Modivcare Inc. (the “Company” or “Modivcare”) (Nasdaq: MODV), a
technology-enabled healthcare services company that provides a
suite of integrated supportive care solutions focused on improving
patient outcomes, today reported financial results for the three
months and full year ended December 31, 2023.
Fourth Quarter 2023
Summary:
- Service revenue of $702.8 million, a 7.5% increase as compared
to $653.9 million in the fourth quarter of 2022
- Net loss of $5.3 million, or $0.37 per diluted common
share
- Adjusted EBITDA(1) of $50.5 million, adjusted net income(1) of
$18.4 million and adjusted EPS(1) of $1.29 per diluted common
share
- Net cash used in operating activities during the quarter of
$25.6 million and negative free cash flow(2) of $36.8 million,
primarily related to a delayed payment from a single client
- Contract receivables increased by $14.7 million to $144.0
million and contract payables decreased by $16.1 million to $117.5
million, resulting in net contract receivables of $26.5 million as
of December 31, 2023
- $216.2 million of NEMT TCV(3) won during the fourth quarter of
2023, including sizable managed Medicaid contracts contributing to
total new wins that will outpace contract attrition in 2024
- $113.8 million drawn on our $325.0 million revolving credit
facility
- As a subsequent event, in early 2024 we amended the leverage
covenant to provide additional cushion for credit facility
availability, ensuring sufficient liquidity
Full Year 2023 Summary:
- Service revenue of $2,751.2 million, a 9.9% increase as
compared to $2,504.4 million in 2022
- Net loss of $204.5 million, or $14.43 per diluted common
share
- Adjusted EBITDA(1) of $204.4 million, adjusted net income(1) of
$79.9 million and adjusted EPS(1) of $5.60 per diluted common
share
- Net cash used in operating activities in 2023 of $83.0 million
and negative free cash flow(2) of $125.3 million
- Contract receivables increased by $72.8 million to $144.0
million and contract payables decreased by $76.8 million to $117.5
million
- In 2023, won $463.5 million of NEMT TCV(3) or $141.8 million
ACV(3), as well as $10.6 million in ACV(3) for remote patient
monitoring
(1) Non-GAAP financial measure
reconciliations and other related information about non-GAAP
financial measures provided below
(2) Free cash flow, a non-GAAP financial
measure, is calculated by us as cash flow from operations less our
capital expenditures during the period that is included in our
purchase of property and equipment line in our Statements of Cash
Flows provided below.
(3) Total Contract Value, or TCV,
describes a measure of the expected revenue impact of a contract
over the life of the contract. Annual Contract Value, or ACV,
describes the revenue impact over one full year during the life of
a contract. ACV expected for a contract in effect for less than a
full year during the life of a contract would be prorated for the
portion the year during which it is in effect.
“We delivered solid financial results for 2023 with revenue and
adjusted EBITDA meeting our guidance. Our NEMT revenue grew 9%
during the fourth quarter driven by a 13% increase in trips, while
our personal care and remote patient monitoring segments continued
to grow nicely," stated L. Heath Sampson, President and CEO. “Our
transformation has led to substantial operational improvement,
while cultivating a results-oriented yet compassionate culture and
sharpening our strategic focus. This uniquely positions us to make
a meaningful impact on our clients and their members by addressing
the social determinants of health. Despite these advancements, we
expect that financial results will lag such foundational changes.
We have encountered some near-term financial headwinds, due to
sooner than anticipated, large COVID-related working capital needs
and margin pressure in our NEMT segment. Looking ahead, we
anticipate the implementation of approximately $150 million in
annual contract value starting in the second quarter, along with
$30 million in cost savings driven by initiatives, including
digitization, will help mitigate the effects of Medicaid
redetermination and the normalizing healthcare utilization
environment, especially in the second half of the year. These
efforts will yield even greater annual run-rate benefits in 2025.
Additionally, our success in centralizing and standardizing
processes, coupled with the rollout of core platforms and new
capabilities in our personal care and remote patient monitoring
segments in 2023, is now accelerating growth. This large-scale
progress positions us well to enhance long-term shareholder value,
which is a direct result of the hard work of our team, and I am
humbled by their unwavering dedication."
