
expenses and other current assets and short-term restricted
cash.
(2)
Includes other long-term liabilities and
deferred tax liabilities.
Modivcare Inc.
Unaudited Condensed
Consolidated Statements of Cash Flows
(in thousands)
Three months ended September
30,
Nine months ended September
30,
2023
2022
2023
2022
Operating activities
Net loss
$
(4,302
)
$
(28,505
)
$
(199,208
)
$
(24,859
)
Depreciation and amortization
26,077
25,672
77,679
74,376
Stock-based compensation
1,743
656
4,029
5,152
Equity in net (income) loss of
investee
222
36,525
(3,915
)
38,883
Deferred income taxes
(4,971
)
(16,739
)
(15,235
)
(31,232
)
Impairment of goodwill
—
—
183,100
—
Reduction of right-of-use asset
2,924
2,923
9,875
8,680
Other non-cash items(1)
1,594
1,925
1,486
(4,570
)
Changes in operating assets and
liabilities:
Contract receivables
(9,512
)
(13,562
)
(58,143
)
(35,580
)
Contract payables
24,483
(37,938
)
(60,710
)
(37,786
)
Other working capital items(2)
15,289
23,363
3,715
52,462
Net cash provided by (used in) operating
activities
53,547
(5,680
)
(57,327
)
45,526
Investing activities
Purchase of property and equipment
(8,878
)
(9,619
)
(31,143
)
(25,518
)
Acquisitions, net of cash acquired
—
(11
)
—
(78,872
)
Net cash used in investing activities
(8,878
)
(9,630
)
(31,143
)
(104,390
)
Financing activities
Proceeds from short-term borrowings
(43,500
)
—
83,000
—
Debt issuance costs
—
—
(376
)
(2,415
)
Proceeds from common stock issued pursuant
to stock option exercise
—
99
31
1,237
Restricted stock surrendered for employee
tax payment
(21
)
(42
)
(861
)
(649
)
Other financing activities
—
—
315
—
Net cash provided by (used in) financing
activities
(43,521
)
57
82,109
(1,827
)
Net change in cash, cash equivalents and
restricted cash
1,148
(15,253
)
(6,361
)
(60,691
)
Cash, cash equivalents and restricted cash
at beginning of period
7,466
87,984
14,975
133,422
Cash, cash equivalents and restricted cash
at end of period
$
8,614
$
72,731
$
8,614
$
72,731
(1)
Includes amortization of deferred
financing costs and debt discount and other assets.
(2)
Includes accounts receivable and other
receivables, prepaid expenses and other current assets, accounts
payable and accrued expenses, accrued transportation costs and
other long-term liabilities.
Modivcare Inc.
Unaudited Reconciliation of
Non-GAAP Financial Measures
Segment Information and
Adjusted EBITDA
(in thousands)
Three months ended September
30, 2023
NEMT
PCS
RPM
Corporate
and Other
Total
Service revenue, net
$
485,951
$
179,979
$
19,779
$
1,216
$
686,925
Grant income
—
551
—
—
551
Operating expenses:
Service expense
428,021
143,078
6,934
1,181
579,214
General and administrative expense
25,433
20,252
5,685
18,772
70,142
Depreciation and amortization
6,814
12,850
6,174
239
26,077
Total operating expenses
460,268
176,180
18,793
20,192
675,433
Operating income (loss)
25,683
4,350
986
(18,976
)
12,043
Interest expense, net
—
—
—
17,844
17,844
Income (loss) before income taxes and
equity method investment
25,683
4,350
986
(36,820
)
(5,801
)
Income tax (provision) benefit
(6,994
)
(1,208
)
(279
)
10,140
1,659
Equity in net income (loss) of investee,
net of tax
142
—
—
(302
)
(160
)
Net income (loss)
18,831
3,142
707
(26,982
)
(4,302
)
Interest expense, net
—
—
—
17,844
17,844
Income tax provision (benefit)
6,994
1,208
279
(10,140
)
(1,659
)
Depreciation and amortization
6,814
12,850
6,174
239
26,077
EBITDA
32,639
17,200
7,160
(19,039
)
37,960
Restructuring and related costs(1)
2,711
—
—
6,205
8,916
Transaction and integration costs
101
431
22
605
1,159
Settlement related costs
(25
)
—
—
1,474
1,449
Stock-based compensation
—
—
—
1,690
1,690
Equity in net (income) loss of investee,
net of tax
(142
)
—
—
302
160
Adjusted EBITDA
$
35,284
$
17,631
$
7,182
$
(8,763
)
$
51,334
(1)
Restructuring and related costs include
professional fees for strategic initiatives, organizational
consolidation costs, severance and other professional fees.
