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Modivcare Reports First Quarter 2024 Financial Results; Maintains Guidance

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 months ended March 31, 2024.

First Quarter 2024 Summary:

  • Service revenue of $684.5 million increased 3.3% from the first quarter of 2023
  • Net loss of $22.3 million or $1.57 per diluted common share
  • Adjusted EBITDA(1) of $32.1 million, adjusted net loss(1) of $1.2 million and adjusted EPS(1) of negative $0.09 per diluted common share
  • Cash provided by operating activities during the quarter of $9.6 million and free cash flow(2) of $1.7 million
  • Contract receivables, net of contract payables, of $25.9 million as of March 31, 2024
  • Won $171.2 million of NEMT total contract value (TCV) during first quarter 2024 ($36.4 million annual contract value (ACV)), with implementation beginning in the second quarter of 2024

 

 

(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 $7.9 million that is included in our purchase of property and equipment line in our Unaudited Condensed Consolidated Statements of Cash Flows provided below.

“We are pleased to report first quarter 2024 results in-line with our previously announced guidance as revenue increased 3% year-over-year and adjusted EBITDA was $32 million," stated L. Heath Sampson, President and CEO. “We made significant progress in our strategic transformation to optimize the Company’s best-scaled supportive care services platform. We completed another pivotal quarter in our NEMT segment, gaining conviction in our cost savings initiatives as the headwinds from Medicaid redetermination, recovery of utilization, and working capital normalization are expected to ease in the second half of the year. The onboarding of over $140 million in ACV won in 2023 is being implemented as anticipated, and we won an additional $36 million in ACV during the first quarter 2024. Our digital integration and technology enhancement initiatives are progressing with expected in-year cost savings of at least $34 million.”

Sampson continued, “We are confident in our path to exit the fourth quarter of 2024 with expected run-rate adjusted EBITDA of $220 million to $230 million. With the first quarter behind us, our top priority remains the refinancing of our 2025 senior unsecured notes. I am pleased to report that this process is well underway, and we are focused on completing it expeditiously while also optimizing for the best possible outcome. Lastly, while we remain steadfast in executing our strategy, I want to reiterate our unwavering commitment to enhance shareholder value through any avenue available to the Company.”

2024 Guidance

We maintained our Revenue and Adjusted EBITDA guidance ranges as follows ($ in millions):

 

 

Fiscal Year 2024

 

Revenue

 

$2,700 - $2,900

 

Adjusted EBITDA

 

$190 - $210

 

Guidance excludes the effects of any future merger or acquisition activity and is based on the current operating environment.

First Quarter 2024 Results

For the first quarter of 2024, the Company reported $684.5 million in revenue, a 3.3% increase from $662.3 million in the first quarter of 2023. NEMT segment revenue grew by $9.8 million or 2.1%, PCS segment revenue grew by $9.4 million or 5.4%, and RPM segment revenue grew by $1.4 million or 7.4%, as compared to the first quarter of 2023.

Our operating loss was $3.4 million, or 0.5% of revenue, in the first quarter of 2024, compared to operating income of $8.1 million, or 1.2% of revenue, in the first quarter of 2023. Net loss in the first quarter of 2024 was $22.3 million, or $1.57 per diluted common share, compared to net loss of $4.0 million, or $0.28 per diluted common share, in the first quarter of 2023. Our operating loss was driven by a 4.9% increase in operating expenses in the first quarter of 2024, primarily as a result of an 6.1% increase in service expense related to the services provided in conjunction with the increase in total paid trips in our NEMT segment and the increase in total hours worked in our PCS segment during the first quarter of 2024.

Adjusted EBITDA was $32.1 million, or 4.7% of revenue, in the first quarter of 2024, compared to $50.2 million, or 7.6% of revenue, in the first quarter of 2023. The change in adjusted EBITDA was primarily a result of the lower operating income earned across each of our segments, primarily due to higher service expense. Accordingly, adjusted net loss in the first quarter of 2024 was $1.2 million, or $0.09 per diluted common share, compared to adjusted net income of $20.2 million, or $1.42 per diluted common share, in the first quarter of 2023.