2024 Guidance
Our 2024 guidance is as follows (in millions):
First Quarter 2024
Fiscal Year 2024
Revenue
$650 - $700
$2,700 - $2,900
Adjusted EBITDA
$28 - $33
$190 - $210
Guidance excludes the effects of any future merger or
acquisition activity and is based on the current operating
environment.
Fourth Quarter 2023 Results
For the fourth quarter of 2023, the Company reported revenue of
$702.8 million, an increase of 7.5% from $653.9 million in the
fourth quarter of 2022. The revenue growth was driven by a 12.7%
increase in total paid trips in our NEMT segment, partially offset
by a 5.5% decrease in average monthly members. The decrease in
membership is related to Medicaid redetermination impacts which are
trending in line with our expectations. Revenue also increased due
to 3.4% growth in hours in our PCS segment.
Operating income was $15.7 million, or 2.2% of revenue, in the
fourth quarter of 2023, compared to $6.6 million, or 1.0% of
revenue, in the fourth quarter of 2022. Net loss was $5.3 million,
or $0.37 per common share in the fourth quarter of 2023, compared
to $6.9 million, or $0.49 per common share, in the fourth quarter
of 2022. Operating income was higher in the fourth quarter of 2023
when compared to 2022, due to 16.2% lower general and
administrative costs related to fewer one-time costs for
restructuring and integration activities.
Adjusted EBITDA was $50.5 million, or 7.2% of revenue, in the
fourth quarter of 2023, compared to $59.7 million, or 9.1% of
revenue, in the fourth quarter of 2022. Our adjusted EBITDA was
lower in 2023 than in the comparable period due to 7.6% lower gross
profit at our NEMT segment, primarily as a result of higher service
expense costs. Accordingly, adjusted net income in the fourth
quarter of 2023 was $18.4 million or $1.29 per diluted common
share, compared to $29.8 million, or $2.11 per diluted common
share, in the fourth quarter of 2022.
Net cash used in operating activities during the quarter was
$25.6 million as compared to $56.0 million of net cash used in
operating activities during the fourth quarter of 2022. Changes in
operating assets and liabilities during the quarter include a
settlement in contract payables of $16.1 million and an increase in
contract receivables of $14.7 million. Additionally, as of year-end
2023, approximately $35.9 million was due from a single client, the
collection of which would have resulted in positive operating
cashflow for the quarter. Net cash used in investing activities
during the quarter was $11.1 million, primarily due to investments
in technology and purchases of monitoring devices. Net cash
provided by financing activities during the quarter was $31.0
million, which resulted in a quarter ended balance on our revolving
credit facility of $113.8 million.
Full Year 2023 Results
For the full year 2023, the Company reported revenue of $2,751.2
million, an increase of 9.9% from $2,504.4 million in 2022. The
revenue growth was driven by a 12.2% increase in total paid trips
in our NEMT segment, partially offset by a 1.6% decrease in average
monthly members. Revenue also increased due to 3.4% growth in hours
in our PCS segment.
Loss from operations was $139.9 million, or 5.1% of revenue, for
2023, compared to income from operations of $57.1 million, or 2.3%
of revenue, for 2022. Net loss in 2023 was $204.5 million, or
$14.43 per common share, compared to a net loss of $31.8 million,
or $2.26 per common share, in 2022. Both our net loss and our loss
from operations in 2023 are primarily related to the previously
disclosed $183.1 million non-cash goodwill impairment in the second
quarter of 2023.
Adjusted EBITDA for 2023 was $204.4 million or 7.4% of revenue,
compared to $221.9 million, or 8.9% of revenue, in 2022. Our
Adjusted EBITDA was lower in 2023 primarily due to 5.4% lower gross
margin as a result of service expense increases associated with
Mobility utilization. Accordingly, adjusted net income for 2023 was
$79.9 million or $5.60 per diluted common share, compared to $103.4
million, or $7.32 per diluted common share, for 2022.