Modivcare Inc.
Unaudited Reconciliation of
Non-GAAP Financial Measures
Segment Information and
Adjusted EBITDA
(in thousands)
Three months ended September
30, 2022
NEMT
PCS
RPM
Corporate
and Other
Total
Service revenue, net
$
459,796
$
169,226
$
18,760
$
—
$
647,782
Grant income
—
789
—
—
789
Operating expenses:
Service expense
394,981
132,746
6,836
—
534,563
General and administrative expense
31,815
22,057
5,816
16,201
75,889
Depreciation and amortization
7,079
12,919
5,467
207
25,672
Total operating expenses
433,875
167,722
18,119
16,408
636,124
Operating income (loss)
25,921
2,293
641
(16,408
)
12,447
Interest expense, net
—
—
—
15,557
15,557
Income (loss) before income taxes and
equity method investment
25,921
2,293
641
(31,965
)
(3,110
)
Income tax (provision) benefit
(6,978
)
(661
)
(179
)
8,871
1,053
Equity in net income (loss) of investee,
net of tax
208
—
—
(26,656
)
(26,448
)
Net income (loss)
19,151
1,632
462
(49,750
)
(28,505
)
Interest expense, net
—
—
—
15,557
15,557
Income tax provision (benefit)
6,978
661
179
(8,871
)
(1,053
)
Depreciation and amortization
7,079
12,919
5,467
207
25,672
EBITDA
33,208
15,212
6,108
(42,857
)
11,671
Restructuring and related costs(1)
902
582
39
565
2,088
Transaction and integration costs(2)
6
2,231
471
2,191
4,899
Settlement related costs
5,500
—
—
500
6,000
Stock-based compensation(3)
—
—
—
83
83
COVID-19 related costs, net of grant
income
(51
)
659
—
—
608
Equity in net (income) loss of investee,
net of tax
(208
)
—
—
26,656
26,448
Adjusted EBITDA
$
39,357
$
18,684
$
6,618
$
(12,862
)
$
51,797
(1)
Restructuring and related costs include
professional fees for strategic initiatives, organizational
consolidation costs, severance and other professional fees.
(2)
Transaction and integration costs consist
of fees incurred related to Sarbanes-Oxley Act of 2002
implementation and business integration efforts.
(3)
Stock-based compensation includes cash
settled equity balances.
Modivcare Inc.
Unaudited Reconciliation of
Non-GAAP Financial Measures
Segment Information and
Adjusted EBITDA
(in thousands)
Nine months ended September
30, 2023
NEMT
PCS
RPM
Corporate
and Other
Total
Service revenue, net
$
1,452,389
$
534,435
$
57,702
$
3,812
$
2,048,338
Grant income
—
4,649
—
—
4,649
Operating expenses:
Service expense
1,277,604
417,636
20,129
3,366
1,718,735
General and administrative expense
87,645
63,480
16,781
61,189
229,095
Depreciation and amortization
20,319
38,590
18,087
683
77,679
Impairment of goodwill
—
137,331
45,769
—
183,100
Total operating expenses
1,385,568
657,037
100,766
65,238
2,208,609
Operating income (loss)
66,821
(117,953
)
(43,064
)
(61,426
)
(155,622
)
Interest expense, net
—
—
—
50,769
50,769
Income (loss) before income taxes and
equity method investment
66,821
(117,953
)
(43,064
)
(112,195
)
(206,391
)
Income tax (provision) benefit
(18,014
)
(5,452
)
(765
)
28,593
4,362
Equity in net income (loss) of investee,
net of tax
984
—
—
1,837
2,821
Net income (loss)
49,791
(123,405
)
(43,829
)
(81,765
)
(199,208
)
Interest expense, net
—
—
—
50,769
50,769
Income tax provision (benefit)
18,014
5,452
765
(28,593
)
(4,362
)
Depreciation and amortization
20,319
38,590
18,087
683
77,679
EBITDA
88,124
(79,363
)
(24,977
)
(58,906
)
(75,122
)
Restructuring and related costs(1)
11,865
—
—
21,606
33,471
Transaction and integration costs
101
881
70
1,834
2,886
Settlement related costs
250
—
—
8,683
8,933
Stock-based compensation
—
—
—
3,485
3,485
Impairment of goodwill
—
137,331
45,769
—
183,100
Equity in net (income) loss of investee,
net of tax
(984
)
—
—
(1,837
)
(2,821
)
Adjusted EBITDA
$
99,356
$
58,849
$
20,862
$
(25,135
)
$
153,932
(1)
Restructuring and related costs include
professional fees for strategic initiatives, organizational
consolidation costs, severance and other professional fees.