Cash generated from operations during the quarter was $9.6 million as compared to $2.7 million of cash used in operations during the first quarter of 2023. Changes in operating assets and liabilities during the quarter include an increase in contract receivables of $10.3 million, net, and an increase in contract payables of $10.9 million, net. Net cash used in investing activities during the quarter was $7.9 million, primarily due to capitalized investments in technology and purchases of monitoring devices. Net cash provided by financing activities during the quarter was $6.4 million, which resulted in a quarter ended balance on our revolving credit facility of $121.0 million.

First Quarter Earnings Conference Call

Modivcare will hold a conference call to discuss its financial results on Friday, May 3, 2024 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 health outcomes. Modivcare is a provider of non-emergency medical transportation (NEMT), personal care services (PCS), and remote patient monitoring solutions (RPM). The company also holds a minority equity investment in CCHN Holdings (d/b/a Matrix Medical Network), an independent, at scale provider of comprehensive in-home health assessments in the U.S. 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 of America ("GAAP"), the information contained herein may include presentations for the Company and its segments (as noted and applicable) of: (1) EBITDA, Adjusted EBITDA, Adjusted G&A expense, Adjusted EBITDA margin, Adjusted Net Income (Loss), and Adjusted EPS, all of which are non-GAAP financial measures considered by management to be performance measures; and (2) free cash flow, which is a non-GAAP financial measure considered by management to be a liquidity measure. 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; and (5) equity in net (income) loss of investee, net of tax. Adjusted EBITDA margin is calculated as Adjusted EBITDA divided by service revenue, net. Adjusted Net Income (Loss) is calculated as net income (loss) before (as applicable): (1) restructuring and related costs; (2) transaction and integration costs; (3) settlement related costs; (4) stock-based compensation; (5) equity in net (income) loss of investee, net of tax; (6) intangible asset amortization expense; and (7) the income tax impact of such adjustments. Adjusted EPS is calculated as Adjusted Net Income (Loss) divided by the diluted weighted-average number of common shares outstanding as calculated for Adjusted Net Income (Loss). 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 used herein 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 measure (Adjusted EBITDA) to its most directly comparable GAAP financial measure (net income (loss)) on a forward-looking basis because we are unable to predict items contained in the GAAP financial measure 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 free cash flow presentation (as applicable) 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 any 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 their 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; inadequacies in, or security breaches of, our information technology systems, including those intended to protect our clients’ confidential information; the effects of any public health emergency; changes in the funding, financial viability or our relationships with our payors; delays in collection, or non-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; weakening of general economic conditions, including the impact of inflationary pressures, rising interest rates, labor shortages, higher labor costs and supply chain challenges; estimated income taxes being different from income taxes that we ultimately pay; pandemics and other infectious diseases; 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; labor disputes or disruptions, in particular in New York; becoming subject to malpractice, professional negligence, medical liability 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; any legal challenges to the relationships or arrangements between our virtual clinical care management services and the unaffiliated physician-owned professional corporation through which such services are provided; any failure to comply with applicable data interoperability and information blocking rules; the lapse of temporary telehealth flexibilities currently permitted under the Consolidated Appropriations Act of 2023; 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; increasing scrutiny and changing expectations with respect to environmental, social and governance matters; changes to, or violations of, licensing regulations, including regulations governing surveys and audits; 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, financial covenants and cross-default provisions that limit our flexibility in operating our business; our substantial indebtedness and lease obligations and ability to generate or distribute sufficient cash to service our indebtedness; the expiration of our existing credit agreement or any loss of available financing alternatives; our ability to incur substantial additional indebtedness or to issue additional equity; the results of the remediation of our identified material weaknesses in internal control over financial reporting; future sales of our common stock by existing stockholders; any stock price volatility; our dependence on our subsidiaries to fund our operations and expenses; securities analysts failing to publish research or publishing misleading or unfavorable research about us; and the effects of applicable anti-takeover provisions.