Net cash used in operating activities during the year was $83.0
million as compared to $10.4 million of net cash used in operating
activities during 2022. Changes in operating assets and liabilities
during the current year include a settlement in contract payables
of $76.8 million and an increase in contract receivables of $72.8
million. Net cash used in investing activities during the year was
$42.3 million, primarily related to investments in technology and
purchases of monitoring devices. Net cash provided by financing
activities during the year was $113.1 million, which resulted in a
year ended balance on our revolving credit facility of $113.8
million.
Fourth Quarter and Full Year 2023 Earnings Conference
Call
Modivcare will hold a conference call to discuss its financial
results on Friday, February 23, 2024 at 8:30 a.m. ET. To access the
call, please dial:
US toll-free: 1 (877) 407-8037 International: 1
(201) 689-8037
You may also access the conference call via webcast at
investors.modivcare.com, where the call will also be archived.
About Modivcare
Modivcare Inc. ("Modivcare" or the "Company") is a
technology-enabled healthcare services company that provides a
suite of integrated supportive care solutions for public and
private payors and their members. Our value-based solutions address
the social determinants of health (SDoH) by connecting members to
essential care services. By doing so, Modivcare helps health plans
manage risks, reduce costs, and improve overall health outcomes.
Modivcare is a provider of non-emergency medical transportation
(NEMT), personal care services (PCS), and remote patient monitoring
(RPM) solutions. To learn more about Modivcare, please visit
www.modivcare.com.
Non-GAAP Financial Measures and Adjustments
In addition to the financial measures presented herein that have
been prepared in accordance with generally accepted accounting
principles in the United States ("GAAP"), presentations for the
Company and/or its segments (as applicable) of the following
financial measures that have not been prepared in accordance with
GAAP may be included herein: (1) EBITDA, Adjusted EBITDA, Adjusted
G&A expense, Adjusted EBITDA margin, Adjusted Net Income, and
Adjusted EPS, all of which are considered by management to be
performance measures; and (2) free cash flow, which is considered
by management to be a liquidity measure. EBITDA is defined as net
income (loss) before: (1) interest expense, net, (2) provision
(benefit) for income taxes, and (3) depreciation and amortization.
Adjusted EBITDA is calculated as EBITDA before (as applicable): (1)
restructuring and related costs, (2) transaction and integration
costs, (3) settlement related costs, (4) stock-based compensation,
(5) impairment of goodwill, (6) equity in net (income) loss of
investee, net of tax, and (7) COVID-19 related costs, net of grant
income. Adjusted EBITDA margin is calculated as Adjusted EBITDA,
divided by service revenue, net. Adjusted Net Income is calculated
as net income (loss) before (as applicable): (1) restructuring and
related costs, (2) transaction and integration costs, (3)
settlement related costs, (4) stock-based compensation, (5)
impairment of goodwill, (6) equity in net (income) loss of
investee, net of tax (7) intangible asset amortization expense, (8)
COVID-19 related costs, net of grant income, and (9) the income tax
impact of such adjustments. Adjusted EPS is calculated as Adjusted
Net Income divided by the diluted weighted-average number of common
shares outstanding as calculated for Adjusted Net Income. Adjusted
G&A expense is calculated as G&A expense before (as
applicable): (1) restructuring and related costs, (2) transaction
and integration costs, (3) settlement related costs and (4)
stock-based compensation. Free cash flow is calculated as cash flow
from operations less our applicable capital expenditures included
in our purchase of property and equipment line in our Statements of
Cash Flows. Reconciliations of the non-GAAP financial measures used
herein to their most directly comparable GAAP financial measures
that are not included in the discussion above are included below.
We do not provide guidance for net income (loss) in this
presentation on a basis consistent with GAAP or a reconciliation of
forward-looking non-GAAP financial measures to their most directly
comparable GAAP financial measures on a forward-looking basis
because we are unable to predict items contained in the GAAP
financial measures without unreasonable efforts. Our non-GAAP
performance measures exclude expenses and amounts that are not
driven by our core operating results and may be one time in nature.