Modivcare Inc.
Unaudited Reconciliation of
Non-GAAP Financial Measures
Segment Information and
Adjusted EBITDA
(in thousands)
Nine months ended September
30, 2022
NEMT
PCS
RPM
Corporate
and Other
Total
Service revenue, net
$
1,309,449
$
491,661
$
49,362
$
—
$
1,850,472
Grant income
—
4,587
—
—
4,587
Operating expenses:
Service expense
1,100,801
379,423
17,884
—
1,498,108
General and administrative expense
102,736
68,536
17,520
43,316
232,108
Depreciation and amortization
21,576
37,976
14,201
623
74,376
Total operating expenses
1,225,113
485,935
49,605
43,939
1,804,592
Operating income (loss)
84,336
10,313
(243
)
(43,939
)
50,467
Interest expense, net
—
—
—
46,429
46,429
Income (loss) before income taxes and
equity method investment
84,336
10,313
(243
)
(90,368
)
4,038
Income tax (provision) benefit
(23,116
)
(2,902
)
68
25,073
(877
)
Equity in net income (loss) of investee,
net of tax
143
—
—
(28,163
)
(28,020
)
Net income (loss)
61,363
7,411
(175
)
(93,458
)
(24,859
)
Interest expense, net
—
—
—
46,429
46,429
Income tax provision (benefit)
23,116
2,902
(68
)
(25,073
)
877
Depreciation and amortization
21,576
37,976
14,201
623
74,376
EBITDA
106,055
48,289
13,958
(71,479
)
96,823
Restructuring and related costs(1)
11,359
763
63
950
13,135
Transaction and integration costs(2)
6
6,334
2,753
7,219
16,312
Settlement related costs
5,500
—
—
500
6,000
Stock-based compensation(3)
—
190
86
3,950
4,226
COVID-19 related costs, net of grant
income
105
(2,370
)
—
—
(2,265
)
Equity in net (income) loss of investee,
net of tax
(143
)
—
—
28,163
28,020
Adjusted EBITDA
$
122,882
$
53,206
$
16,860
$
(30,697
)
$
162,251
(1)
Restructuring and related costs include
professional fees for strategic initiatives, organizational
consolidation costs, severance and other professional fees.
(2)
Transaction and integration costs consist
of fees incurred related to Sarbanes-Oxley Act of 2002
implementation and business integration efforts.
(3)
Stock-based compensation includes cash
settled equity balances.
Modivcare Inc.
Unaudited Reconciliation of
Non-GAAP Financial Measures
Adjusted Net Income and
Adjusted Net Income per Common Share
(in thousands, except share and
per share data)
Three months ended September
30,
Nine months ended September
30,
2023
2022
2023
2022
Net income (loss)
$
(4,302
)
$
(28,505
)
$
(199,208
)
$
(24,859
)
Restructuring and related costs(1)
8,916
2,088
33,471
13,135
Transaction and integration costs(2)
1,159
4,899
2,886
16,312
Settlement related costs
1,449
6,000
8,933
6,000
Stock-based compensation(3)
1,690
83
3,485
4,226
Impairment of goodwill
—
—
183,100
—
Equity in net (income) loss of investee,
net of tax
160
26,448
(2,821
)
28,020
Intangible asset amortization expense
19,748
20,727
59,457
59,978
COVID-19 related costs, net of grant
income(4)
—
608
—
(2,265
)
Tax effected impact of adjustments
(8,327
)
(9,649
)
(27,833
)
(26,964
)
Adjusted net income
$
20,493
$
22,699
$
61,470
$
73,583
Adjusted EPS
$
1.44
$
1.61
$
4.33
$
5.21
Diluted weighted-average number of common
shares outstanding
14,218,141
14,110,928
14,209,787
14,119,598
(1)
Restructuring and related costs include
professional fees for strategic initiatives, organizational
consolidation costs, severance and other professional fees.