The Company has provided additional information about the foregoing and other risks facing our business in our annual report on Form 10-K and subsequent periodic and current reports 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 March 31,

 

 

2024

 

 

 

2023

 

 

 

 

 

Service revenue, net

$

684,451

 

 

$

662,306

 

Grant income

 

 

 

 

1,464

 

 

 

 

 

Operating expenses:

 

 

 

Service expense

 

583,566

 

 

 

550,266

 

General and administrative expense

 

77,177

 

 

 

79,713

 

Depreciation and amortization

 

27,103

 

 

 

25,693

 

Total operating expenses

 

687,846

 

 

 

655,672

 

 

 

 

 

Operating income (loss)

 

(3,395

)

 

 

8,098

 

 

 

 

 

Interest expense, net

 

18,686

 

 

 

15,958

 

Loss before income taxes and equity method investment

 

(22,081

)

 

 

(7,860

)

Income tax (provision) benefit

 

543

 

 

 

1,873

 

Equity in net income (loss) of investee, net of tax

 

(762

)

 

 

2,025

 

Net loss

$

(22,300

)

 

$

(3,962

)

 

 

 

 

Loss per common share:

 

 

 

Basic

$

(1.57

)

 

$

(0.28

)

Diluted

$

(1.57

)

 

$

(0.28

)

 

 

 

 

Weighted-average number of common shares outstanding:

 

 

Basic

 

14,202,000

 

 

 

14,163,511

 

Diluted

 

14,202,000

 

 

 

14,163,511

 

 

Modivcare Inc.

Unaudited Condensed Consolidated Balance Sheets

(in thousands)

 

 

 

 

 

March 31, 2024

 

December 31, 2023

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

10,341

 

$

2,217

Accounts receivable, net

 

214,106

 

 

222,537

Contract receivables

 

134,680

 

 

143,960

Other current assets(1)

 

44,874

 

 

36,209

Total current assets

 

404,001

 

 

404,923

Property and equipment, net

 

86,238

 

 

85,629

Long-term contract receivables

 

19,598

 

 

Goodwill

 

785,554

 

 

785,554

Intangible assets, net

 

341,078

 

 

360,935

Equity investment

 

40,247

 

 

41,531

Operating lease right-of-use assets

 

40,565

 

 

39,776

Other long-term assets

 

46,767

 

 

48,927

Total assets

$

1,764,048

 

$

1,767,275

 

 

 

 

Liabilities and stockholders' equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

54,645

 

$

55,241

Accrued contract payables

 

128,399

 

 

117,488

Accrued expenses and other current liabilities

 

139,812

 

 

127,901

Accrued transportation costs

 

86,846

 

 

97,245

Current portion of operating lease liabilities

 

8,612

 

 

8,727

Short-term borrowings

 

121,000

 

 

113,800

Total current liabilities

 

539,314

 

 

520,402

Long-term debt, net of deferred financing costs

 

984,896

 

 

983,757

Operating lease liabilities, less current portion

 

34,886

 

 

33,784

Other long-term liabilities(2)

 

69,111

 

 

73,137

Total liabilities

 

1,628,207

 

 

1,611,080

 

 

 

 

Stockholders' equity

 

 

 

Stockholders' equity

 

135,841

 

 

156,195

Total liabilities and stockholders' equity

$

1,764,048

 

$

1,767,275

(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 March 31,

 

 

2024

 

 

 

2023

 

Operating activities

 

 

 

Net loss

$

(22,300

)

 

$

(3,962

)

Depreciation and amortization

 

27,103

 

 

 

25,693

 

Stock-based compensation

 

2,010

 

 

 

1,124

 

Equity in net (income) loss of investee

 

1,056

 

 

 

(2,810

)

Deferred income taxes

 

(3,778

)

 

 

(3,624

)

Reduction of right-of-use asset

 

2,947

 

 

 

3,547

 

Other non-cash items(1)

 

1,407

 

 

 

1,278

Changes in operating assets and liabilities:

 

 

