Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil Hydroworld Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Modivcare Reports Second Quarter 2022 Financial Results and Updates 2022 Guidance By: Modivcare Inc. via Business Wire August 04, 2022 at 06:00 AM EDT 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 patient outcomes, today reported financial results for the three and six months ended June 30, 2022. Second Quarter 2022 Highlights: Revenue of $628.2 million, a 32.4% increase as compared to $474.4 million in Q2 2021 Net income of $3.3 million or $0.24 per diluted common share Adjusted EBITDA of $60.2 million, Adjusted Net Income of $28.1 million and Adjusted EPS of $1.99 2022 guidance increased to account for strong second quarter and year-to-date results Net cash used in operating activities during the quarter of $17.9 million Cash and cash equivalents of $88.0 million as of June 30, 2022, with $1,000.0 million principal amount of debt outstanding related to the Senior Unsecured Notes due 2025 and 2029 Undrawn $325.0 million revolving credit facility as of June 30, 2022 “We reported solid second quarter 2022 results with Adjusted EBITDA of $60 million and revenue growth of 32 percent driven by 23 percent growth from our non-emergency medical transportation business,” said Heath Sampson, Interim Chief Executive Officer and Chief Financial Officer. “We delivered on several strategic initiatives during the quarter, including expanding our national remote patient monitoring footprint with the acquisition of Guardian Medical Monitoring and aligning more closely with our transportation providers. We also hosted our inaugural investor day where we issued 2022 guidance, which we increased this morning, and provided a long-term outlook with 2025 targets for revenue of $3 billion and Adjusted EBITDA of $300 million. I am pleased with our progress as we continue to improve outcomes and better serve patients through our unique supportive care platform that addresses the social determinants of health by broadening access to care for the nearly 34 million members we serve. I want to thank our 20,000 team members for their hard work and dedication as they are the foundation of the care and services we provide that help empower patients.” Second Quarter 2022 Results For the second quarter of 2022, the Company reported revenue of $628.2 million, an increase of 32.4% from $474.4 million in the second quarter of 2021. Operating income was $23.1 million, or 3.7% of revenue, in the second quarter of 2022, compared to operating income of $27.5 million, or 5.8% of revenue, in the second quarter of 2021. Net income in the second quarter of 2022 was $3.3 million, or $0.24 per diluted common share, compared to net income of $13.7 million, or $0.96 per diluted common share, in the second quarter of 2021. Adjusted EBITDA was $60.2 million, or 9.6% of revenue, in the second quarter of 2022, compared to $53.1 million, or 11.2% of revenue, in the second quarter of 2021. Adjusted Net Income in the second quarter of 2022 was $28.1 million, or $1.99 per diluted common share, compared to $30.3 million, or $2.14 per diluted common share, in the second quarter of 2021. The year-over-year increase in revenue was primarily due to incremental revenue of $42.4 million and $16.7 million associated with the acquisitions of Care Finders and VRI, respectively. NEMT revenue also increased year-over-year due to higher trip volume which drove higher revenue per member in Q2 2022. Adjusted EBITDA increased in the second quarter of 2022 due to incremental contribution from Care Finders and VRI. This was partially offset by higher corporate general and administrative cost as the Company continued to make investments in its employees and technology. Organizational Consolidation and Change in Segments We operate four reportable business segments: NEMT, Personal Care, RPM, and Corporate and Other. Effective January 1, 2022, the Company completed its segment reorganization which resulted in the addition of a Corporate segment that includes the costs associated with the Company's corporate operations. The operating results of our Corporate segment include our activities related to executive, accounting, finance, internal audit, tax, legal and certain strategic and corporate development functions for each segment, as well as the results of our Matrix investment. The Company reclassified certain costs associated with this reorganization for the three and six months ended June 30, 2021 to conform to this presentation. Updated 2022 Guidance We are updating our 2022 guidance as follows ($ in millions): Updated Previous Low High Low High Revenue $ 2,375 $ 2,400 $ 2,350 $ 2,375 Adjusted EBITDA $ 210 $ 220 $ 203 $ 213 Guidance excludes the effect of any future acquisitions and is based on the current operating environment. Investor Presentation and Conference Call Modivcare will hold a conference call to discuss its financial results on Thursday, August 4, 2022 at 8:00 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 also will be archived. About Modivcare Modivcare Inc. (“Modivcare”) (Nasdaq: MODV) is a technology-enabled healthcare services company that provides a platform of integrated supportive care solutions for public and private payors and their patients. Our value-based solutions address the social determinants of health (SDoH), enable greater access to care, reduce costs, and improve outcomes. We are a leading provider of non-emergency medical transportation (NEMT), personal care and remote patient monitoring. 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 EBITDA, Adjusted EBITDA and Adjusted EBITDA margin for the Company and its segments, Adjusted Net Income and Adjusted EPS for the Company, and Adjusted G&A expense for the Company’s segments, which are performance measures that are not recognized under GAAP. EBITDA is defined as income (loss) from continuing operations, net of taxes, 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 charges, including severance and office closure and professional services costs, (2) certain transaction and related costs, (3) cash settled equity, (4) stock-based compensation, (5) COVID-19 related costs, net of grant income, and (6) equity in net (income) loss of investee. Adjusted EBITDA margin is calculated as Adjusted EBITDA, divided by Service revenue, net. Adjusted Net Income is calculated as income from continuing operations, net of taxes, before: (1) restructuring and related charges including severance and office closure and professional services costs, (2) certain transaction and related costs, (3) cash settled equity, (4) stock-based compensation, (5) equity in net (income) loss of investee, (6) intangible amortization expense, (7) COVID-19 related costs, net of grant income, (8) tax impacts from the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"), and (9) the income tax impact of such adjustments. Adjusted EPS is calculated as Adjusted Net Income less (as applicable): the sum of (1) dividends on convertible preferred stock plus (2) income allocated to participating securities, 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 charges, (2) transaction costs, (3) cash settled equity, and (4) stock-based compensation. 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. In addition, 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 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. 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 events to be materially different from those expressed or implied herein, including but not limited to: government or private insurance program funding reductions or limitations; alternative payment models or the transition of Medicaid and Medicare beneficiaries to Managed Care Organizations, or MCOs; our inability to control reimbursement rates received for our services; cost containment initiatives undertaken by private third-party payors; the effects of a public health emergency; inadequacies in, or security breaches of, our information technology systems, including the systems intended to protect our clients’ privacy and confidential information; any changes in the funding, financial viability or our relationships with our payors; pandemic infectious diseases, including the COVID-19 pandemic; disruptions to our contact center operations caused by health epidemics or pandemics like COVID-19; delays in collection, or non-collection, of our accounts receivable, particularly during any business integration; an impairment of our long-lived assets; any failure to maintain or to develop further reliable, efficient and secure information technology systems; an inability to attract and retain qualified employees; any acquisition or acquisition integration efforts; 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; a 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; 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 that we acquired with our personal care segment; acquired unknown liabilities in connection with the acquisition of our personal care segment; 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 shortages in qualified employees and management; labor disputes or disruptions, in particular in New York; becoming subject to malpractice or other similar claims; and our reliance on others for the financial condition of our equity investment in Matrix. The Company has provided additional information about the risks facing our business in our annual report on Form 10-K and subsequent filings most recently filed with the Securities and Exchange Commission. 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 June 30, Six months ended June 30, 2022 2021 2022 2021 Service revenue, net $ 628,215 $ 474,448 $ 1,202,690 $ 928,058 Grant income 3,330 852 3,798 3,500 Operating expenses: Service expense 504,230 379,565 963,545 739,898 General and administrative expense 79,411 56,465 156,219 111,390 Depreciation and amortization 24,758 11,820 48,704 24,059 Total operating expenses 608,399 447,850 1,168,468 875,347 Operating income 23,146 27,450 38,020 56,211 Other expenses: Interest expense, net 15,472 8,287 30,872 16,710 Income before income taxes and equity method investment 7,674 19,163 7,148 39,501 Provision for income taxes 2,291 5,671 1,930 10,410 Equity in net (income) loss of investee, net of tax 2,055 (180 ) 1,572 (3,421 ) Net income $ 3,328 $ 13,672 $ 3,646 $ 32,512 Earnings per common share: Basic $ 0.24 $ 0.97 $ 0.26 $ 2.30 Diluted $ 0.24 $ 0.96 $ 0.26 $ 2.27 Weighted-average number of common shares outstanding: Basic 14,047,459 14,025,325 14,035,588 14,151,946 Diluted 14,115,471 14,175,594 14,122,730 14,329,794 Modivcare Inc. Unaudited Condensed Consolidated Balance Sheets (in thousands) June 30, 2022 December 31, 2021 Assets Current assets: Cash and cash equivalents $ 87,956 $ 133,139 Accounts receivable, net 272,402 233,121 Other current assets (1) 35,426 43,574 Total current assets 395,784 409,834 Property and equipment, net 62,739 53,549 Goodwill and intangible assets, net 1,448,982 1,415,000 Equity investment 80,364 83,069 Operating lease right-of-use assets 40,326 43,750 Other long-term assets 31,368 22,223 Total assets $ 2,059,563 $ 2,027,425 Liabilities and stockholders' equity Current liabilities: Accounts payable $ 10,622 $ 8,690 Accrued contract payables 278,052 281,586 Accrued expenses and other current liabilities 123,503 123,791 Accrued transportation costs 131,282 103,294 Current portion of operating lease liabilities 9,973 9,873 Total current liabilities 553,432 527,234 Long-term debt, net of deferred financing costs 977,261 975,225 Operating lease liabilities, less current portion 32,508 34,524 Long-term contracts payables 3,686 — Other long-term liabilities (2) 110,736 117,175 Total liabilities 1,677,623 1,654,158 Stockholders' equity Stockholders' equity 381,940 373,267 Total liabilities and stockholders' equity $ 2,059,563 $ 2,027,425 (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) Six months ended June 30, 2022 2021 Operating activities Net income $ 3,646 $ 32,512 Depreciation and amortization 48,704 24,059 Stock-based compensation 4,496 2,659 Equity in net (income) loss of investee 2,358 (4,770 ) Deferred income taxes (14,493 ) (2,843 ) Reduction of right-of-use asset 5,757 7,341 Other non-cash items (1) 645 (136 ) Changes in working capital (2) 93 110,969 Net cash provided by operating activities 51,206 169,791 Investing activities Purchase of property and equipment (15,899 ) (8,132 ) Acquisition, net of cash acquired (78,861 ) (15,843 ) Net cash used in investing activities (94,760 ) (23,975 ) Financing activities Proceeds from debt 100,000 — Repayment of debt (100,000 ) — Debt issuance costs (2,415 ) — Repurchase of common stock, for treasury — (39,040 ) Proceeds from common stock issued pursuant to stock option exercise 1,138 2,335 Restricted stock surrendered for employee tax payment (607 ) (820 ) Other financing activities — (41 ) Net cash used in financing activities (1,884 ) (37,566 ) Net change in cash, cash equivalents and restricted cash (45,438 ) 108,250 Cash, cash equivalents and restricted cash at beginning of period 133,422 183,356 Cash, cash equivalents and restricted cash at end of period $ 87,984 $ 291,606 (1) Includes provision for doubtful accounts and amortization of deferred financing costs and debt discount. (2) Includes accounts receivable and other receivables, prepaid expenses and other current assets, accrued contract payables, 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 June 30, 2022 NEMT Personal Care RPM Corporate (3) Total Service revenue, net $ 448,733 $ 162,737 $ 16,745 $ — $ 628,215 Grant income — 3,330 — — 3,330 Operating expenses: Service expense 373,724 124,445 6,061 — 504,230 General and administrative expense 33,588 23,346 6,742 15,735 79,411 Depreciation and amortization 7,392 12,552 4,606 208 24,758 Total operating expenses 414,704 160,343 17,409 15,943 608,399 Operating income (loss) 34,029 5,724 (664 ) (15,943 ) 23,146 Other expenses: Interest expense, net — — — 15,472 15,472 Income (loss) before income taxes and equity method investment 34,029 5,724 (664 ) (31,415 ) 7,674 Provision (benefit) for income taxes 9,563 1,601 (189 ) (8,684 ) 2,291 Equity in net loss of investee, net of tax — — — 2,055 2,055 Net Income (loss) 24,466 4,123 (475 ) (24,786 ) 3,328 Interest expense, net — — — 15,472 15,472 Provision (benefit) for income taxes 9,563 1,601 (189 ) (8,684 ) 2,291 Depreciation and amortization 7,392 12,552 4,606 208 24,758 EBITDA 41,421 18,276 3,942 (17,790 ) 45,849 Restructuring and related charges (1) 4,852 — — 354 5,206 Transaction costs (2) — 2,830 1,635 3,237 7,702 Cash settled equity — — — 20 20 Stock-based compensation — 173 57 2,440 2,670 COVID-19 related costs, net of grant income 34 (3,378 ) — — (3,344 ) Equity in net loss (income) of investee, net of tax — — — 2,055 2,055 Adjusted EBITDA $ 46,307 $ 17,901 $ 5,634 $ (9,684 ) $ 60,158 (1) Restructuring and related charges include professional services costs and severance and recruiting costs. (2) Transaction costs include SOX integration efforts at recently acquired subsidiaries and acquisition costs. (3) Effective January 1, 2022, the Company completed its segment reorganization which resulted in the addition of a Corporate segment that includes the costs associated with the Company's corporate operations. Through this reorganization, it was also determined that the Matrix Investment is no longer a reportable segment, and is now reported within the Corporate segment. Prior period segment amounts have been reclassified to conform to the current presentation. Modivcare Inc. Unaudited Reconciliation of Non-GAAP Financial Measures Segment Information and Adjusted EBITDA (in thousands) Three months ended June 30, 2021 NEMT Personal Care Corporate (3) Total Service revenue, net $ 364,760 $ 109,688 $ — $ 474,448 Grant income — 852 — 852 Operating expenses: Service expense 292,656 86,909 — 379,565 General and administrative expense 28,099 14,775 13,591 56,465 Depreciation and amortization 6,936 4,884 — 11,820 Total operating expenses 327,691 106,568 13,591 447,850 Operating income (loss) 37,069 3,972 (13,591 ) 27,450 Interest expense, net — — 8,287 8,287 Income (loss) before income taxes and equity method investment 37,069 3,972 (21,878 ) 19,163 Provision (benefit) for income taxes 10,019 918 (5,266 ) 5,671 Equity in net income of investee, net of tax — — (180 ) (180 ) Net Income (loss) 27,050 3,054 (16,432 ) 13,672 Interest expense, net — — 8,287 8,287 Provision (benefit) for income taxes 10,019 918 (5,266 ) 5,671 Depreciation and amortization 6,936 4,884 — 11,820 EBITDA 44,005 8,856 (13,411 ) 39,450 Restructuring and related charges (1) 4,044 — 557 4,601 Transaction costs (2) 247 1,245 1,974 3,466 Cash settled equity — — 4,452 4,452 Stock-based compensation — 76 1,340 1,416 COVID-19 related costs, net of grant income 114 (248 ) — (134 ) Equity in net income of investee, net of tax — — (180 ) (180 ) Adjusted EBITDA $ 48,410 $ 9,929 $ (5,268 ) $ 53,071 (1) Restructuring and related charges include professional services costs of $3.5 million and severance and office closure costs of $1.0 million. (2) Transaction costs include Circulation management incentive plan costs and acquisition costs related to Simplura Health Group and National MedTrans. (3) Effective January 1, 2022, the Company completed its segment reorganization which resulted in the addition of a Corporate segment that includes the costs associated with the Company's corporate operations. Through this reorganization, it was also determined that the Matrix Investment is no longer a reportable segment, and is now reported within the Corporate segment. Prior period segment amounts have been reclassified to conform to the current presentation, with the exception of the RPM segment, which is not included in Q2 of 2021 as it was purchased in Q3 of 2021. Modivcare Inc. Unaudited Reconciliation of Non-GAAP Financial Measures Segment Information and Adjusted EBITDA (in thousands) Six months ended June 30, 2022 NEMT Personal Care RPM Corporate (3) Total Service revenue, net $ 849,653 $ 322,435 $ 30,602 $ — $ 1,202,690 Grant income — 3,798 — — 3,798 Operating expenses: Service expense 705,820 246,677 11,048 — 963,545 General and administrative expense 70,921 46,479 11,704 27,115 156,219 Depreciation and amortization 14,497 25,057 8,734 416 48,704 Total operating expenses 791,238 318,213 31,486 27,531 1,168,468 Operating income (loss) 58,415 8,020 (884 ) (27,531 ) 38,020 Interest expense, net — — — 30,872 30,872 Income (loss) before income taxes and equity method investment 58,415 8,020 (884 ) (58,403 ) 7,148 Provision (benefit) for income taxes 16,138 2,241 (247 ) (16,202 ) 1,930 Equity in net loss (income) of investee, net of tax 65 — — 1,507 1,572 Net Income (loss) 42,212 5,779 (637 ) (43,708 ) 3,646 Interest expense, net — — — 30,872 30,872 Provision (benefit) for income taxes 16,138 2,241 (247 ) (16,202 ) 1,930 Depreciation and amortization 14,497 25,057 8,734 416 48,704 EBITDA 72,847 33,077 7,850 (28,622 ) 85,152 Restructuring and related charges (1) 10,456 181 24 385 11,046 Transaction costs (2) — 4,103 2,282 5,028 11,413 Cash settled equity — — — 7 7 Stock-based compensation — 190 86 3,860 4,136 COVID-19 related costs, net of grant income 156 (3,029 ) — — (2,873 ) Equity in net loss (income) of investee, net of tax 65 — — 1,507 1,572 Adjusted EBITDA $ 83,524 $ 34,522 $ 10,242 $ (17,835 ) $ 110,453 (1) Restructuring and related charges include professional services costs and severance and recruiting costs. (2) Transaction costs include SOX integration efforts at recently acquired subsidiaries and acquisition costs. (3) Effective January 1, 2022, the Company completed its segment reorganization which resulted in the addition of a Corporate segment that includes the costs associated with the Company's corporate operations. Through this reorganization, it was also determined that the Matrix Investment is no longer a reportable segment, and is now reported within the Corporate segment. Prior period segment amounts have been reclassified to conform to the current presentation. Modivcare Inc. Unaudited Reconciliation of Non-GAAP Financial Measures Segment Information and Adjusted EBITDA (in thousands) Six months ended June 30, 2021 NEMT Personal Care Corporate (3) Total Service revenue, net $ 708,176 $ 219,882 $ — $ 928,058 Grant income — 3,500 — 3,500 Operating expenses: Service expense 565,072 174,826 — 739,898 General and administrative expense 56,086 29,804 25,500 111,390 Depreciation and amortization 14,248 9,811 — 24,059 Total operating expenses 635,406 214,441 25,500 875,347 Operating income (loss) 72,770 8,941 (25,500 ) 56,211 Interest expense, net — — 16,710 16,710 Income (loss) before income taxes and equity method investment 72,770 8,941 (42,210 ) 39,501 Provision (benefit) for income taxes 19,423 2,356 (11,369 ) 10,410 Equity in net income of investee, net of tax — — (3,421 ) (3,421 ) Net Income (loss) 53,347 6,585 (27,420 ) 32,512 Interest expense, net — — 16,710 16,710 Provision (benefit) for income taxes 19,423 2,356 (11,369 ) 10,410 Depreciation and amortization 14,248 9,811 — 24,059 EBITDA 87,018 18,752 (22,079 ) 83,691 Restructuring and related charges (1) 7,538 — 763 8,301 Transaction costs (2) 210 2,290 4,644 7,144 Cash settled equity — — 6,545 6,545 Stock-based compensation — 76 2,489 2,565 COVID-19 related costs, net of grant income 453 (2,100 ) — (1,647 ) Equity in net income of investee, net of tax — — (3,421 ) (3,421 ) Adjusted EBITDA $ 95,219 $ 19,018 $ (11,059 ) $ 103,178 (1) Restructuring and related charges include professional services costs of $6.4 million and severance and office closure costs of $1.7 million. (2) Transaction costs include Circulation management incentive plan costs and acquisition costs related to Simplura Health Group and National MedTrans. (3) Effective January 1, 2022, the Company completed its segment reorganization which resulted in the addition of a Corporate segment that includes the costs associated with the Company's corporate operations. Through this reorganization, it was also determined that the Matrix Investment is no longer a reportable segment, and is now reported within the Corporate segment. Prior period segment amounts have been reclassified to conform to the current presentation, with the exception of the RPM segment, which is not included in YTD 2021 as it was purchased in Q3 of 2021. 