(2)
Transaction and integration costs consist
of fees incurred related to SOX implementation and business
integration efforts.
(3)
Stock-based compensation includes cash
settled equity balances.
(4)
COVID-19 related costs were added back as
one-time items through 2022. As the Public Health Emergency ended
in 2023 and the effects of COVID-19 have become normal course of
business, COVID-19 related items are no longer added back in
2023.
Modivcare Inc.
Unaudited Key Statistical and
Financial Data
(in thousands, except for
statistical data)
Three months ended
Nine months ended
Three months ended
September 30,
2023
September 30,
2022
%
Change
September 30,
2023
September 30,
2022
%
Change
June 30,
2023
QoQ %
Change
NEMT Segment
Service revenue, net
$
485,951
$
459,796
5.7
%
$
1,452,389
$
1,309,449
10.9
%
$
496,975
(2.2
)%
Purchased services expense
363,594
340,138
6.9
%
1,085,206
935,298
16.0
%
377,192
(3.6
)%
Payroll and other expense
64,427
54,843
17.5
%
192,398
165,503
16.3
%
64,705
(0.4
)%
Service expense
$
428,021
$
394,981
8.4
%
$
1,277,604
$
1,100,801
16.1
%
$
441,897
(3.1
)%
Gross profit
$
57,930
$
64,815
(10.6
)%
$
174,785
$
208,648
(16.2
)%
$
55,078
5.2
%
Gross margin
11.9
%
14.1
%
12.0
%
15.9
%
11.1
%
G&A expense
$
25,433
$
31,815
(20.1
)%
$
87,645
$
102,736
(14.7
)%
$
28,337
(10.2
)%
G&A expense adjustments:
Restructuring and related costs
2,711
902
200.6
%
11,865
11,359
4.5
%
2,055
31.9
%
Transaction and integration costs
101
6
N/M
101
6
N/M
—
N/M
Settlement related costs
(25
)
5,500
N/M
250
5,500
N/M
—
N/M
Adjusted G&A expense
$
22,646
$
25,407
(10.9
)%
$
75,429
$
85,871
(12.2
)%
$
26,282
(13.8
)%
Adjusted G&A expense % of revenue
4.7
%
5.5
%
5.2
%
6.6
%
5.3
%
Net income
$
18,831
$
19,151
(1.7
)%
$
49,791
$
61,363
(18.9
)%
$
14,789
27.3
%
Net income margin
3.9
%
4.2
%
3.4
%
4.7
%
3.0
%
Adjusted EBITDA
$
35,284
$
39,357
(10.3
)%
$
99,356
$
122,882
(19.1
)%
$
28,796
22.5
%
Adjusted EBITDA margin
7.3
%
8.6
%
6.8
%
9.4
%
5.8
%
Total paid trips (thousands)
8,824
8,045
9.7
%
25,761
22,987
12.1
%
8,735
1.0
%
Average monthly members (thousands)
33,660
36,026
(6.6
)%
33,892
33,998
(0.3
)%
34,312
(1.9
)%
Revenue per member per month
$
4.81
$
4.25
13.2
%
$
4.76
$
4.28
11.2
%
$
4.83
(0.4
)%
Revenue per trip
$
55.07
$
57.15
(3.6
)%
$
56.38
$
56.96
(1.0
)%
$
56.89
(3.2
)%
Monthly utilization
8.7
%
7.4
%
8.4
%
7.5
%
8.5
%
Purchased services per trip
$
41.21
$
42.28
(2.5
)%
$
42.13
$
40.69
3.5
%
$
43.18
(4.6
)%
Payroll and other per trip
$
7.30
$
6.82
7.0
%
$
7.47
$
7.20
3.7
%
$
7.41
(1.5
)%
Total service expense per trip
$
48.51
$
49.10
(1.2
)%
$
49.60
$
47.89
3.6
%
$
50.59
(4.1
)%
N/M - Not Meaningful. Certain figures in the tables above do not
provide meaningful percentage comparison, thus, the percentage has
been removed.