Excluding these expenses makes comparisons with prior periods as
well as to other companies in our industry more meaningful. We
believe such measures allow investors to gain a better
understanding of the factors and trends affecting the ongoing
operations of our business. We consider our core operations to be
the ongoing activities to provide services from which we earn
revenue, including direct operating costs and indirect costs to
support these activities. As a result, our net income or loss in
equity investee is excluded from these measures, as we do not have
the ability to manage the venture, allocate resources within the
venture, or directly control its operations or performance. Our
free cash flow presentation (as applicable) reflects an additional
way of viewing our liquidity that, when viewed together with our
GAAP results, provides management, investors, and other users of
our financial information with a more complete understanding of
factors and trends affecting our cash flows. Our use of the term
free cash flow is not intended to imply, and no inference should be
made, however, that any reported amounts are free to be used
without restriction for discretionary expenditures, as our use of
these funds may be restricted by the terms of our outstanding
indebtedness, including our credit facility, and otherwise
earmarked for other non-discretionary expenditures.
Our non-GAAP financial measures may not provide information that
is directly comparable to that provided by other companies in our
industry, as other companies in our industry may calculate non-GAAP
financial measures differently. In addition, there are limitations
in using non-GAAP financial measures because they are not prepared
in accordance with GAAP, may be different from non-GAAP financial
measures used by other companies, and exclude expenses that may
have a material impact on our reported financial results. The
presentation of non-GAAP financial measures is not intended to be
considered in isolation from or as a substitute for the most
directly comparable financial measures prepared in accordance with
GAAP. We urge you to review the reconciliations of our non-GAAP
financial measures to the most directly comparable GAAP financial
measures included below, and not to rely on any single financial
measure to evaluate our business.
Forward-Looking Statements
Certain statements contained in this press release constitute
“forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements are
predictive in nature and are frequently identified by the use of
terms such as “may,” “will,” “should,” “expect,” “believe,”
“estimate,” “intend,” and similar words indicating possible future
expectations, events or actions. The updated guidance discussed
herein constitutes forward-looking statements. Such forward-looking
statements are based on current expectations, assumptions,
estimates and projections about our business and our industry, and
are not guarantees of our future performance. These statements are
subject to a number of known and unknown risks, uncertainties and
other factors, many of which are beyond our ability to control or
predict, which may cause actual results to be materially different
from those expressed or implied herein, including but not limited
to: government or private insurance program funding reductions or
limitations; implementation of alternative payment models or the
transition of Medicaid and Medicare beneficiaries to Managed Care
Organizations; our inability to control reimbursement rates
received for our services; cost containment initiatives undertaken
by private third-party payors and an inability to maintain or
reduce our cost of services below rates set forth by our payors;
the effects of a public health emergency; inadequacies in, or
security breaches of, our information technology systems; changes
in the funding, financial viability or our relationships with our
payors; pandemics and other infectious diseases; delays in
collection, or non-collection, of our accounts receivable; any
impairment of our goodwill and long-lived assets; any failure to
maintain or to develop reliable, efficient and secure information
technology systems; any inability to attract and retain qualified
employees; any disruptions from acquisition or acquisition
integration efforts; estimated income taxes being different from
income taxes that we ultimately pay; weakening of general economic
conditions, including the impact of inflationary pressures, rising
interest rates, labor shortages, higher labor costs and supply
chain challenges; our contracts not surviving until the end of
their stated terms, or not being renewed or extended; our failure
to compete effectively in the marketplace; our not being awarded
contracts through the government’s requests for proposals process,
or our awarded contracts not being profitable; any failure to
satisfy our contractual obligations or to maintain existing pledged
performance and payment bonds; any failure to estimate accurately
the cost of performing our contracts; any misclassification of the
drivers we engage as independent contractors rather than as
employees; significant interruptions in our communication and data
services; not successfully executing on our strategies in the face
of our competition; any inability to maintain relationships with