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 June 30, Six months ended June 30, 2022 2021 2022 2021 Net income $ 3,328 $ 13,672 $ 3,646 $ 32,512 Restructuring and related charges(1) 5,206 4,601 11,046 8,301 Transaction costs(2) 7,702 3,466 11,413 7,144 Cash settled equity 20 4,452 7 6,545 Stock-based compensation 2,670 1,416 4,136 2,565 Equity in net income of investee, net of tax 2,055 (180 ) 1,572 (3,421 ) Intangible amortization expense 19,752 9,148 39,251 18,649 COVID-19 related costs, net of grant income (3,344 ) (134 ) (2,873 ) (1,647 ) Tax effected impact of adjustments (9,299 ) (6,100 ) (18,224 ) (11,417 ) Adjusted Net Income $ 28,090 $ 30,341 $ 49,974 $ 59,231 Adjusted EPS $ 1.99 $ 2.14 $ 3.54 $ 4.13 Diluted weighted-average number of common shares outstanding 14,115,471 14,175,594 14,122,730 14,329,794 (1) Restructuring and related charges include severance, organizational consolidation costs and professional fees. (2) Transaction costs include certain transaction-related expenses and SOX integration efforts. Modivcare Inc. Unaudited Key Statistical and Financial Data (in thousands, except for statistical data) Three months ended Six months ended Three months ended June 30, 2022 June 30, 2021 % Change June 30, 2022 June 30, 2021 % Change March 31, 2022 QoQ % Change NEMT Segment Service revenue, net $ 448,733 $ 364,760 23.0 % $ 849,653 $ 708,176 20.0 % $ 400,920 11.9 % Purchased services expense 317,213 245,015 29.5 % 595,160 468,309 27.1 % 277,947 14.1 % Payroll and other expense 56,511 47,641 18.6 % 110,660 96,763 14.4 % 54,149 4.4 % Service expense $ 373,724 $ 292,656 27.7 % $ 705,820 $ 565,072 24.9 % $ 332,096 12.5 % Gross profit $ 75,009 $ 72,104 4.0 % $ 143,833 $ 143,104 0.5 % $ 68,824 9.0 % Gross margin 16.7 % 19.8 % 16.9 % 20.2 % 17.2 % G&A expense $ 33,588 $ 28,099 19.5 % $ 70,921 $ 56,086 26.5 % $ 37,333 (10.0 )% G&A expense adjustments: Restructuring and related charges 4,852 4,044 20.0 % 10,456 7,538 38.7 % 5,604 (13.4 )% Transaction costs — 247 — % — 210 — % — — % Adjusted G&A expense $ 28,736 $ 23,808 20.7 % $ 60,465 $ 48,338 25.1 % $ 31,729 (9.4 )% Adjusted G&A expense % of revenue 6.4 % 6.5 % 7.1 % 6.8 % 7.9 % Net income $ 24,466 $ 27,050 (9.6 ) % $ 42,212 $ 53,347 (20.9 ) % $ 17,746 37.9 % Net income margin 5.5 % 7.4 % 5.0 % 7.5 % 4.4 % Adjusted EBITDA $ 46,307 $ 48,410 (4.3 )% $ 83,524 $ 95,219 (12.3 )% $ 37,217 24.4 % Adjusted EBITDA margin 10.3 % 13.3 % 9.8 % 13.4 % 9.3 % Total paid trips (in thousands) 7,831 6,657 17.6 % 14,942 13,276 12.5 % 7,111 10.1 % Average monthly members (in thousands) 33,792 29,756 13.6 % 32,984 30,102 9.6 % 32,176 5.0 % Revenue per member per month $ 4.43 $ 4.09 8.3 % $ 4.29 $ 3.92 9.4 % $ 4.15 6.7 % Revenue per trip $ 57.30 $ 54.79 4.6 % $ 56.86 $ 53.34 6.6 % $ 56.38 1.6 % Monthly utilization 7.7 % 7.5 % 7.6 % 7.4 % 7.4 % Purchased services per trip $ 40.51 $ 36.81 10.1 % $ 39.83 $ 35.27 12.9 % $ 39.09 3.6 % Payroll and other per trip $ 7.22 $ 7.16 0.8 % $ 7.41 $ 7.29 1.6 % $ 7.61 (5.1 ) % Modivcare Inc. Unaudited Key Statistical and Financial Data (in thousands, except for statistical data) Three months ended Six months ended Three months ended June 30, 2022 June 30, 2021 % Change June 30, 2022 June 30, 2021 % Change March 31, 2022 QoQ % Change Personal Care Segment Service revenue, net $ 162,737 $ 109,688 48.4 % $ 322,435 $ 219,882 46.6 % $ 159,698 1.9 % Service expense 124,445 86,909 43.2 % 246,677 174,826 41.1 % 122,232 1.8 % Gross profit $ 38,292 $ 22,779 68.1 % $ 75,758 $ 45,056 68.1 % $ 37,466 2.2 % Gross Margin 23.5 % 20.8 % 23.5 % 20.5 % 23.5 % G&A expense $ 23,346 $ 14,775 58.0 % $ 46,479 $ 29,804 55.9 % $ 23,133 0.9 % G&A expense adjustments Restructuring and related charges — — — % 181 — — % 181 (100.0 )% Transaction costs 2,830 1,245 127.3 % 4,103 2,290 79.2 % 1,273 122.3 % Stock-based compensation 173 76 127.6 % 190 76 150.0 % 17 917.6 % Adjusted G&A expense $ 20,343 $ 13,454 51.2 % $ 42,005 $ 27,438 53.1 % $ 21,662 (6.1 )% Adjusted G&A expense % of revenue 12.5 % 12.3 % 13.0 % 12.5 % 13.6 % Net income $ 4,123 $ 3,054 35.0 % $ 5,779 $ 6,585 (12.2 )% $ 1,656 149.0 % Net income margin 2.5 % 2.8 % 1.8 % 3.0 % 1.0 % Adjusted EBITDA $ 17,901 $ 9,929 80.3 % $ 34,522 $ 19,018 81.5 % $ 16,621 7.7 % Adjusted EBITDA margin 11.0 % 9.1 % 10.7 % 8.6 % 10.4 % Total hours (in thousands) 6,705 4,629 44.8 % 13,240 9,255 43.1 % 6,535 2.6 % Revenue per hour $ 24.27 $ 23.70 2.4 % $ 24.35 $ 23.76 2.5 % $ 24.44 (0.7 )% Service expense per hour $ 18.56 $ 18.77 (1.1 )% $ 18.63 $ 18.89 (1.4 )% $ 18.70 (0.7 )% Modivcare Inc. Unaudited Key Statistical and Financial Data (in thousands, except for statistical data) Three months ended Six months ended Three months ended June 30, 2022 June 30, 2021 % Change June 30, 2022 June 30, 2021 % Change March 31, 2022 QoQ % Change RPM Segment Service revenue, net $ 16,745 N/M $ 30,602 N/M $ 13,857 20.8 % Service expense 6,061 N/M 11,048 N/M 4,987 21.5 % Gross profit $ 10,684 N/M $ 19,554 N/M $ 8,870 20.5 % Gross Margin 63.8 % 63.9 % 64.0 % G&A expense $ 6,742 N/M $ 11,704 N/M $ 4,962 35.9 % G&A expense adjustments Restructuring and related charges — N/M 24 N/M 24 (100.0 )% Transaction costs 1,635 N/M 2,282 N/M 647 152.7 % Stock-based compensation 57 N/M 86 N/M 29 96.6 % Adjusted G&A expense $ 5,050 N/M $ 9,312 N/M $ 4,262 18.5 % Adjusted G&A expense % of revenue 30.2 % 30.4 % 30.8 % Net income (loss) $ (475 ) N/M $ (637 ) N/M $ (162 ) 193.2 % Net income (loss) margin (2.8 )% (2.1 )% (1.2 )% Adjusted EBITDA $ 5,634 N/M $ 10,242 N/M $ 4,608 22.3 % Adjusted EBITDA margin 33.6 % 33.5 % 33.3 % Average monthly members (in thousands) 203 N/M 186 N/M 169 20.1 % Revenue per member per month $ 27.50 N/M $ 27.42 N/M $ 27.33 0.6 % Service expense per member per month $ 9.95 N/M $ 9.90 N/M $ 9.84 1.1 % N/M - Not Meaningful. The RPM Segment was established with the acquisition of VRI on September 22, 2021 and as such, these figures are not meaningful for comparative purposes. Modivcare Inc. Unaudited Key Statistical and Financial Data (in thousands) Three months ended Six months ended Three months ended June 30, 2022 June 30, 2021 % Change June 30, 2022 June 30, 2021 % Change March 31, 2022 QoQ % Change Corporate and Other Segment G&A expense $ 15,735 $ 13,591 15.8 % $ 27,115 $ 25,500 6.3 % $ 11,380 38.3 % G&A expense adjustments Restructuring and related charges 354 557 (36.4 )% 385 763 (49.5 )% 31 1041.9 % Transaction costs 3,237 1,974 64.0 % 5,028 4,644 8.3 % 1,791 80.7 % Cash settled equity 20 4,452 (99.6 )% 7 6,545 (99.9 )% (13 ) (253.8 )% Stock-based compensation 2,440 1,340 82.1 % 3,860 2,489 55.1 % 1,420 71.8 % Adjusted G&A expense $ 9,684 $ 5,268 83.8 % $ 17,835 $ 11,059 61.3 % $ 8,151 18.8 % Adjusted G&A expense % of consolidated revenue 1.5 % 1.1 % 1.5 % 1.2 % 1.4 % Three months ended Six months ended Three months ended June 30, 2022 June 30, 2021 % Change June 30, 2022 June 30, 2021 % Change March 31, 2022 QoQ % Change Consolidated Modivcare G&A expense $ 79,411 $ 56,465 40.6 % $ 156,219 $ 111,390 40.2 % $ 76,808 3.4 % G&A expense adjustments Restructuring and related charges 5,206 4,601 13.1 % 11,046 8,301 33.1 % 5,840 (10.9 )% Transaction costs 7,702 3,466 122.2 % 11,413 7,144 59.8 % 3,711 107.5 % Cash settled equity 20 4,452 (99.6 )% 7 6,545 (99.9 )% (13 ) (253.8 )% Stock-based compensation 2,670 1,416 88.6 % 4,136 2,565 61.2 % 1,466 82.1 % Adjusted G&A expense $ 63,813 $ 42,530 50.0 % $ 129,617 $ 86,835 49.3 % $ 65,804 (3.0 )% Adjusted G&A expense % of revenue 10.2 % 9.0 % 10.8 % 9.4 % 11.5 % View source version on businesswire.com: https://www.businesswire.com/news/home/20220804005265/en/Contacts Investor Relations Contact Kevin Ellich, Head of Investor Relations (303) 728-7012 Kevin.Ellich@modivcare.com Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. 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Modivcare Reports Second Quarter 2022 Financial Results and Updates 2022 Guidance By: Modivcare Inc. via Business Wire August 04, 2022 at 06:00 AM EDT 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 patient outcomes, today reported financial results for the three and six months ended June 30, 2022. Second Quarter 2022 Highlights: Revenue of $628.2 million, a 32.4% increase as compared to $474.4 million in Q2 2021 Net income of $3.3 million or $0.24 per diluted common share Adjusted EBITDA of $60.2 million, Adjusted Net Income of $28.1 million and Adjusted EPS of $1.99 2022 guidance increased to account for strong second quarter and year-to-date results Net cash used in operating activities during the quarter of $17.9 million Cash and cash equivalents of $88.0 million as of June 30, 2022, with $1,000.0 million principal amount of debt outstanding related to the Senior Unsecured Notes due 2025 and 2029 Undrawn $325.0 million revolving credit facility as of June 30, 2022 “We reported solid second quarter 2022 results with Adjusted EBITDA of $60 million and revenue growth of 32 percent driven by 23 percent growth from our non-emergency medical transportation business,” said Heath Sampson, Interim Chief Executive Officer and Chief Financial Officer. “We delivered on several strategic initiatives during the quarter, including expanding our national remote patient monitoring footprint with the acquisition of Guardian Medical Monitoring and aligning more closely with our transportation providers. We also hosted our inaugural investor day where we issued 2022 guidance, which we increased this morning, and provided a long-term outlook with 2025 targets for revenue of $3 billion and Adjusted EBITDA of $300 million. I am pleased with our progress as we continue to improve outcomes and better serve patients through our unique supportive care platform that addresses the social determinants of health by broadening access to care for the nearly 34 million members we serve. I want to thank our 20,000 team members for their hard work and dedication as they are the foundation of the care and services we provide that help empower patients.” Second Quarter 2022 Results For the second quarter of 2022, the Company reported revenue of $628.2 million, an increase of 32.4% from $474.4 million in the second quarter of 2021. Operating income was $23.1 million, or 3.7% of revenue, in the second quarter of 2022, compared to operating income of $27.5 million, or 5.8% of revenue, in the second quarter of 2021. Net income in the second quarter of 2022 was $3.3 million, or $0.24 per diluted common share, compared to net income of $13.7 million, or $0.96 per diluted common share, in the second quarter of 2021. Adjusted EBITDA was $60.2 million, or 9.6% of revenue, in the second quarter of 2022, compared to $53.1 million, or 11.2% of revenue, in the second quarter of 2021. Adjusted Net Income in the second quarter of 2022 was $28.1 million, or $1.99 per diluted common share, compared to $30.3 million, or $2.14 per diluted common share, in the second quarter of 2021. The year-over-year increase in revenue was primarily due to incremental revenue of $42.4 million and $16.7 million associated with the acquisitions of Care Finders and VRI, respectively. NEMT revenue also increased year-over-year due to higher trip volume which drove higher revenue per member in Q2 2022. Adjusted EBITDA increased in the second quarter of 2022 due to incremental contribution from Care Finders and VRI. This was partially offset by higher corporate general and