 

Contract receivables

 

9,280

 

 

 

(26,893

)

Contract payables

 

10,910

 

 

 

(6,667

)

Long-term contract receivables

 

(19,598

)

 

 

(3,897

)

Other changes in operating assets and liabilities(2)

 

523

 

 

13,556

 

Net cash provided by (used in) operating activities

 

9,560

 

 

 

(2,655

)

 

 

 

 

Investing activities

 

 

 

Purchase of property and equipment

 

(7,856

)

 

 

(13,320

)

Net cash used in investing activities

 

(7,856

)

 

 

(13,320

)

 

 

 

 

Financing activities

 

 

 

Proceeds from short-term borrowings

 

7,200

 

 

 

15,000

 

Debt issuance costs

 

(756

)

 

 

 

Restricted stock surrendered for employee tax payment

 

(64

)

 

 

(620

)

Net cash provided by financing activities

 

6,380

 

 

 

14,380

 

 

 

 

 

Net change in cash, cash equivalents and restricted cash

 

8,084

 

 

 

(1,595

)

Cash, cash equivalents and restricted cash at beginning of period

 

2,782

 

 

 

14,975

 

Cash, cash equivalents and restricted cash at end of period

$

10,866

 

 

$

13,380

 

(1)

Includes amortization of deferred financing costs and debt discount.

(2)

Includes accounts receivable and other receivables, prepaid expenses and other current assets, accounts payable and accrued expenses, accrued transportation costs, other long-term assets and other long-term liabilities.

 

Modivcare Inc.

Unaudited Reconciliation of Non-GAAP Financial Measures

Segment Information and Adjusted EBITDA

(in thousands)

 

 

Three months ended March 31, 2024

 

NEMT

 

PCS

 

RPM

 

Corporate and Other

 

Total

 

 

 

 

 

 

 

 

 

 

Service revenue, net

$

479,306

 

 

$

183,568

 

 

$

20,102

 

 

$

1,475

 

 

$

684,451

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Service expense

 

423,657

 

 

 

149,438

 

 

 

8,363

 

 

 

2,108

 

 

 

583,566

 

General and administrative expense

 

31,820

 

 

 

24,432

 

 

 

5,440

 

 

 

15,485

 

 

 

77,177

 

Depreciation and amortization

 

7,359

 

 

 

12,795

 

 

 

6,674

 

 

 

275

 

 

 

27,103

 

Total operating expenses

 

462,836

 

 

 

186,665

 

 

 

20,477

 

 

 

17,868

 

 

 

687,846

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

 

16,470

 

 

 

(3,097

)

 

 

(375

)

 

 

(16,393

)

 

 

(3,395

)

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

 

 

 

 

 

 

 

 

18,686

 

 

 

18,686

 

Income (loss) before income taxes and equity method investment

 

16,470

 

 

 

(3,097

)

 

 

(375

)

 

 

(35,079

)

 

 

(22,081

)

Income tax benefit (provision)

 

(4,274

)

 

 

823

 

 

 

67

 

 

 

3,927

 

 

 

543

 

Equity in net loss of investee, net of tax

 

(28

)

 

 

 

 

 

 

 

 

(734

)

 

 

(762

)

Net income (loss)

 

12,168

 

 

 

(2,274

)

 

 

(308

)

 

 

(31,886

)

 

 

(22,300

)

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

 

 

 

 

 

 

 

 

18,686

 

 

 

18,686

 

Income tax provision (benefit)

 

4,274

 

 

 

(823

)

 

 

(67

)

 

 

(3,927

)

 

 

(543

)

Depreciation and amortization

 

7,359

 

 

 

12,795

 

 

 

6,674

 

 

 

275

 

 

 

27,103

 

EBITDA

 

23,801

 

 

 

9,698

 

 

 

6,299

 

 

 

(16,852

)

 

 

22,946

 

 

 

 

 

 

 

 

 

 

 

Restructuring and related costs(1)

 

3,239

 

 

 

127

 

 

 

10

 

 

 