Modivcare Inc.
Unaudited Key Statistical and
Financial Data
(in thousands, except for
statistical data)
Three months ended
Nine months ended
Three months ended
September 30,
2023
September 30,
2022
%
Change
September 30,
2023
September 30,
2022
%
Change
June 30,
2023
QoQ %
Change
PCS Segment
Service revenue, net
$
179,979
$
169,226
6.4
%
$
534,435
$
491,661
8.7
%
$
180,325
(0.2
)%
Service expense
143,078
132,746
7.8
%
417,636
379,423
10.1
%
138,468
3.3
%
Gross profit
$
36,901
$
36,480
1.2
%
$
116,799
$
112,238
4.1
%
$
41,857
(11.8
)%
Gross Margin
20.5
%
21.6
%
21.9
%
22.8
%
23.2
%
G&A expense
$
20,252
$
22,057
(8.2
)%
$
63,480
$
68,536
(7.4
)%
$
20,565
(1.5
)%
G&A expense adjustments
Restructuring and related costs
—
582
(100.0
)%
—
763
(100.0
)%
—
N/M
Transaction and integration costs
431
2,231
(80.7
)%
881
6,334
(86.1
)%
173
149.1
%
Stock-based compensation
—
—
N/M
—
190
(100.0
)%
—
N/M
Adjusted G&A expense
$
19,821
$
19,244
3.0
%
$
62,599
$
61,249
2.2
%
$
20,392
(2.8
)%
Adjusted G&A expense % of revenue
11.0
%
11.4
%
11.7
%
12.5
%
11.3
%
Net income
$
3,142
$
1,632
92.5
%
$
(123,405
)
$
7,411
(1765.2
)%
$
(129,372
)
(102.4
)%
Net income margin
1.7
%
1.0
%
(23.1
)%
1.5
%
(71.7
)%
Adjusted EBITDA
$
17,631
$
18,684
(5.6
)%
$
58,849
$
53,206
10.6
%
$
24,099
(26.8
)%
Adjusted EBITDA margin
9.8
%
11.0
%
11.0
%
10.8
%
13.4
%
Total hours (in thousands)
6,995
6,836
2.3
%
20,752
20,076
3.4
%
6,933
0.9
%
Revenue per hour
$
25.73
$
24.76
3.9
%
$
25.75
$
24.49
5.1
%
$
26.01
(1.1
)%
Service expense per hour
$
20.45
$
19.42
5.3
%
$
20.13
$
18.90
6.5
%
$
19.97
2.4
%
N/M - Not Meaningful. Certain figures in the tables above do not
provide meaningful percentage comparison, thus, the percentage has
been removed.
Modivcare Inc.