administrative cost as the Company continued to make investments in its employees and technology. Organizational Consolidation and Change in Segments We operate four reportable business segments: NEMT, Personal Care, RPM, and Corporate and Other. Effective January 1, 2022, the Company completed its segment reorganization which resulted in the addition of a Corporate segment that includes the costs associated with the Company's corporate operations. The operating results of our Corporate segment include our activities related to executive, accounting, finance, internal audit, tax, legal and certain strategic and corporate development functions for each segment, as well as the results of our Matrix investment. The Company reclassified certain costs associated with this reorganization for the three and six months ended June 30, 2021 to conform to this presentation. Updated 2022 Guidance We are updating our 2022 guidance as follows ($ in millions): Updated Previous Low High Low High Revenue $ 2,375 $ 2,400 $ 2,350 $ 2,375 Adjusted EBITDA $ 210 $ 220 $ 203 $ 213 Guidance excludes the effect of any future acquisitions and is based on the current operating environment. Investor Presentation and Conference Call Modivcare will hold a conference call to discuss its financial results on Thursday, August 4, 2022 at 8:00 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 also will be archived. About Modivcare Modivcare Inc. (“Modivcare”) (Nasdaq: MODV) is a technology-enabled healthcare services company that provides a platform of integrated supportive care solutions for public and private payors and their patients. Our value-based solutions address the social determinants of health (SDoH), enable greater access to care, reduce costs, and improve outcomes. We are a leading provider of non-emergency medical transportation (NEMT), personal care and remote patient monitoring. 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 EBITDA, Adjusted EBITDA and Adjusted EBITDA margin for the Company and its segments, Adjusted Net Income and Adjusted EPS for the Company, and Adjusted G&A expense for the Company’s segments, which are performance measures that are not recognized under GAAP. EBITDA is defined as income (loss) from continuing operations, net of taxes, 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 charges, including severance and office closure and professional services costs, (2) certain transaction and related costs, (3) cash settled equity, (4) stock-based compensation, (5) COVID-19 related costs, net of grant income, and (6) equity in net (income) loss of investee. Adjusted EBITDA margin is calculated as Adjusted EBITDA, divided by Service revenue, net. Adjusted Net Income is calculated as income from continuing operations, net of taxes, before: (1) restructuring and related charges including severance and office closure and professional services costs, (2) certain transaction and related costs, (3) cash settled equity, (4) stock-based compensation, (5) equity in net (income) loss of investee, (6) intangible amortization expense, (7) COVID-19 related costs, net of grant income, (8) tax impacts from the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"), and (9) the income tax impact of such adjustments. Adjusted EPS is calculated as Adjusted Net Income less (as applicable): the sum of (1) dividends on convertible preferred stock plus (2) income allocated to participating securities, 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 charges, (2) transaction costs, (3) cash settled equity, and (4) stock-based compensation. 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. In addition, 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 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. 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 events to be materially different from those expressed or implied herein, including but not limited to: government or private insurance program funding reductions or limitations; alternative payment models or the transition of Medicaid and Medicare beneficiaries to Managed Care Organizations, or MCOs; our inability to control reimbursement rates received for our services; cost containment initiatives undertaken by private third-party payors; the effects of a public health emergency; inadequacies in, or security breaches of, our information technology systems, including the systems intended to protect our clients’ privacy and confidential information; any changes in the funding, financial viability or our relationships with our payors; pandemic infectious diseases, including the COVID-19 pandemic; disruptions to our contact center operations caused by health epidemics or pandemics like COVID-19; delays in collection, or non-collection, of our accounts receivable, particularly during any business integration; an impairment of our long-lived assets; any failure to maintain or to develop further reliable, efficient and secure information technology systems; an inability to attract and retain qualified employees; any acquisition or acquisition integration efforts; 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; a 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; 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 that we acquired with our personal care segment; acquired unknown liabilities in connection with the acquisition of our personal care segment; 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 shortages in qualified employees and management; labor disputes or disruptions, in particular in New York; becoming subject to malpractice or other similar claims; and our reliance on others for the financial condition of our equity investment in Matrix. The Company has provided additional information about the risks facing our business in our annual report on Form 10-K and subsequent filings most recently filed with the Securities and Exchange Commission. 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 June 30, Six months ended June 30, 2022 2021 2022 2021 Service revenue, net $ 628,215 $ 474,448 $ 1,202,690 $ 928,058 Grant income 3,330 852 3,798 3,500 Operating expenses: Service expense 504,230 379,565 963,545 739,898 General and administrative expense 79,411 56,465 156,219 111,390 Depreciation and amortization 24,758 11,820 48,704 24,059 Total operating expenses 608,399 447,850 1,168,468 875,347 Operating income 23,146 27,450 38,020 56,211 Other expenses: Interest expense, net 15,472 8,287 30,872 16,710 Income before income taxes and equity method investment 7,674 19,163 7,148 39,501 Provision for income taxes 2,291 5,671 1,930 10,410 Equity in net (income) loss of investee, net of tax 2,055 (180 ) 1,572 (3,421 ) Net income $ 3,328 $ 13,672 $ 3,646 $ 32,512 Earnings per common share: Basic $ 0.24 $ 0.97 $ 0.26 $ 2.30 Diluted $ 0.24 $ 0.96 $ 0.26 $ 2.27 Weighted-average number of common shares outstanding: Basic 14,047,459 14,025,325 14,035,588 14,151,946 Diluted 14,115,471 14,175,594 14,122,730 14,329,794 Modivcare Inc. Unaudited Condensed Consolidated Balance Sheets (in thousands) June 30, 2022 December 31, 2021 Assets Current assets: Cash and cash equivalents $ 87,956 $ 133,139 Accounts receivable, net 272,402 233,121 Other current assets (1) 35,426 43,574 Total current assets 395,784 409,834 Property and equipment, net 62,739 53,549 Goodwill and intangible assets, net 1,448,982 1,415,000 Equity investment 80,364 83,069 Operating lease right-of-use assets 40,326 43,750 Other long-term assets 31,368 22,223 Total assets $ 2,059,563 $ 2,027,425 Liabilities and stockholders' equity Current liabilities: Accounts payable $ 10,622 $ 8,690 Accrued contract payables 278,052 281,586 Accrued expenses and other current liabilities 123,503 123,791 Accrued transportation costs 131,282 103,294 Current portion of operating lease liabilities 9,973 9,873 Total current liabilities 553,432 527,234 Long-term debt, net of deferred financing costs 977,261 975,225 Operating lease liabilities, less current portion 32,508 34,524 Long-term contracts payables 3,686 — Other long-term liabilities (2) 110,736 117,175 Total liabilities 1,677,623 1,654,158 Stockholders' equity Stockholders' equity 381,940 373,267 Total liabilities and stockholders' equity $ 2,059,563 $ 2,027,425 (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) Six months ended June 30, 2022 2021 Operating activities Net income $ 3,646 $ 32,512 Depreciation and amortization 48,704 24,059 Stock-based compensation 4,496 2,659 Equity in net (income) loss of investee 2,358 (4,770 ) Deferred income taxes (14,493 ) (2,843 ) Reduction of right-of-use asset 5,757 7,341 Other non-cash items (1) 645 (136 ) Changes in working capital (2) 93 110,969 Net cash provided by operating activities 51,206 169,791 Investing activities Purchase of property and equipment (15,899 ) (8,132 ) Acquisition, net of cash acquired (78,861 ) (15,843 ) Net cash used in investing activities (94,760 ) (23,975 ) Financing activities Proceeds from debt 100,000 — Repayment of debt (100,000 ) — Debt issuance costs (2,415 ) — Repurchase of common stock, for treasury — (39,040 ) Proceeds from common stock issued pursuant to stock option exercise 1,138 2,335 Restricted stock surrendered for employee tax payment (607 ) (820 ) Other financing activities — (41 ) Net cash used in financing activities (1,884 ) (37,566 ) Net change in cash, cash equivalents and restricted cash (45,438 ) 108,250 Cash, cash equivalents and restricted cash at beginning of period 133,422 183,356 Cash, cash equivalents and restricted cash at end of period $ 87,984 $ 291,606 (1) Includes provision for doubtful accounts and amortization of deferred financing costs and debt discount. (2) Includes accounts receivable and other receivables, prepaid expenses and other current assets, accrued contract payables, 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 June 30, 2022 NEMT Personal Care RPM Corporate (3) Total Service revenue, net $ 448,733 $ 162,737 $ 16,745 $ — $ 628,215 Grant income — 3,330 — — 3,330 Operating expenses: Service expense 373,724 124,445 6,061 — 504,230 General and administrative expense 33,588 23,346 6,742 15,735 79,411 Depreciation and amortization 7,392 12,552 4,606 208 24,758 Total operating expenses 414,704 160,343 17,409 15,943 608,399 Operating income (loss) 34,029 5,724 (664 ) (15,943 ) 23,146 Other expenses: Interest expense, net — — — 15,472 15,472 Income (loss) before income taxes and equity method investment 34,029 5,724 (664 ) (31,415 ) 7,674 Provision (benefit) for income taxes 9,563 1,601 (189 ) (8,684 ) 2,291 Equity in net loss of investee, net of tax — — — 2,055 2,055 Net Income (loss) 24,466 4,123 (475 ) (24,786 ) 3,328 Interest expense, net — — — 15,472 15,472 Provision (benefit) for income taxes 9,563 1,601 (189 ) (8,684 ) 2,291 Depreciation and amortization 7,392 12,552 4,606 208 24,758 EBITDA 41,421 18,276 3,942 (17,790 ) 45,849 Restructuring and related charges (1) 4,852 — — 354 5,206 Transaction costs (2) — 2,830 1,635 3,237 7,702 Cash settled equity — — — 20 20 Stock-based compensation — 173 57 2,440 2,670 COVID-19 related costs, net of grant income 34 (3,378 ) — — (3,344 ) Equity in net loss (income) of investee, net of tax — — — 2,055 2,055 Adjusted EBITDA $ 46,307 $ 17,901 $ 5,634 $ (9,684 ) $ 60,158 (1) Restructuring