1,729

 

 

 

5,105

 

Transaction and integration costs

 

52

 

 

 

1,446

 

 

 

 

 

 

45

 

 

 

1,543

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

1,781

 

 

 

1,781

 

Equity in net loss of investee, net of tax

 

28

 

 

 

 

 

 

 

 

 

734

 

 

 

762

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

$

27,120

 

 

$

11,271

 

 

$

6,309

 

 

$

(12,563

)

 

$

32,137

 

(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 March 31, 2023

 

NEMT

 

PCS

 

RPM

 

Corporate and Other

 

Total

 

 

 

 

 

 

 

 

 

 

Service revenue, net

$

469,463

 

 

$

174,131

 

 

$

18,712

 

 

$

 

 

$

662,306

 

Grant income

 

 

 

 

1,464

 

 

 

 

 

 

 

 

 

1,464

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Service expense

 

407,686

 

 

 

136,090

 

 

 

6,490

 

 

 

 

 

 

550,266

 

General and administrative expense

 

33,875

 

 

 

22,663

 

 

 

5,769

 

 

 

17,406

 

 

 

79,713

 

Depreciation and amortization

 

6,766

 

 

 

12,868

 

 

 

5,854

 

 

 

205

 

 

 

25,693

 

Total operating expenses

 

448,327

 

 

 

171,621

 

 

 

18,113

 

 

 

17,611

 

 

 

655,672

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

 

21,136

 

 

 

3,974

 

 

 

599

 

 

 

(17,611

)

 

 

8,098

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

 

 

 

 

 

 

 

 

15,958

 

 

 

15,958

 

Income (loss) before income taxes and equity method investment

 

21,136

 

 

 

3,974

 

 

 

599

 

 

 

(33,569

)

 

 

(7,860

)

Income tax benefit (provision)

 

(5,618

)

 

 

(1,149

)

 

 

(170

)

 

 

8,810

 

 

 

1,873

 

Equity in net income of investee, net of tax

 

653

 

 

 

 

 

 

 

 

 

1,372

 

 

 

2,025

 

Net income (loss)

 

16,171

 

 

 

2,825

 

 

 

429

 

 

 

(23,387

)

 

 

(3,962

)

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

 

 

 

 

 

 

 

 

15,958

 

 

 

15,958

 

Income tax provision (benefit)

 

5,618

 

 

 

1,149

 

 

 

170

 

 

 

(8,810

)

 

 

(1,873

)

Depreciation and amortization

 

6,766

 

 

 

12,868

 

 

 

5,854

 

 

 

205

 

 

 

25,693

 

EBITDA

 

28,555

 

 

 

16,842

 

 

 

6,453

 

 

 

(16,034

)

 

 

35,816

 

 

 

 

 

 

 

 

 

 

 

Restructuring and related costs(1)

 

7,099

 

 

 

 

 

 

 

 

 

7,346

 

 

 

14,445

 

Transaction and integration costs(2)

 

 

 

 

277

 

 

 

32

 

 

 

564

 

 

 

873

 

Settlement related costs

 

275

 

 

 

 

 

 

 

 

 

 

 

 

275

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

848

 

 

 

848

 

Equity in net income of investee, net of tax

 

(653

)

 

 

 

 

 

 

 

 

(1,372

)

 

 

(2,025

)

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

$

35,276

 

 

$

17,119

 

 

$

6,485

 

 

$

(8,648

)

 

$

50,232

 

(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.

 

Modivcare Inc.