Unaudited Key Statistical and
Financial Data
(in thousands, except for
statistical data)
Three months ended
Nine months ended
Three months ended
September 30,
2023
September 30,
2022
%
Change
September 30,
2023
September 30,
2022
%
Change
June 30,
2023
QoQ %
Change
RPM Segment
Service revenue, net
$
19,779
$
18,760
5.4
%
$
57,702
$
49,362
16.9
%
$
19,211
3.0
%
Service expense
6,934
6,836
1.4
%
20,129
17,884
12.6
%
6,705
3.4
%
Gross profit
$
12,845
$
11,924
7.7
%
$
37,573
$
31,478
19.4
%
$
12,506
2.7
%
Gross Margin
64.9
%
63.6
%
65.1
%
63.8
%
65.1
%
G&A expense
$
5,685
$
5,816
(2.3
)%
$
16,781
$
17,520
(4.2
)%
$
5,327
6.7
%
G&A expense adjustments
Restructuring and related costs
—
39
(100.0
)%
—
63
(100.0
)%
—
N/M
Transaction and integration costs
22
471
(95.3
)%
70
2,753
(97.5
)%
16
37.5
%
Stock-based compensation
—
—
N/M
—
86
(100.0
)%
—
N/M
Adjusted G&A expense
$
5,663
$
5,306
6.7
%
$
16,711
$
14,618
14.3
%
$
5,311
6.6
%
Adjusted G&A expense % of revenue
28.6
%
28.3
%
29.0
%
29.6
%
27.6
%
Net income (loss)
$
707
$
462
53.0
%
$
(43,829
)
$
(175
)
N/M
$
(44,965
)
(101.6
)%
Net income (loss) margin
3.6
%
2.5
%
(76.0
)%
(0.4
)%
(234.1
)%
Adjusted EBITDA
$
7,182
$
6,618
8.5
%
$
20,862
$
16,860
23.7
%
$
7,195
(0.2
)%
Adjusted EBITDA margin
36.3
%
35.3
%
36.2
%
34.2
%
37.5
%
Average monthly members (in thousands)
247
230
7.4
%
241
201
19.9
%
240
2.9
%
Revenue per member per month
$
26.69
$
27.19
(1.8
)%
$
26.60
$
27.29
(2.5
)%
$
26.68
—
%
Service expense per member per month
$
9.36
$
9.91
(5.5
)%
$
9.28
$
9.89
(6.2
)%
$
9.31
0.5
%
N/M - Not Meaningful. Certain figures in the tables above do not
provide meaningful percentage comparison, thus, the percentage has
been removed.
Modivcare Inc.
Unaudited Key Statistical and
Financial Data
(in thousands)
Three months ended
Nine months ended
Three months ended
September 30,
2023
September 30,
2022
%
Change
September 30,
2023
September 30,
2022
%
Change
June 30,
2023
QoQ %
Change
Corporate and Other Segment
G&A expense
$
18,772
$
16,201
15.9
%
$
61,189
$
43,316
41.3
%
$
25,011
(24.9
)%
G&A expense adjustments
Restructuring and related costs
6,205
565
N/M
21,606
950
N/M
8,055
(23.0
)%
Transaction and integration costs
605
2,191
(72.4
)%
1,834
7,219
(74.6
)%
665
(9.0
)%
Settlement related costs
1,474
500
194.8
%
8,683
500
N/M
7,209
(79.6
)%
Stock-based compensation
1,690
83
N/M
3,485
3,950
(11.8
)%
947
78.5
%
Adjusted G&A expense
$
8,798
$
12,862
(31.6
)%
$
25,581
$
30,697
(16.7
)%
$
8,135
8.1
%
Adjusted G&A expense % of consolidated
revenue
1.3
%
2.0
%
1.2
%
1.7
%
1.2
%
Three months ended
Nine months ended
Three months ended
September 30,
2023
September 30,
2022
%
Change
September 30,
2023
September 30,
2022
%
Change
June 30,
2023
QoQ %
Change
Consolidated Modivcare Inc.
G&A expense
$
70,142
$
75,889
(7.6
)%
$
229,095
$
232,108
(1.3
)%
$
79,240
(11.5
)%
G&A expense adjustments
Restructuring and related costs
8,916
2,088
327.0
%
33,471
13,135
154.8
%
10,110
(11.8
)%
Transaction and integration costs
1,159
4,899
(76.3
)%
2,886
16,312
(82.3
)%
854
35.7
%
Settlement related costs
1,449
6,000
(75.9
)%
8,933
6,000
48.9
%
7,209
(79.9
)%
Stock-based compensation
1,690
83
N/M
3,485
4,226
(17.5
)%
947
78.5
%
Adjusted G&A expense
$
56,928
$
62,819
(9.4
)%
$
180,320
$
192,435
(6.3
)%
$
60,120
(5.3
)%
Adjusted G&A expense % of revenue
8.3
%
9.7
%
8.8
%
10.4
%
8.6
%
N/M - Not Meaningful. Certain figures in the tables above do not
provide meaningful percentage comparison, thus, the percentage has
been removed.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231102026666/en/
Investor Relations Contact Kevin Ellich, Head of Investor
Relations Kevin.Ellich@modivcare.com
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