and related charges include professional services costs and severance and recruiting costs. (2) Transaction costs include SOX integration efforts at recently acquired subsidiaries and acquisition costs. (3) Effective January 1, 2022, the Company completed its segment reorganization which resulted in the addition of a Corporate segment that includes the costs associated with the Company's corporate operations. Through this reorganization, it was also determined that the Matrix Investment is no longer a reportable segment, and is now reported within the Corporate segment. Prior period segment amounts have been reclassified to conform to the current presentation. Modivcare Inc. Unaudited Reconciliation of Non-GAAP Financial Measures Segment Information and Adjusted EBITDA (in thousands) Three months ended June 30, 2021 NEMT Personal Care Corporate (3) Total Service revenue, net $ 364,760 $ 109,688 $ — $ 474,448 Grant income — 852 — 852 Operating expenses: Service expense 292,656 86,909 — 379,565 General and administrative expense 28,099 14,775 13,591 56,465 Depreciation and amortization 6,936 4,884 — 11,820 Total operating expenses 327,691 106,568 13,591 447,850 Operating income (loss) 37,069 3,972 (13,591 ) 27,450 Interest expense, net — — 8,287 8,287 Income (loss) before income taxes and equity method investment 37,069 3,972 (21,878 ) 19,163 Provision (benefit) for income taxes 10,019 918 (5,266 ) 5,671 Equity in net income of investee, net of tax — — (180 ) (180 ) Net Income (loss) 27,050 3,054 (16,432 ) 13,672 Interest expense, net — — 8,287 8,287 Provision (benefit) for income taxes 10,019 918 (5,266 ) 5,671 Depreciation and amortization 6,936 4,884 — 11,820 EBITDA 44,005 8,856 (13,411 ) 39,450 Restructuring and related charges (1) 4,044 — 557 4,601 Transaction costs (2) 247 1,245 1,974 3,466 Cash settled equity — — 4,452 4,452 Stock-based compensation — 76 1,340 1,416 COVID-19 related costs, net of grant income 114 (248 ) — (134 ) Equity in net income of investee, net of tax — — (180 ) (180 ) Adjusted EBITDA $ 48,410 $ 9,929 $ (5,268 ) $ 53,071 (1) Restructuring and related charges include professional services costs of $3.5 million and severance and office closure costs of $1.0 million. (2) Transaction costs include Circulation management incentive plan costs and acquisition costs related to Simplura Health Group and National MedTrans. (3) Effective January 1, 2022, the Company completed its segment reorganization which resulted in the addition of a Corporate segment that includes the costs associated with the Company's corporate operations. Through this reorganization, it was also determined that the Matrix Investment is no longer a reportable segment, and is now reported within the Corporate segment. Prior period segment amounts have been reclassified to conform to the current presentation, with the exception of the RPM segment, which is not included in Q2 of 2021 as it was purchased in Q3 of 2021. Modivcare Inc. Unaudited Reconciliation of Non-GAAP Financial Measures Segment Information and Adjusted EBITDA (in thousands) Six months ended June 30, 2022 NEMT Personal Care RPM Corporate (3) Total Service revenue, net $ 849,653 $ 322,435 $ 30,602 $ — $ 1,202,690 Grant income — 3,798 — — 3,798 Operating expenses: Service expense 705,820 246,677 11,048 — 963,545 General and administrative expense 70,921 46,479 11,704 27,115 156,219 Depreciation and amortization 14,497 25,057 8,734 416 48,704 Total operating expenses 791,238 318,213 31,486 27,531 1,168,468 Operating income (loss) 58,415 8,020 (884 ) (27,531 ) 38,020 Interest expense, net — — — 30,872 30,872 Income (loss) before income taxes and equity method investment 58,415 8,020 (884 ) (58,403 ) 7,148 Provision (benefit) for income taxes 16,138 2,241 (247 ) (16,202 ) 1,930 Equity in net loss (income) of investee, net of tax 65 — — 1,507 1,572 Net Income (loss) 42,212 5,779 (637 ) (43,708 ) 3,646 Interest expense, net — — — 30,872 30,872 Provision (benefit) for income taxes 16,138 2,241 (247 ) (16,202 ) 1,930 Depreciation and amortization 14,497 25,057 8,734 416 48,704 EBITDA 72,847 33,077 7,850 (28,622 ) 85,152 Restructuring and related charges (1) 10,456 181 24 385 11,046 Transaction costs (2) — 4,103 2,282 5,028 11,413 Cash settled equity — — — 7 7 Stock-based compensation — 190 86 3,860 4,136 COVID-19 related costs, net of grant income 156 (3,029 ) — — (2,873 ) Equity in net loss (income) of investee, net of tax 65 — — 1,507 1,572 Adjusted EBITDA $ 83,524 $ 34,522 $ 10,242 $ (17,835 ) $ 110,453 (1) Restructuring and related charges include professional services costs and severance and recruiting costs. (2) Transaction costs include SOX integration efforts at recently acquired subsidiaries and acquisition costs. (3) Effective January 1, 2022, the Company completed its segment reorganization which resulted in the addition of a Corporate segment that includes the costs associated with the Company's corporate operations. Through this reorganization, it was also determined that the Matrix Investment is no longer a reportable segment, and is now reported within the Corporate segment. Prior period segment amounts have been reclassified to conform to the current presentation. Modivcare Inc. Unaudited Reconciliation of Non-GAAP Financial Measures Segment Information and Adjusted EBITDA (in thousands) Six months ended June 30, 2021 NEMT Personal Care Corporate (3) Total Service revenue, net $ 708,176 $ 219,882 $ — $ 928,058 Grant income — 3,500 — 3,500 Operating expenses: Service expense 565,072 174,826 — 739,898 General and administrative expense 56,086 29,804 25,500 111,390 Depreciation and amortization 14,248 9,811 — 24,059 Total operating expenses 635,406 214,441 25,500 875,347 Operating income (loss) 72,770 8,941 (25,500 ) 56,211 Interest expense, net — — 16,710 16,710 Income (loss) before income taxes and equity method investment 72,770 8,941 (42,210 ) 39,501 Provision (benefit) for income taxes 19,423 2,356 (11,369 ) 10,410 Equity in net income of investee, net of tax — — (3,421 ) (3,421 ) Net Income (loss) 53,347 6,585 (27,420 ) 32,512 Interest expense, net — — 16,710 16,710 Provision (benefit) for income taxes 19,423 2,356 (11,369 ) 10,410 Depreciation and amortization 14,248 9,811 — 24,059 EBITDA 87,018 18,752 (22,079 ) 83,691 Restructuring and related charges (1) 7,538 — 763 8,301 Transaction costs (2) 210 2,290 4,644 7,144 Cash settled equity — — 6,545 6,545 Stock-based compensation — 76 2,489 2,565 COVID-19 related costs, net of grant income 453 (2,100 ) — (1,647 ) Equity in net income of investee, net of tax — — (3,421 ) (3,421 ) Adjusted EBITDA $ 95,219 $ 19,018 $ (11,059 ) $ 103,178 (1) Restructuring and related charges include professional services costs of $6.4 million and severance and office closure costs of $1.7 million. (2) Transaction costs include Circulation management incentive plan costs and acquisition costs related to Simplura Health Group and National MedTrans. (3) Effective January 1, 2022, the Company completed its segment reorganization which resulted in the addition of a Corporate segment that includes the costs associated with the Company's corporate operations. Through this reorganization, it was also determined that the Matrix Investment is no longer a reportable segment, and is now reported within the Corporate segment. Prior period segment amounts have been reclassified to conform to the current presentation, with the exception of the RPM segment, which is not included in YTD 2021 as it was purchased in Q3 of 2021. 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 June 30, Six months ended June 30, 2022 2021 2022 2021 Net income $ 3,328 $ 13,672 $ 3,646 $ 32,512 Restructuring and related charges(1) 5,206 4,601 11,046 8,301 Transaction costs(2) 7,702 3,466 11,413 7,144 Cash settled equity 20 4,452 7 6,545 Stock-based compensation 2,670 1,416 4,136 2,565 Equity in net income of investee, net of tax 2,055 (180 ) 1,572 (3,421 ) Intangible amortization expense 19,752 9,148 39,251 18,649 COVID-19 related costs, net of grant income (3,344 ) (134 ) (2,873 ) (1,647 ) Tax effected impact of adjustments (9,299 ) (6,100 ) (18,224 ) (11,417 ) Adjusted Net Income $ 28,090 $ 30,341 $ 49,974 $ 59,231 Adjusted EPS $ 1.99 $ 2.14 $ 3.54 $ 4.13 Diluted weighted-average number of common shares outstanding 14,115,471 14,175,594 14,122,730 14,329,794 (1) Restructuring and related charges include severance, organizational consolidation costs and professional fees. (2) Transaction costs include certain transaction-related expenses and SOX integration efforts. Modivcare Inc. Unaudited Key Statistical and Financial Data (in thousands, except for statistical data) Three months ended Six months ended Three months ended June 30, 2022 June 30, 2021 % Change June 30, 2022 June 30, 2021 % Change March 31, 2022 QoQ % Change NEMT Segment Service revenue, net $ 448,733 $ 364,760 23.0 % $ 849,653 $ 708,176 20.0 % $ 400,920 11.9 % Purchased services expense 317,213 245,015 29.5 % 595,160 468,309 27.1 % 277,947 14.1 % Payroll and other expense 56,511 47,641 18.6 % 110,660 96,763 14.4 % 54,149 4.4 % Service expense $ 373,724 $ 292,656 27.7 % $ 705,820 $ 565,072 24.9 % $ 332,096 12.5 % Gross profit $ 75,009 $ 72,104 4.0 % $ 143,833 $ 143,104 0.5 % $ 68,824 9.0 % Gross margin 16.7 % 19.8 % 16.9 % 20.2 % 17.2 % G&A expense $ 33,588 $ 28,099 19.5 % $ 70,921 $ 56,086 26.5 % $ 37,333 (10.0 )% G&A expense adjustments: Restructuring and related charges 4,852 4,044 20.0 % 10,456 7,538 38.7 % 5,604 (13.4 )% Transaction costs — 247 — % — 210 — % — — % Adjusted G&A expense $ 28,736 $ 23,808 20.7 % $ 60,465 $ 48,338 25.1 % $ 31,729 (9.4 )% Adjusted G&A expense % of revenue 6.4 % 6.5 % 7.1 % 6.8 % 7.9 % Net income $ 24,466 $ 27,050 (9.6 ) % $ 42,212 $ 53,347 (20.9 ) % $ 17,746 37.9 % Net income margin 5.5 % 7.4 % 5.0 % 7.5 % 4.4 % Adjusted EBITDA $ 46,307 $ 48,410 (4.3 )% $ 83,524 $ 95,219 (12.3 )% $ 37,217 24.4 % Adjusted EBITDA margin 10.3 % 13.3 % 9.8 % 13.4 % 9.3 % Total paid trips (in thousands) 7,831 6,657 17.6 % 14,942 13,276 12.5 % 7,111 10.1 % Average monthly members (in thousands) 33,792 29,756 13.6 % 32,984 30,102 9.6 % 32,176 5.0 % Revenue per member per month $ 4.43 $ 4.09 8.3 % $ 4.29 $ 3.92 9.4 % $ 4.15 6.7 % Revenue per trip $ 57.30 $ 54.79 4.6 % $ 56.86 $ 53.34 6.6 % $ 56.38 1.6 % Monthly utilization 7.7 % 7.5 % 7.6 % 7.4 % 7.4 % Purchased services per trip $ 40.51 $ 36.81 10.1 % $ 39.83 $ 35.27 12.9 % $ 39.09 3.6 % Payroll and other per trip $ 7.22 $ 7.16 0.8 % $ 7.41 $ 7.29 1.6 % $ 7.61 (5.1 ) % Modivcare Inc. Unaudited Key Statistical and Financial Data (in thousands, except for statistical data) Three months ended Six months ended Three months ended June 30, 2022 June 30, 2021 % Change June 30, 2022 June 30, 2021 % Change March 31, 2022 QoQ % Change Personal Care Segment Service revenue, net $ 162,737 $ 109,688 48.4 % $ 322,435 $ 219,882 46.6 % $ 159,698 1.9 % Service expense 124,445 86,909 43.2 % 246,677 174,826 41.1 % 122,232 1.8 % Gross profit $ 38,292 $ 22,779 68.1 % $ 75,758 $ 45,056 68.1 % $ 37,466 2.2 % Gross Margin 23.5 % 20.8 % 23.5 % 20.5 % 23.5 % G&A expense $ 23,346 $ 14,775 58.0 % $ 46,479 $ 29,804 55.9 % $ 23,133 0.9 % G&A expense adjustments Restructuring and related charges — — — % 181 — — % 181 (100.0 )% Transaction costs 2,830 1,245 127.3 % 4,103 2,290 79.2 % 1,273 122.3 % Stock-based compensation 173 76 127.6 % 190 76 150.0 % 17 917.6 % Adjusted G&A expense $ 20,343 $ 13,454 51.2 % $ 42,005 $ 27,438 53.1 % $ 21,662 (6.1 )% Adjusted G&A expense % of revenue 12.5 % 12.3 % 13.0 % 12.5 % 13.6 % Net income $ 4,123 $ 3,054 35.0 % $ 5,779 $ 6,585 (12.2 )% $ 1,656 149.0 % Net income margin 2.5 % 2.8 % 1.8 % 3.0 % 1.0 % Adjusted EBITDA $ 17,901 $ 9,929 80.3 % $ 34,522 $ 19,018 81.5 % $ 16,621 7.7 % Adjusted EBITDA margin 11.0 % 9.1 % 10.7 % 8.6 % 10.4 % Total hours (in thousands) 6,705 4,629 44.8 % 13,240 9,255 43.1 % 6,535 2.6 % Revenue per hour $ 24.27 $ 23.70 2.4 % $ 24.35 $ 23.76 2.5 % $ 24.44 (0.7 )% Service expense per hour $ 18.56 $ 18.77 (1.1 )% $ 18.63 $ 18.89 (1.4 )% $ 18.70 (0.7 )% Modivcare Inc. Unaudited Key Statistical and Financial Data (in thousands, except for statistical data) Three months ended Six months ended Three months ended June 30, 2022 June 30, 2021 % Change June 30, 2022 June 30, 2021 % Change March 31, 2022 QoQ % Change RPM Segment Service revenue, net $ 16,745 N/M $ 30,602 N/M $ 13,857 20.8 % Service expense 6,061 N/M 11,048 N/M 4,987 21.5 % Gross profit $ 10,684 N/M $ 19,554 N/M $ 8,870 20.5 % Gross Margin 63.8 % 63.9 % 64.0 % G&A expense $ 6,742 N/M $ 11,704 N/M $ 4,962 35.9 % G&A expense adjustments Restructuring and related charges — N/M 24 N/M 24 (100.0 )% Transaction costs 1,635 N/M 2,282 N/M 647 152.7 % Stock-based compensation 57 N/M 86 N/M 29 96.6 % Adjusted G&A expense $ 5,050 N/M $ 9,312 N/M $ 4,262 18.5 % Adjusted G&A expense % of revenue 30.2 % 30.4 % 30.8 % Net income (loss) $ (475 ) N/M $ (637 ) N/M $ (162 ) 193.2 % Net income (loss) margin (2.8 )% (2.1 )% (1.2 )% Adjusted EBITDA $ 5,634 N/M $ 10,242 N/M $ 4,608 22.3 % Adjusted EBITDA margin 33.6 % 33.5 % 33.3 % Average monthly members (in thousands) 203 N/M 186 N/M 169 20.1 % Revenue per member per month $ 27.50 N/M $ 27.42 N/M $ 27.33 0.6 % Service expense per member per month $ 9.95 N/M $ 9.90 N/M $ 9.84 1.1 % N/M - Not Meaningful. The RPM Segment was established with the acquisition of VRI on September 22, 2021 and as such, these figures are not meaningful for comparative purposes. Modivcare Inc. Unaudited Key Statistical and Financial Data (in thousands) Three months ended Six months ended Three months ended June 30, 2022 June 30, 2021 % Change June 30, 2022 June 30, 2021 % Change March 31, 2022 QoQ % Change Corporate and Other Segment G&A expense $ 15,735 $ 13,591 15.8 % $ 27,115 $ 25,500 6.3 % $ 11,380 38.3 % G&A expense adjustments Restructuring and related charges 354 557 (36.4 )% 385 763 (49.5 )% 31 1041.9 % Transaction costs 3,237 1,974 64.0 % 5,028 4,644 8.3 % 1,791 80.7 % Cash settled equity 20 4,452 (99.6 )% 7 6,545 (99.9 )% (13 ) (253.8 )% Stock-based compensation 2,440 1,340 82.1 % 3,860 2,489 55.1 % 1,420 71.8 % Adjusted G&A expense $ 9,684 $ 5,268 83.8 % $ 17,835 $ 11,059 61.3 % $ 8,151 18.8 % Adjusted G&A expense % of consolidated revenue 1.5 % 1.1 % 1.5 % 1.2 % 1.4 % Three months ended Six months ended Three months ended June 30, 2022 June 30, 2021 % Change June 30, 2022 June 30, 2021 % Change March 31, 2022 QoQ % Change Consolidated Modivcare G&A expense $ 79,411 $ 56,465 40.6 % $ 156,219 $ 111,390 40.2 % $ 76,808 3.4 % G&A expense adjustments Restructuring and related charges 5,206 4,601 13.1 % 11,046 8,301 33.1 % 5,840 (10.9 )% Transaction costs 7,702 3,466 122.2 % 11,413 7,144 59.8 % 3,711 107.5 % Cash settled equity 20 4,452 (99.6 )% 7 6,545 (99.9 )% (13 ) (253.8 )% Stock-based compensation 2,670 1,416 88.6 % 4,136 2,565 61.2 % 1,466 82.1 % Adjusted G&A expense $ 63,813 $ 42,530 50.0 % $ 129,617 $ 86,835 49.3 % $ 65,804 (3.0 )% Adjusted G&A expense % of revenue 10.2 % 9.0 % 10.8 % 9.4 % 11.5 % View source version on businesswire.com: https://www.businesswire.com/news/home/20220804005265/en/Contacts Investor Relations Contact Kevin Ellich, Head of Investor Relations (303) 728-7012 Kevin.Ellich@modivcare.com
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 patient outcomes, today reported financial results for the three and six months ended June 30, 2022. Second Quarter 2022 Highlights: Revenue of $628.2 million, a 32.4% increase as compared to $474.4 million in Q2 2021 Net income of $3.3 million or $0.24 per diluted common share Adjusted EBITDA of $60.2 million, Adjusted Net Income of $28.1 million and Adjusted EPS of $1.99 2022 guidance increased to account for strong second quarter and year-to-date results Net cash used in operating activities during the quarter of $17.9 million Cash and cash equivalents of $88.0 million as of June 30, 2022, with $1,000.0 million principal amount of debt outstanding related to the Senior Unsecured Notes due 2025 and 2029 Undrawn $325.0 million revolving credit facility as of June 30, 2022 “We reported solid second quarter 2022 results with Adjusted EBITDA of $60 million and revenue growth of 32 percent driven by 23 percent growth from our non-emergency medical transportation business,” said Heath Sampson, Interim Chief Executive Officer and Chief Financial Officer. “We delivered on several strategic initiatives during the quarter, including expanding our national remote patient monitoring footprint with the acquisition of Guardian Medical Monitoring and aligning more closely with our transportation providers. We also hosted our inaugural investor day where we issued 2022 guidance, which we increased this morning, and provided a long-term outlook with 2025 targets for revenue of $3 billion and Adjusted EBITDA of $300 million. I am pleased with our progress as we continue to improve outcomes and better serve patients through our unique supportive care platform that addresses the social determinants of health by broadening access to care for the nearly 34 million members we serve. I want to thank our 20,000 team members for their hard work and dedication as they are the foundation of the care and services we provide that help empower patients.” Second Quarter 2022 Results For the second quarter of 2022, the Company reported revenue of $628.2 million, an increase of 32.4% from $474.4 million in the second quarter of 2021. Operating income was $23.1 million, or 3.7% of revenue, in the second quarter of 2022, compared to operating income of $27.5 million, or 5.8% of revenue, in the second quarter of 2021. Net income in the second quarter of 2022 was $3.3 million, or $0.24 per diluted common share, compared to net income of $13.7 million, or $0.96 per diluted common share, in the second quarter of 2021. Adjusted EBITDA was $60.2 million, or 9.6% of revenue, in the second quarter of 2022, compared to $53.1 million, or 11.2% of revenue, in the second quarter of 2021. Adjusted Net Income in the second quarter of 2022 was $28.1 million, or $1.99 per diluted common share, compared to $30.3 million, or $2.14 per diluted common share, in the second quarter of 2021. The year-over-year increase in revenue was primarily due to incremental revenue of $42.4 million and $16.7 million associated with the acquisitions of Care Finders and VRI, respectively. NEMT revenue also increased year-over-year due to higher trip volume which drove higher revenue per member in Q2 2022. Adjusted EBITDA increased in the second quarter of 2022 due to incremental contribution from Care Finders and VRI. This was partially offset by higher corporate general and administrative cost as the Company continued to make investments in its employees and technology. Organizational Consolidation and Change in Segments We operate four reportable business segments: NEMT, Personal Care, RPM, and Corporate and Other. Effective January 1, 2022, the Company completed its segment reorganization which resulted in the addition of a Corporate segment that includes the costs associated with the Company's corporate operations. The operating results of our Corporate segment include our activities related to executive, accounting, finance, internal audit, tax, legal and certain strategic and corporate development functions for each segment, as well as the results of our Matrix investment. The Company reclassified certain costs associated with this reorganization for the three and six months ended June 30, 2021 to conform to this presentation. Updated 2022 Guidance We are updating our 2022 guidance as follows ($ in millions): Updated Previous Low High Low High Revenue $ 2,375 $ 2,400 $ 2,350 $ 2,375 Adjusted EBITDA $ 210 $ 220 $ 203 $ 213 Guidance excludes the effect of any future acquisitions and is based on the current operating environment. Investor Presentation and Conference Call Modivcare will hold a conference call to discuss its financial results on Thursday, August 4, 2022 at 8:00 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 also will be archived. About Modivcare Modivcare Inc. (“Modivcare”) (Nasdaq: MODV) is a technology-enabled healthcare services company that provides a platform of integrated supportive care solutions for public and private payors and their patients. Our value-based solutions address the social determinants of health (SDoH), enable greater access to care, reduce costs, and improve outcomes. We are a leading provider of non-emergency medical transportation (NEMT), personal care and remote patient monitoring. 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 EBITDA, Adjusted EBITDA and Adjusted EBITDA margin for the Company and its segments, Adjusted Net Income and Adjusted EPS for the Company, and Adjusted G&A expense for the Company’s segments, which are performance measures that are not recognized under GAAP. EBITDA is defined as income (loss) from continuing operations, net of taxes, 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 charges, including severance and office closure and professional services costs, (2) certain transaction and related costs, (3) cash settled equity, (4) stock-based compensation, (5) COVID-19 related costs, net of grant income, and (6) equity in net (income) loss of investee. Adjusted EBITDA margin is calculated as Adjusted EBITDA, divided by Service revenue, net. Adjusted Net Income is calculated as income from continuing operations, net of taxes, before: (1) restructuring and related charges including severance and office closure and professional services costs, (2) certain transaction and related costs, (3) cash settled equity, (4) stock-based compensation, (5) equity in net (income) loss of investee, (6) intangible amortization expense, (7) COVID-19 related costs, net of grant income, (8) tax impacts from the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"), and (9) the income tax impact of such adjustments. Adjusted EPS is calculated as Adjusted Net Income less (as applicable): the sum of (1) dividends on convertible preferred stock plus (2) income allocated to participating securities, 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 charges, (2) transaction costs, (3) cash settled equity, and (4) stock-based compensation. 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. In addition, 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 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. 