existing patient referral sources; certificates of need laws or
other regulatory and licensure obligations that may adversely
affect our personal care integration efforts and expansion into new
markets; any failure to obtain the consent of the New York
Department of Health to manage the day to day operations of our
licensed in-home personal care services agency business; changes in
the case-mix of our personal care patients, or changes in payor mix
or payment methodologies; our loss of existing favorable managed
care contracts; our experiencing labor shortages in qualified
employees and management; labor disputes or disruptions, in
particular in New York; becoming subject to malpractice or other
similar claims; our operating in the competitive remote patient
monitoring industry, and failing to develop and enhance related
technology applications; any failure to innovate and provide
services that are useful to customers and to achieve and maintain
market acceptance; our lack of sole decision-making authority with
respect to our minority investment in Matrix and any failure by
Matrix to achieve positive financial position and results of
operations; any legal challenges to the relationships or
arrangements between our virtual clinical care management services
and the unaffiliated physician-owned professional corporation
through which such services are provided; any failure to comply
with applicable data interoperability and information blocking
rules; the lapse of temporary telehealth flexibilities currently
permitted under the Consolidated Appropriations Act of 2023; the
cost of our compliance with laws; changes to the regulatory
landscape applicable to our businesses; changes in budgetary
priorities of the government entities or private insurance programs
that fund our services; regulations relating to privacy and
security of patient and service user information; actions for false
claims or recoupment of funds; civil penalties or loss of business
for failing to comply with bribery, corruption and other
regulations governing business with public organizations;
increasing scrutiny and changing expectations with respect to
environmental, social and governance matters; changes to, or
violations of, licensing regulations; our contracts being subject
to audit and modification by the payors with whom we contract; a
loss of Medicaid coverage by a significant number of Medicaid
beneficiaries following the expiration of the COVID-19 public
health emergency under the Families First Coronavirus Response Act
(2020); our existing debt agreements containing restrictions,
financial covenants and cross-default provisions that limit our
flexibility in operating our business; our substantial indebtedness
and lease obligations and ability to generate or distribute
sufficient cash to service our indebtedness; the expiration of our
existing credit agreement or any loss of available financing
alternatives; our ability to incur substantial additional
indebtedness or to issue additional equity; the results of the
remediation of our identified material weaknesses in internal
control over financial reporting; and any stock price
volatility.
The Company has provided additional information about the risks
facing our business in our annual report on Form 10-K and
subsequent periodic and current reports most recently filed with
the Securities and Exchange Commission that could impact future
performance. You are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date the
statement was made and are expressly qualified in their entirety by
the cautionary statements set forth herein and in our filings with
the Securities and Exchange Commission, which you should read in
their entirety before making an investment decision with respect to
our securities. We undertake no obligation to update or revise any
forward-looking statements contained in this release, whether as a
result of new information, future events or otherwise, except as
required by applicable law.
Modivcare Inc.
Unaudited Condensed
Consolidated Statements of Operations
(in thousands except share and
per share data)
Three months ended December
31,
Year ended December
31,
2023
2022
2023
2022
Service revenue, net
$
702,832
$
653,921
$
2,751,170
$
2,504,393
Grant income
388
2,764
5,037
7,351
Operating expenses:
Service expense
585,483
533,966
2,304,218
2,032,074
General and administrative expense
75,469
90,063
304,564
322,171
Depreciation and amortization
26,592
26,039
104,271
100,415
Impairment of goodwill
—
—
183,100
—
Total operating expenses
687,544
650,068
2,896,153
2,454,660
Operating income (loss)
15,676
6,617
(139,946
)
57,084
Other expenses:
Interest expense, net
18,351
15,532
69,120
61,961
Loss before income taxes and equity method
investment
(2,675
)
(8,915
)
(209,066
)
(4,877
)
Income tax benefit (provision)
(43
)
3,912
4,319
3,035
Equity in net income (loss) of investee,
net of tax
(2,534
)
(1,944
)
287
(29,964
)
Net loss
$
(5,252
)
$
(6,947
)
$
(204,460
)
$
(31,806
)
Loss per common share:
Basic
$
(0.37
)
$
(0.49
)
$
(14.43
)
$
(2.26
)
Diluted
$
(0.37
)
$
(0.49
)
$
(14.43
)
$
(2.26
)
Weighted-average number of common shares
outstanding:
Basic
14,187,071
14,123,013
14,173,957
14,061,839
Diluted
14,187,071
14,123,013
14,173,957
14,061,839
Modivcare Inc.