Unaudited Reconciliation of Non-GAAP Financial Measures

Adjusted Net Income (Loss) and Adjusted Net Income (Loss) per Common Share

(in thousands, except share and per share data)

 

 

Three months ended March 31,

 

 

2024

 

 

 

2023

 

 

 

 

 

Net loss

$

(22,300

)

 

$

(3,962

)

 

 

 

 

Restructuring and related costs(1)

 

5,105

 

 

 

14,445

 

Transaction and integration costs(2)

 

1,543

 

 

 

873

 

Settlement related costs

 

 

 

 

275

 

Stock-based compensation

 

1,781

 

 

 

848

 

Equity in net (income) loss of investee, net of tax

 

762

 

 

 

(2,025

)

Intangible asset amortization expense

 

19,779

 

 

 

19,901

 

Tax effected impact of adjustments

 

(7,881

)

 

 

(10,154

)

 

 

 

 

Adjusted net income (loss)

$

(1,211

)

 

$

20,201

 

 

 

 

 

Adjusted earnings (loss) per share

$

(0.09

)

 

$

1.42

 

 

 

 

 

Diluted weighted-average number of common shares outstanding

 

14,202,000

 

 

 

14,193,257

 

(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.

 

Modivcare Inc.

Unaudited Key Statistical and Financial Data

(in thousands, except for statistical data)

 

 

Three months ended

 

 

 

Three months

ended

 

 

March 31, 2024

 

March 31, 2023

 

% Change

 

December 31, 2023

QoQ % Change

 

 

 

 

 

 

 

 

 

 

NEMT Segment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service revenue, net

$

479,306

 

 

$

469,463

 

 

2.1

%

 

$

499,058

 

 

(4.0

)%

Purchased services expense

 

362,900

 

 

 

344,420

 

 

5.4

%

 

 

371,590

 

 

(2.3

)%

Payroll and other expense

 

60,757

 

 

 

63,266

 

 

(4.0

)%

 

 

60,596

 

 

0.3

%

Service expense

$

423,657

 

 

$

407,686

 

 

3.9

%

 

$

432,186

 

 

(2.0

)%

 

 

 

 

 

 

 

 

 

 

Gross profit

$

55,649

 

 

$

61,777

 

 

(9.9

)%

 

$

66,872

 

 

(16.8

)%

Gross margin

 

11.6

%

 

 

13.2

%

 

 

 

 

13.4

%

 

 

 

 

 

 

 

 

 

 

 

 

G&A expense

$

31,820

 

 

$

33,875

 

 

(6.1

)%

 

$

27,710

 

 

14.8

%

G&A expense adjustments:

 

 

 

 

 

 

 

 

 

Restructuring and related costs

 

3,239

 

 

 

7,099

 

 

(54.4

)%

 

 

658

 

 

392.2

%

Transaction and integration costs

 

52

 

 

 

 

 

N/M

 

 

 

(101

)

 

(151.5

)%

Settlement related costs

 

 

 

 

275

 

 

(100.0

)%

 

 

 

 

N/M

 

Adjusted G&A expense

$

28,529

 

 

$

26,501

 

 

7.7

%

 

$

27,153

 

 

5.1

%

Adjusted G&A expense % of revenue

 

6.0

%

 

 

5.6

%

 

 

 

 

5.4

%

 

 

 

 

 

 

 

 

 

 

 

 

Net income

$

12,168

 

 

$

16,171

 

 

(24.8

)%

 

$

23,557

 

 

(48.3

)%

Net income margin

 

2.5

%

 

 

3.4

%

 

 

 

 

4.7

%

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

$

27,120

 

 

$

35,276

 

 

(23.1

)%

 

$

39,719

 

 

(31.7

)%

Adjusted EBITDA margin

 

5.7

%

 

 

7.5

%

 

 

 

 

8.0

%

 

 

 

 

 

 

 

 

 

 

 

 

Total paid trips (thousands)

 

8,808

 

 

 

8,202

 

 

7.4

%

 

 

8,798

 

 

0.1

%

Average monthly members (thousands)

 

29,071

 

 

 

33,704

 

 

(13.7

)%

 

 

32,914

 

 

(11.7

)%

 

 

 

 

 

 

 

 

 

 

Revenue per member per month

$

5.50

 

 

$

4.64

 

 

18.5

%

 

$

5.05

 

 

8.9

%

Revenue per trip

$

54.42

 

 

$

57.24

 

 

(4.9

)%

 

$

56.72

 

 

(4.1

)%

Monthly utilization

 

10.1

%

 