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 events to be materially different from those expressed or implied herein, including but not limited to: government or private insurance program funding reductions or limitations; alternative payment models or the transition of Medicaid and Medicare beneficiaries to Managed Care Organizations, or MCOs; our inability to control reimbursement rates received for our services; cost containment initiatives undertaken by private third-party payors; the effects of a public health emergency; inadequacies in, or security breaches of, our information technology systems, including the systems intended to protect our clients’ privacy and confidential information; any changes in the funding, financial viability or our relationships with our payors; pandemic infectious diseases, including the COVID-19 pandemic; disruptions to our contact center operations caused by health epidemics or pandemics like COVID-19; delays in collection, or non-collection, of our accounts receivable, particularly during any business integration; an impairment of our long-lived assets; any failure to maintain or to develop further reliable, efficient and secure information technology systems; an inability to attract and retain qualified employees; any acquisition or acquisition integration efforts; 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; a 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; 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 that we acquired with our personal care segment; acquired unknown liabilities in connection with the acquisition of our personal care segment; 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 shortages in qualified employees and management; labor disputes or disruptions, in particular in New York; becoming subject to malpractice or other similar claims; and our reliance on others for the financial condition of our equity investment in Matrix. The Company has provided additional information about the risks facing our business in our annual report on Form 10-K and subsequent filings most recently filed with the Securities and Exchange Commission. 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 June 30, Six months ended June 30, 2022 2021 2022 2021 Service revenue, net $ 628,215 $ 474,448 $ 1,202,690 $ 928,058 Grant income 3,330 852 3,798 3,500 Operating expenses: Service expense 504,230 379,565 963,545 739,898 General and administrative expense 79,411 56,465 156,219 111,390 Depreciation and amortization 24,758 11,820 48,704 24,059 Total operating expenses 608,399 447,850 1,168,468 875,347 Operating income 23,146 27,450 38,020 56,211 Other expenses: Interest expense, net 15,472 8,287 30,872 16,710 Income before income taxes and equity method investment 7,674 19,163 7,148 39,501 Provision for income taxes 2,291 5,671 1,930 10,410 Equity in net (income) loss of investee, net of tax 2,055 (180 ) 1,572 (3,421 ) Net income $ 3,328 $ 13,672 $ 3,646 $ 32,512 Earnings per common share: Basic $ 0.24 $ 0.97 $ 0.26 $ 2.30 Diluted $ 0.24 $ 0.96 $ 0.26 $ 2.27 Weighted-average number of common shares outstanding: Basic 14,047,459 14,025,325 14,035,588 14,151,946 Diluted 14,115,471 14,175,594 14,122,730 14,329,794 Modivcare Inc. Unaudited Condensed Consolidated Balance Sheets (in thousands) June 30, 2022 December 31, 2021 Assets Current assets: Cash and cash equivalents $ 87,956 $ 133,139 Accounts receivable, net 272,402 233,121 Other current assets (1) 35,426 43,574 Total current assets 395,784 409,834 Property and equipment, net 62,739 53,549 Goodwill and intangible assets, net 1,448,982 1,415,000 Equity investment 80,364 83,069 Operating lease right-of-use assets 40,326 43,750 Other long-term assets 31,368 22,223 Total assets $ 2,059,563 $ 2,027,425 Liabilities and stockholders' equity Current liabilities: Accounts payable $ 10,622 $ 8,690 Accrued contract payables 278,052 281,586 Accrued expenses and other current liabilities 123,503 123,791 Accrued transportation costs 131,282 103,294 Current portion of operating lease liabilities 9,973 9,873 Total current liabilities 553,432 527,234 Long-term debt, net of deferred financing costs 977,261 975,225 Operating lease liabilities, less current portion 32,508 34,524 Long-term contracts payables 3,686 — Other long-term liabilities (2) 110,736 117,175 Total liabilities 1,677,623 1,654,158 Stockholders' equity Stockholders' equity 381,940 373,267 Total liabilities and stockholders' equity $ 2,059,563 $ 2,027,425 (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) Six months ended June 30, 2022 2021 Operating activities Net income $ 3,646 $ 32,512 Depreciation and amortization 48,704 24,059 Stock-based compensation 4,496 2,659 Equity in net (income) loss of investee 2,358 (4,770 ) Deferred income taxes (14,493 ) (2,843 ) Reduction of right-of-use asset 5,757 7,341 Other non-cash items (1) 645 (136 ) Changes in working capital (2) 93 110,969 Net cash provided by operating activities 51,206 169,791 Investing activities Purchase of property and equipment (15,899 ) (8,132 ) Acquisition, net of cash acquired (78,861 ) (15,843 ) Net cash used in investing activities (94,760 ) (23,975 ) Financing activities Proceeds from debt 100,000 — Repayment of debt (100,000 ) — Debt issuance costs (2,415 ) — Repurchase of common stock, for treasury — (39,040 ) Proceeds from common stock issued pursuant to stock option exercise 1,138 2,335 Restricted stock surrendered for employee tax payment (607 ) (820 ) Other financing activities — (41 ) Net cash used in financing activities (1,884 ) (37,566 ) Net change in cash, cash equivalents and restricted cash (45,438 ) 108,250 Cash, cash equivalents and restricted cash at beginning of period 133,422 183,356 Cash, cash equivalents and restricted cash at end of period $ 87,984 $ 291,606 (1) Includes provision for doubtful accounts and amortization of deferred financing costs and debt discount. (2) Includes accounts receivable and other receivables, prepaid expenses and other current assets, accrued contract payables, 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 June 30, 2022 NEMT Personal Care RPM Corporate (3) Total Service revenue, net $ 448,733 $ 162,737 $ 16,745 $ — $ 628,215 Grant income — 3,330 — — 3,330 Operating expenses: Service expense 373,724 124,445 6,061 — 504,230 General and administrative expense 33,588 23,346 6,742 15,735 79,411 Depreciation and amortization 7,392 12,552 4,606 208 24,758 Total operating expenses 414,704 160,343 17,409 15,943 608,399 Operating income (loss) 34,029 5,724 (664 ) (15,943 ) 23,146 Other expenses: Interest expense, net — — — 15,472 15,472 Income (loss) before income taxes and equity method investment 34,029 5,724 (664 ) (31,415 ) 7,674 Provision (benefit) for income taxes 9,563 1,601 (189 ) (8,684 ) 2,291 Equity in net loss of investee, net of tax — — — 2,055 2,055 Net Income (loss) 24,466 4,123 (475 ) (24,786 ) 3,328 Interest expense, net — — — 15,472 15,472 Provision (benefit) for income taxes 9,563 1,601 (189 ) (8,684 ) 2,291 Depreciation and amortization 7,392 12,552 4,606 208 24,758 EBITDA 41,421 18,276 3,942 (17,790 ) 45,849 Restructuring and related charges (1) 4,852 — — 354 5,206 Transaction costs (2) — 2,830 1,635 3,237 7,702 Cash settled equity — — — 20 20 Stock-based compensation — 173 57 2,440 2,670 COVID-19 related costs, net of grant income 34 (3,378 ) — — (3,344 ) Equity in net loss (income) of investee, net of tax — — — 2,055 2,055 Adjusted EBITDA $ 46,307 $ 17,901 $ 5,634 $ (9,684 ) $ 60,158 (1) Restructuring and related charges include professional services costs and severance and recruiting costs. (2) Transaction costs include SOX integration efforts at recently acquired subsidiaries and acquisition costs. (3) Effective January 1, 2022, the Company completed its segment reorganization which resulted in the addition of a Corporate segment that includes the costs associated with the Company's corporate operations. Through this reorganization, it was also determined that the Matrix Investment is no longer a reportable segment, and is now reported within the Corporate segment. Prior period segment amounts have been reclassified to conform to the current presentation. Modivcare Inc. Unaudited Reconciliation of Non-GAAP Financial Measures Segment Information and Adjusted EBITDA (in thousands) Three months ended June 30, 2021 NEMT Personal Care Corporate (3) Total Service revenue, net $ 364,760 $ 109,688 $ — $ 474,448 Grant income — 852 — 852 Operating expenses: Service expense 292,656 86,909 — 379,565 General and administrative expense 28,099 14,775 13,591 56,465 Depreciation and amortization 6,936 4,884 — 11,820 Total operating expenses 327,691 106,568 13,591 447,850 Operating income (loss) 37,069 3,972 (13,591 ) 27,450 Interest expense, net — — 8,287 8,287 Income (loss) before income taxes and equity method investment 37,069 3,972 (21,878 ) 19,163 Provision (benefit) for income taxes 10,019 918 (5,266 ) 5,671 Equity in net income of investee, net of tax — — (180 ) (180 ) Net Income (loss) 27,050 3,054 (16,432 ) 13,672 Interest expense, net — — 8,287 8,287 Provision (benefit) for income taxes 10,019 918 (5,266 ) 5,671 Depreciation and amortization 6,936 4,884 — 11,820 EBITDA 44,005 8,856 (13,411 ) 39,450 Restructuring and related charges (1) 4,044 — 557 4,601 Transaction costs (2) 247 1,245 1,974 3,466 Cash settled equity — — 4,452 4,452 Stock-based compensation — 76 1,340 1,416 COVID-19 related costs, net of grant income 114 (248 ) — (134 ) Equity in net income of investee, net of tax — — (180 ) (180 ) Adjusted EBITDA $ 48,410 $ 9,929 $ (5,268 ) $ 53,071 (1) Restructuring and related charges include professional services costs of $3.5 million and severance and office closure costs of $1.0 million. (2) Transaction costs include Circulation management incentive plan costs and acquisition costs related to Simplura Health Group and National MedTrans. (3) Effective January 1, 2022, the Company completed its segment reorganization which resulted in the addition of a Corporate segment that includes the costs associated with the Company's corporate operations. Through this reorganization, it was also determined that the Matrix Investment is no longer a reportable segment, and is now reported within the Corporate segment. Prior period segment amounts have been reclassified to conform to the current presentation, with the exception of the RPM segment, which is not included in Q2 of 2021 as it was purchased in Q3 of 2021. Modivcare Inc. Unaudited Reconciliation of Non-GAAP Financial Measures Segment Information and Adjusted EBITDA (in thousands) Six months ended June 30, 2022 NEMT Personal Care RPM Corporate (3) Total Service revenue, net $ 849,653 $ 322,435 $ 30,602 $ — $ 1,202,690 Grant income — 3,798 — — 3,798 Operating expenses: Service expense 705,820 246,677 11,048 — 963,545 General and administrative expense 70,921 46,479 11,704 27,115 156,219 Depreciation and amortization 14,497 25,057 8,734 416 48,704 Total operating expenses 791,238 318,213 31,486 27,531 1,168,468 Operating income (loss) 58,415 8,020 (884 ) (27,531 ) 38,020 Interest expense, net — — — 30,872 30,872 Income (loss) before income taxes and equity method investment 58,415 8,020 (884 ) (58,403 ) 7,148 Provision (benefit) for income taxes 16,138 2,241 (247 ) (16,202 ) 1,930 Equity in net loss (income) of investee, net of tax 65 — — 1,507 1,572 Net Income (loss) 42,212 5,779 (637 ) (43,708 ) 3,646 Interest expense, net — — — 