Unaudited Condensed
Consolidated Balance Sheets
(in thousands)
December 31,
2023
2022
Assets
Current assets:
Cash and cash equivalents
$
2,217
$
14,451
Accounts receivable, net
222,537
223,210
Contract receivables
143,960
71,131
Other current assets(1)
36,209
37,362
Total current assets
404,923
346,154
Property and equipment, net
85,629
69,138
Goodwill
785,554
968,654
Intangible assets, net
360,935
439,409
Equity investment
41,531
41,303
Operating lease right-of-use assets
39,776
39,405
Other long-term assets
48,927
40,209
Total assets
$
1,767,275
$
1,944,272
Liabilities and stockholders'
equity
Current liabilities:
Accounts payable
$
55,241
$
54,959
Accrued contract payables
117,488
194,287
Accrued expenses and other current
liabilities
127,901
135,860
Accrued transportation costs
97,245
96,851
Current portion of operating lease
liabilities
8,727
9,640
Short-term borrowings
113,800
—
Total current liabilities
520,402
491,597
Long-term debt, net of deferred financing
costs
983,757
979,361
Operating lease liabilities, less current
portion
33,784
32,088
Other long-term liabilities(2)
73,137
86,670
Total liabilities
1,611,080
1,589,716
Stockholders' equity
156,195
354,556
Total liabilities and stockholders'
equity
$
1,767,275
$
1,944,272
(1)
Includes other receivables, prepaid
expenses and other current assets and short-term restricted
cash.
(2)
Includes deferred tax liabilities.
Modivcare Inc.
Unaudited Condensed
Consolidated Statements of Cash Flows
(in thousands)
Three months ended December
31,
Year ended December
31,
2023
2022
2023
2022
Operating activities
Net loss
$
(5,252
)
$
(6,947
)
$
(204,460
)
$
(31,806
)
Depreciation and amortization
26,592
26,039
104,271
100,415
Stock-based compensation
2,427
1,720
6,456
6,872
Equity in net (income) loss of investee,
before tax
3,517
2,033
(398
)
40,916
Deferred income taxes
(2,417
)
(5,431
)
(17,652
)
(36,663
)
Impairment of goodwill
—
—
183,100
—
Reduction of right-of-use assets
2,469
2,960
12,344
11,640
Other non-cash items(1)
(4,959
)
(8,292
)
(3,473
)
(12,862
)
Changes in operating assets and
liabilities:
Contract receivables
(14,685
)
(11,071
)
(72,828
)
(46,651
)
Contract payables
(16,088
)
(49,513
)
(76,798
)
(87,299
)
Other working capital items(2)
(17,248
)
(7,466
)
(13,533
)
44,996
Net cash used in operating activities
(25,644
)
(55,968
)
(82,971
)
(10,442
)
Investing activities
Purchase of property and equipment
(11,145
)
(7,486
)
(42,288
)
(33,004
)
Acquisitions, net of cash acquired
—
63
—
(78,809
)
Net cash used in investing activities
(11,145
)
(7,423
)
(42,288
)
(111,813
)
Financing activities
Net proceeds from short-term
borrowings
30,800
—
113,800
—
Payment of debt issuance costs
—
—
(376
)
(2,415
)
Proceeds from common stock issued pursuant
to stock option exercise
—
5,552
31
6,789
Restricted stock surrendered for employee
tax payment
(38
)
(143
)
(899
)
(792
)
Other financing activities
195
226
510
226
Net cash provided by financing
activities
30,957
5,635
113,066
3,808
Net change in cash and cash
equivalents
(5,832
)
(57,756
)
(12,193
)
(118,447
)
Cash, cash equivalents and restricted cash
at beginning of period
8,614
72,731
14,975
133,422
Cash, cash equivalents and restricted cash
at end of period
$
2,782
$
14,975
$
2,782
$
14,975
(1)
Includes amortization of deferred
financing costs and debt discount and other assets.