 

8.1

%

 

 

 

 

8.9

%

 

 

 

 

 

 

 

 

 

 

 

 

Purchased services per trip

$

41.20

 

 

$

41.99

 

 

(1.9

)%

 

$

42.24

 

 

(2.5

)%

Payroll and other per trip

$

6.90

 

 

$

7.71

 

 

(10.5

)%

 

$

6.89

 

 

0.1

%

Total service expense per trip

$

48.10

 

 

$

49.70

 

 

(3.2

)%

 

$

49.13

 

 

(2.1

)%

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

 

 

 

Three months

ended

 

 

March 31, 2024

 

March 31, 2023

 

% Change

 

December 31, 2023

QoQ % Change

 

 

 

 

 

 

 

 

 

 

PCS Segment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service revenue, net

$

183,568

 

 

$

174,131

 

 

5.4

%

 

$

181,180

 

 

1.3

%

Service expense

 

149,438

 

 

 

136,090

 

 

9.8

%

 

 

144,283

 

 

3.6

%

Gross profit

$

34,130

 

 

$

38,041

 

 

(10.3

)%

 

$

36,897

 

 

(7.5

)%

Gross margin

 

18.6

%

 

 

21.8

%

 

 

 

 

20.4

%

 

 

 

 

 

 

 

 

 

 

 

 

G&A expense

$

24,432

 

 

$

22,663

 

 

7.8

%

 

$

23,287

 

 

4.9

%

G&A expense adjustments

 

 

 

 

 

 

 

 

 

Restructuring and related costs

 

127

 

 

 

 

 

N/M

 

 

 

 

 

N/M

 

Transaction and integration costs

 

1,446

 

 

 

277

 

 

422.0

%

 

 

1,807

 

 

(20.0

)%

Adjusted G&A expense

$

22,859

 

 

$

22,386

 

 

2.1

%

 

$

21,480

 

 

6.4

%

Adjusted G&A expense % of revenue

 

12.5

%

 

 

12.9

%

 

 

 

 

11.9

%

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

$

(2,274

)

 

$

2,825

 

 

(180.5

)%

 

$

1,235

 

 

(284.1

)%

Net income (loss) margin

 

(1.2

)%

 

 

1.6

%

 

 

 

 

0.7

%

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

$

11,271

 

 

$

17,119

 

 

(34.2

)%

 

$

15,805

 

 

(28.7

)%

Adjusted EBITDA margin

 

6.1

%

 

 

9.8

%

 

 

 

 

8.7

%

 

 

 

 

 

 

 

 

 

 

 

 

Total hours (thousands)

 

6,965

 

 

 

6,824

 

 

2.1

%

 

 

7,074

 

 

(1.5

)%

Revenue per hour

$

26.36

 

 

$

25.52

 

 

3.3

%

 

$

25.61

 

 

2.9

%

Service expense per hour

$

21.46

 

 

$

19.94

 

 

7.6

%

 

$

20.40

 

 

5.2

%

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

 

 

 

Three months

ended

 

 

March 31, 2024

 

March 31, 2023

 

% Change

 

December 31, 2023

QoQ % Change

 

 

 

 

 

 

 

 

 

 

RPM Segment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service revenue, net

$

20,102

 

 

$

18,712

 

 

7.4

%

 

$

20,239

 

 

(0.7

)%

Service expense

 

8,363

 

 

 

6,490

 

 

28.9

%

 

 

6,896

 

 

21.3

%

Gross profit

$

11,739

 

 

$

12,222

 

 

(4.0

)%

 

$

13,343

 

 

(12.0

)%

Gross margin

 

58.4

%

 

 

65.3

%

 

 

 

 

65.9

%

 

 

 

 

 

 

 

 

 

 

 

 

G&A expense

$

5,440

 

 

$

5,769

 

 

(5.7

)%

 

$

6,190

 

 

(12.1

)%

G&A expense adjustments

 

 

 

 

 

 

 

 

 

Restructuring and related costs

 

10

 

 

 

 

 