30,872 30,872 Provision (benefit) for income taxes 16,138 2,241 (247 ) (16,202 ) 1,930 Depreciation and amortization 14,497 25,057 8,734 416 48,704 EBITDA 72,847 33,077 7,850 (28,622 ) 85,152 Restructuring and related charges (1) 10,456 181 24 385 11,046 Transaction costs (2) — 4,103 2,282 5,028 11,413 Cash settled equity — — — 7 7 Stock-based compensation — 190 86 3,860 4,136 COVID-19 related costs, net of grant income 156 (3,029 ) — — (2,873 ) Equity in net loss (income) of investee, net of tax 65 — — 1,507 1,572 Adjusted EBITDA $ 83,524 $ 34,522 $ 10,242 $ (17,835 ) $ 110,453 (1) Restructuring and related charges include professional services costs and severance and recruiting costs. (2) Transaction costs include SOX integration efforts at recently acquired subsidiaries and acquisition costs. (3) Effective January 1, 2022, the Company completed its segment reorganization which resulted in the addition of a Corporate segment that includes the costs associated with the Company's corporate operations. Through this reorganization, it was also determined that the Matrix Investment is no longer a reportable segment, and is now reported within the Corporate segment. Prior period segment amounts have been reclassified to conform to the current presentation. Modivcare Inc. Unaudited Reconciliation of Non-GAAP Financial Measures Segment Information and Adjusted EBITDA (in thousands) Six months ended June 30, 2021 NEMT Personal Care Corporate (3) Total Service revenue, net $ 708,176 $ 219,882 $ — $ 928,058 Grant income — 3,500 — 3,500 Operating expenses: Service expense 565,072 174,826 — 739,898 General and administrative expense 56,086 29,804 25,500 111,390 Depreciation and amortization 14,248 9,811 — 24,059 Total operating expenses 635,406 214,441 25,500 875,347 Operating income (loss) 72,770 8,941 (25,500 ) 56,211 Interest expense, net — — 16,710 16,710 Income (loss) before income taxes and equity method investment 72,770 8,941 (42,210 ) 39,501 Provision (benefit) for income taxes 19,423 2,356 (11,369 ) 10,410 Equity in net income of investee, net of tax — — (3,421 ) (3,421 ) Net Income (loss) 53,347 6,585 (27,420 ) 32,512 Interest expense, net — — 16,710 16,710 Provision (benefit) for income taxes 19,423 2,356 (11,369 ) 10,410 Depreciation and amortization 14,248 9,811 — 24,059 EBITDA 87,018 18,752 (22,079 ) 83,691 Restructuring and related charges (1) 7,538 — 763 8,301 Transaction costs (2) 210 2,290 4,644 7,144 Cash settled equity — — 6,545 6,545 Stock-based compensation — 76 2,489 2,565 COVID-19 related costs, net of grant income 453 (2,100 ) — (1,647 ) Equity in net income of investee, net of tax — — (3,421 ) (3,421 ) Adjusted EBITDA $ 95,219 $ 19,018 $ (11,059 ) $ 103,178 (1) Restructuring and related charges include professional services costs of $6.4 million and severance and office closure costs of $1.7 million. (2) Transaction costs include Circulation management incentive plan costs and acquisition costs related to Simplura Health Group and National MedTrans. (3) Effective January 1, 2022, the Company completed its segment reorganization which resulted in the addition of a Corporate segment that includes the costs associated with the Company's corporate operations. Through this reorganization, it was also determined that the Matrix Investment is no longer a reportable segment, and is now reported within the Corporate segment. Prior period segment amounts have been reclassified to conform to the current presentation, with the exception of the RPM segment, which is not included in YTD 2021 as it was purchased in Q3 of 2021. 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 June 30, Six months ended June 30, 2022 2021 2022 2021 Net income $ 3,328 $ 13,672 $ 3,646 $ 32,512 Restructuring and related charges(1) 5,206 4,601 11,046 8,301 Transaction costs(2) 7,702 3,466 11,413 7,144 Cash settled equity 20 4,452 7 6,545 Stock-based compensation 2,670 1,416 4,136 2,565 Equity in net income of investee, net of tax 2,055 (180 ) 1,572 (3,421 ) Intangible amortization expense 19,752 9,148 39,251 18,649 COVID-19 related costs, net of grant income (3,344 ) (134 ) (2,873 ) (1,647 ) Tax effected impact of adjustments (9,299 ) (6,100 ) (18,224 ) (11,417 ) Adjusted Net Income $ 28,090 $ 30,341 $ 49,974 $ 59,231 Adjusted EPS $ 1.99 $ 2.14 $ 3.54 $ 4.13 Diluted weighted-average number of common shares outstanding 14,115,471 14,175,594 14,122,730 14,329,794 (1) Restructuring and related charges include severance, organizational consolidation costs and professional fees. (2) Transaction costs include certain transaction-related expenses and SOX integration efforts. Modivcare Inc. Unaudited Key Statistical and Financial Data (in thousands, except for statistical data) Three months ended Six months ended Three months ended June 30, 2022 June 30, 2021 % Change June 30, 2022 June 30, 2021 % Change March 31, 2022 QoQ % Change NEMT Segment Service revenue, net $ 448,733 $ 364,760 23.0 % $ 849,653 $ 708,176 20.0 % $ 400,920 11.9 % Purchased services expense 317,213 245,015 29.5 % 595,160 468,309 27.1 % 277,947 14.1 % Payroll and other expense 56,511 47,641 18.6 % 110,660 96,763 14.4 % 54,149 4.4 % Service expense $ 373,724 $ 292,656 27.7 % $ 705,820 $ 565,072 24.9 % $ 332,096 12.5 % Gross profit $ 75,009 $ 72,104 4.0 % $ 143,833 $ 143,104 0.5 % $ 68,824 9.0 % Gross margin 16.7 % 19.8 % 16.9 % 20.2 % 17.2 % G&A expense $ 33,588 $ 28,099 19.5 % $ 70,921 $ 56,086 26.5 % $ 37,333 (10.0 )% G&A expense adjustments: Restructuring and related charges 4,852 4,044 20.0 % 10,456 7,538 38.7 % 5,604 (13.4 )% Transaction costs — 247 — % — 210 — % — — % Adjusted G&A expense $ 28,736 $ 23,808 20.7 % $ 60,465 $ 48,338 25.1 % $ 31,729 (9.4 )% Adjusted G&A expense % of revenue 6.4 % 6.5 % 7.1 % 6.8 % 7.9 % Net income $ 24,466 $ 27,050 (9.6 ) % $ 42,212 $ 53,347 (20.9 ) % $ 17,746 37.9 % Net income margin 5.5 % 7.4 % 5.0 % 7.5 % 4.4 % Adjusted EBITDA $ 46,307 $ 48,410 (4.3 )% $ 83,524 $ 95,219 (12.3 )% $ 37,217 24.4 % Adjusted EBITDA margin 10.3 % 13.3 % 9.8 % 13.4 % 9.3 % Total paid trips (in thousands) 7,831 6,657 17.6 % 14,942 13,276 12.5 % 7,111 10.1 % Average monthly members (in thousands) 33,792 29,756 13.6 % 32,984 30,102 9.6 % 32,176 5.0 % Revenue per member per month $ 4.43 $ 4.09 8.3 % $ 4.29 $ 3.92 9.4 % $ 4.15 6.7 % Revenue per trip $ 57.30 $ 54.79 4.6 % $ 56.86 $ 53.34 6.6 % $ 56.38 1.6 % Monthly utilization 7.7 % 7.5 % 7.6 % 7.4 % 7.4 % Purchased services per trip $ 40.51 $ 36.81 10.1 % $ 39.83 $ 35.27 12.9 % $ 39.09 3.6 % Payroll and other per trip $ 7.22 $ 7.16 0.8 % $ 7.41 $ 7.29 1.6 % $ 7.61 (5.1 ) % Modivcare Inc. Unaudited Key Statistical and Financial Data (in thousands, except for statistical data) Three months ended Six months ended Three months ended June 30, 2022 June 30, 2021 % Change June 30, 2022 June 30, 2021 % Change March 31, 2022 QoQ % Change Personal Care Segment Service revenue, net $ 162,737 $ 109,688 48.4 % $ 322,435 $ 219,882 46.6 % $ 159,698 1.9 % Service expense 124,445 86,909 43.2 % 246,677 174,826 41.1 % 122,232 1.8 % Gross profit $ 38,292 $ 22,779 68.1 % $ 75,758 $ 45,056 68.1 % $ 37,466 2.2 % Gross Margin 23.5 % 20.8 % 23.5 % 20.5 % 23.5 % G&A expense $ 23,346 $ 14,775 58.0 % $ 46,479 $ 29,804 55.9 % $ 23,133 0.9 % G&A expense adjustments Restructuring and related charges — — — % 181 — — % 181 (100.0 )% Transaction costs 2,830 1,245 127.3 % 4,103 2,290 79.2 % 1,273 122.3 % Stock-based compensation 173 76 127.6 % 190 76 150.0 % 17 917.6 % Adjusted G&A expense $ 20,343 $ 13,454 51.2 % $ 42,005 $ 27,438 53.1 % $ 21,662 (6.1 )% Adjusted G&A expense % of revenue 12.5 % 12.3 % 13.0 % 12.5 % 13.6 % Net income $ 4,123 $ 3,054 35.0 % $ 5,779 $ 6,585 (12.2 )% $ 1,656 149.0 % Net income margin 2.5 % 2.8 % 1.8 % 3.0 % 1.0 % Adjusted EBITDA $ 17,901 $ 9,929 80.3 % $ 34,522 $ 19,018 81.5 % $ 16,621 7.7 % Adjusted EBITDA margin 11.0 % 9.1 % 10.7 % 8.6 % 10.4 % Total hours (in thousands) 6,705 4,629 44.8 % 13,240 9,255 43.1 % 6,535 2.6 % Revenue per hour $ 24.27 $ 23.70 2.4 % $ 24.35 $ 23.76 2.5 % $ 24.44 (0.7 )% Service expense per hour $ 18.56 $ 18.77 (1.1 )% $ 18.63 $ 18.89 (1.4 )% $ 18.70 (0.7 )% Modivcare Inc. Unaudited Key Statistical and Financial Data (in thousands, except for statistical data) Three months ended Six months ended Three months ended June 30, 2022 June 30, 2021 % Change June 30, 2022 June 30, 2021 % Change March 31, 2022 QoQ % Change RPM Segment Service revenue, net $ 16,745 N/M $ 30,602 N/M $ 13,857 20.8 % Service expense 6,061 N/M 11,048 N/M 4,987 21.5 % Gross profit $ 10,684 N/M $ 19,554 N/M $ 8,870 20.5 % Gross Margin 63.8 % 63.9 % 64.0 % G&A expense $ 6,742 N/M $ 11,704 N/M $ 4,962 35.9 % G&A expense adjustments Restructuring and related charges — N/M 24 N/M 24 (100.0 )% Transaction costs 1,635 N/M 2,282 N/M 647 152.7 % Stock-based compensation 57 N/M 86 N/M 29 96.6 % Adjusted G&A expense $ 5,050 N/M $ 9,312 N/M $ 4,262 18.5 % Adjusted G&A expense % of revenue 30.2 % 30.4 % 30.8 % Net income (loss) $ (475 ) N/M $ (637 ) N/M $ (162 ) 193.2 % Net income (loss) margin (2.8 )% (2.1 )% (1.2 )% Adjusted EBITDA $ 5,634 N/M $ 10,242 N/M $ 4,608 22.3 % Adjusted EBITDA margin 33.6 % 33.5 % 33.3 % Average monthly members (in thousands) 203 N/M 186 N/M 169 20.1 % Revenue per member per month $ 27.50 N/M $ 27.42 N/M $ 27.33 0.6 % Service expense per member per month $ 9.95 N/M $ 9.90 N/M $ 9.84 1.1 % N/M - Not Meaningful. The RPM Segment was established with the acquisition of VRI on September 22, 2021 and as such, these figures are not meaningful for comparative purposes. Modivcare Inc. Unaudited Key Statistical and Financial Data (in thousands) Three months ended Six months ended Three months ended June 30, 2022 June 30, 2021 % Change June 30, 2022 June 30, 2021 % Change March 31, 2022 QoQ % Change Corporate and Other Segment G&A expense $ 15,735 $ 13,591 15.8 % $ 27,115 $ 25,500 6.3 % $ 11,380 38.3 % G&A expense adjustments Restructuring and related charges 354 557 (36.4 )% 385 763 (49.5 )% 31 1041.9 % Transaction costs 3,237 1,974 64.0 % 5,028 4,644 8.3 % 1,791 80.7 % Cash settled equity 20 4,452 (99.6 )% 7 6,545 (99.9 )% (13 ) (253.8 )% Stock-based compensation 2,440 1,340 82.1 % 3,860 2,489 55.1 % 1,420 71.8 % Adjusted G&A expense $ 9,684 $ 5,268 83.8 % $ 17,835 $ 11,059 61.3 % $ 8,151 18.8 % Adjusted G&A expense % of consolidated revenue 1.5 % 1.1 % 1.5 % 1.2 % 1.4 % Three months ended Six months ended Three months ended June 30, 2022 June 30, 2021 % Change June 30, 2022 June 30, 2021 % Change March 31, 2022 QoQ % Change Consolidated Modivcare G&A expense $ 79,411 $ 56,465 40.6 % $ 156,219 $ 111,390 40.2 % $ 76,808 3.4 % G&A expense adjustments Restructuring and related charges 5,206 4,601 13.1 % 11,046 8,301 33.1 % 5,840 (10.9 )% Transaction costs 7,702 3,466 122.2 % 11,413 7,144 59.8 % 3,711 107.5 % Cash settled equity 20 4,452 (99.6 )% 7 6,545 (99.9 )% (13 ) (253.8 )% Stock-based compensation 2,670 1,416 88.6 % 4,136 2,565 61.2 % 1,466 82.1 % Adjusted G&A expense $ 63,813 $ 42,530 50.0 % $ 129,617 $ 86,835 49.3 % $ 65,804 (3.0 )% Adjusted G&A expense % of revenue 10.2 % 9.0 % 10.8 % 9.4 % 11.5 % View source version on businesswire.com: https://www.businesswire.com/news/home/20220804005265/en/
Investor Relations Contact Kevin Ellich, Head of Investor Relations (303) 728-7012 Kevin.Ellich@modivcare.com