(2)
Includes accounts receivable and other
receivables, prepaid expenses and other current assets, accounts
payable and accrued expenses, accrued transportation costs and
other long-term liabilities.
Modivcare Inc.
Unaudited Reconciliation of
Non-GAAP Financial Measures
Segment Information and
Adjusted EBITDA
(in thousands)
Three months ended December
31, 2023
NEMT
PCS
RPM
Corporate and Other
Total
Service revenue, net
$
499,058
$
181,180
$
20,239
$
2,355
$
702,832
Grant income
—
388
—
—
388
Operating expenses:
Service expense
432,186
144,283
6,896
2,118
585,483
General and administrative expense
27,710
23,287
6,190
18,282
75,469
Depreciation and amortization
7,090
12,812
6,449
241
26,592
Total operating expenses
466,986
180,382
19,535
20,641
687,544
Operating income (loss)
32,072
1,186
704
(18,286
)
15,676
Interest expense, net
—
—
—
18,351
18,351
Income (loss) before income taxes and
equity method investment
32,072
1,186
704
(36,637
)
(2,675
)
Income tax benefit (provision)
(8,588
)
49
(694
)
9,190
(43
)
Equity in net income (loss) of investee,
net of tax
73
—
—
(2,607
)
(2,534
)
Net Income (loss)
23,557
1,235
10
(30,054
)
(5,252
)
Interest expense, net
—
—
—
18,351
18,351
Income tax (benefit) provision
8,588
(49
)
694
(9,190
)
43
Depreciation and amortization
7,090
12,812
6,449
241
26,592
EBITDA
39,235
13,998
7,153
(20,652
)
39,734
Restructuring and related costs(1)
658
—
—
2,575
3,233
Transaction and integration costs(2)
(101
)
1,807
16
74
1,796
Settlement related costs
—
—
—
1,194
1,194
Stock-based compensation
—
—
—
2,016
2,016
Equity in net (income) loss of investee,
net of tax
(73
)
—
—
2,607
2,534
Adjusted EBITDA
$
39,719
$
15,805
$
7,169
$
(12,186
)
$
50,507
(1)
Includes professional fees for strategic
initiatives, organizational consolidation costs, severance and
other professional fees.
(2)
Consists of fees incurred for SOX
implementation and business integration efforts.
Modivcare Inc.
Unaudited Reconciliation of
Non-GAAP Financial Measures
Segment Information and
Adjusted EBITDA
(in thousands)
Three months ended December
31, 2022
NEMT
PCS
RPM
Corporate and Other
Total
Service revenue, net
$
458,993
$
176,013
$
18,915
$
—
$
653,921
Grant income
—
2,764
—
—
2,764
Operating expenses:
Service expense
386,646
140,642
6,678
—
533,966
General and administrative expense
44,199
22,829
5,636
17,399
90,063
Depreciation and amortization
7,133
13,049
5,653
204
26,039
Total operating expenses
437,978
176,520
17,967
17,603
650,068
Operating income (loss)
21,015
2,257
948
(17,603
)
6,617
Interest expense, net
—
—
—
15,532
15,532
Income (loss) before income taxes and
equity method investment
21,015
2,257
948
(33,135
)
(8,915
)
Income tax benefit (provision)
(3,739
)
92
(276
)
7,835
3,912
Equity in net loss of investee, net of
tax
(72
)
—
—
(1,872
)
(1,944
)
Net Income (loss)
17,204
2,349
672
(27,172
)
(6,947
)
Interest expense, net
—
—
—
15,532
15,532
Income tax provision (benefit)
3,739
(92
)
276
(7,835
)
(3,912
)
Depreciation and amortization
7,133
13,049
5,653
204
26,039
EBITDA
28,076
15,306
6,601
(19,271
)
30,712
Restructuring and related costs(1)
13,869
(6
)
—
—
13,863
Transaction and integration costs(2)
4,219
1,216
174
2,050
7,659
Settlement related costs
—
—
—
3,564
3,564
Stock-based compensation(3)
—
—
—
1,842
1,842
COVID-19 related costs, net of grant
income
24
43
—
—
67
Equity in net loss of investee, net of
tax
72
—
—
1,872
1,944
Adjusted EBITDA
$
46,260
$
16,559
$
6,775
$
(9,943
)
$
59,651
(1)
Includes professional fees for strategic
initiatives, organizational consolidation costs, severance and
other professional fees.