N/M

 

 

 

 

 

N/M

 

Transaction and integration costs

 

 

 

 

32

 

 

(100.0

)%

 

 

16

 

 

(100.0

)%

Adjusted G&A expense

$

5,430

 

 

$

5,737

 

 

(5.4

)%

 

$

6,174

 

 

(12.1

)%

Adjusted G&A expense % of revenue

 

27.0

%

 

 

30.7

%

 

 

 

 

30.5

%

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

$

(308

)

 

$

429

 

 

(171.8

)%

 

$

10

 

 

N/M

 

Net income (loss) margin

 

(1.5

)%

 

 

2.3

%

 

 

 

 

%

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

$

6,309

 

 

$

6,485

 

 

(2.7

)%

 

$

7,169

 

 

(12.0

)%

Adjusted EBITDA margin

 

31.4

%

 

 

34.7

%

 

 

 

 

35.4

%

 

 

 

 

 

 

 

 

 

 

 

 

Average monthly members (thousands)

 

249

 

 

 

235

 

 

6.0

%

 

 

253

 

 

(1.6

)%

Revenue per member per month

$

26.91

 

 

$

26.54

 

 

1.4

%

 

$

26.67

 

 

0.9

%

Service expense per member per month

$

11.20

 

 

$

9.21

 

 

21.6

%

 

$

9.09

 

 

23.2

%

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

 

 

 

Three months

ended

 

 

March 31, 2024

 

March 31, 2023

 

% Change

 

December 31, 2023

QoQ % Change

 

 

 

 

 

 

 

 

 

 

Corporate and Other Segment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

G&A expense

$

15,485

 

 

$

17,406

 

 

(11.0

)%

 

$

18,282

 

 

(15.3

)%

G&A expense adjustments

 

 

 

 

 

 

 

 

 

Restructuring and related costs

 

1,729

 

 

 

7,346

 

 

(76.5

)%

 

 

2,575

 

 

(32.9

)%

Transaction and integration costs

 

45

 

 

 

564

 

 

(92.0

)%

 

 

74

 

 

(39.2

)%

Settlement related costs

 

 

 

 

 

 

N/M

 

 

 

1,194

 

 

(100.0

)%

Stock-based compensation

 

1,781

 

 

 

848

 

 

110.0

%

 

 

2,016

 

 

(11.7

)%

Adjusted G&A expense

$

11,930

 

 

$

8,648

 

 

38.0

%

 

$

12,423

 

 

(4.0

)%

Adjusted G&A expense % of consolidated revenue

 

1.7

%

 

 

1.3

%

 

 

 

 

1.8

%

 

 

 

Three months ended

 

 

 

Three months

ended

 

 

March 31, 2024

 

March 31, 2023

 

% Change

 

December 31, 2023

QoQ % Change

 

 

 

 

 

 

 

 

 

 

Consolidated Modivcare Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

G&A expense

$

77,177

 

 

$

79,713

 

 

(3.2

)%

 

$

75,469

 

 

2.3

%

G&A expense adjustments

 

 

 

 

 

 

 

 

 

Restructuring and related costs

 

5,105

 

 

 

14,445

 

 

(64.7

)%

 

 

3,233

 

 

57.9

%

Transaction and integration costs

 

1,543

 

 

 

873

 

 

76.7

%

 

 

1,796

 

 

(14.1

)%

Settlement related costs

 

 

 

 

275

 

 

(100.0

)%

 

 

1,194

 

 

(100.0

)%

Stock-based compensation

 

1,781

 

 

 

848

 

 

110.0

%

 

 

2,016

 

 

(11.7

)%

Adjusted G&A expense

$

68,748

 

 

$

63,272

 

 

8.7

%

 

$

67,230

 

 

2.3

%

Adjusted G&A expense % of consolidated revenue

 

10.0

%

 

 

9.6

%

 

 

 

 

9.6

%

 

 

N/M - Not Meaningful. Certain figures in the tables above do not provide meaningful percentage comparison, thus, the percentage has been removed.

 

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