(2)
Consists of fees incurred for SOX
implementation and business integration efforts.
(3)
Includes cash settled equity balances.
Modivcare Inc.
Unaudited Reconciliation of
Non-GAAP Financial Measures
Segment Information and
Adjusted EBITDA
(in thousands)
Year ended December 31,
2023
NEMT
PCS
RPM
Corporate and Other
Total
Service revenue, net
$
1,951,447
$
715,615
$
77,941
$
6,167
$
2,751,170
Grant income
—
5,037
—
—
5,037
Operating expenses:
Service expense
1,709,790
561,919
27,025
5,484
2,304,218
General and administrative expense
115,355
86,767
22,971
79,471
304,564
Depreciation and amortization
27,409
51,402
24,536
924
104,271
Impairment of goodwill
—
137,331
45,769
—
183,100
Total operating expenses
1,852,554
837,419
120,301
85,879
2,896,153
Operating income (loss)
98,893
(116,767
)
(42,360
)
(79,712
)
(139,946
)
Interest expense, net
—
—
—
69,120
69,120
Income (loss) before income taxes and
equity method investment
98,893
(116,767
)
(42,360
)
(148,832
)
(209,066
)
Income tax benefit (provision)
(26,602
)
(5,403
)
(1,459
)
37,783
4,319
Equity in net income (loss) of investee,
net of tax
1,057
—
—
(770
)
287
Net Income (loss)
73,348
(122,170
)
(43,819
)
(111,819
)
(204,460
)
Interest expense, net
—
—
—
69,120
69,120
Provision (benefit) for income taxes
26,602
5,403
1,459
(37,783
)
(4,319
)
Depreciation and amortization
27,409
51,402
24,536
924
104,271
EBITDA
127,359
(65,365
)
(17,824
)
(79,558
)
(35,388
)
Restructuring and related costs(1)
12,523
—
—
24,181
36,704
Transaction and integration costs(2)
—
2,688
86
1,908
4,682
Settlement related costs
250
—
—
9,877
10,127
Stock-based compensation
—
—
—
5,501
5,501
Impairment of goodwill
—
137,331
45,769
—
183,100
Equity in net (income) loss of investee,
net of tax
(1,057
)
—
—
770
(287
)
Adjusted EBITDA
$
139,075
$
74,654
$
28,031
$
(37,321
)
$
204,439
(1)
Includes professional fees for strategic
initiatives, organizational consolidation costs, severance and
other professional fees.
(2)
Consists of fees incurred for SOX
implementation and business integration efforts.
Modivcare Inc.
Unaudited Reconciliation of
Non-GAAP Financial Measures
Segment Information and
Adjusted EBITDA
(in thousands)
Year ended December 31,
2022
NEMT
PCS
RPM
Corporate and Other
Total
Service revenue, net
$
1,768,442
$
667,674
$
68,277
$
—
$
2,504,393
Grant income
—
7,351
—
—
7,351
Operating expenses:
Service expense
1,487,447
520,065
24,562
—
2,032,074
General and administrative expense
146,935
91,365
23,156
60,715
322,171
Depreciation and amortization
28,709
51,025
19,854
827
100,415
Total operating expenses
1,663,091
662,455
67,572
61,542
2,454,660
Operating income (loss)
105,351
12,570
705
(61,542
)
57,084
Interest expense, net
—
—
—
61,961
61,961
Income (loss) before income taxes and
equity method investment
105,351
12,570
705
(123,503
)
(4,877
)
Income tax benefit (provision)
(26,855
)
(2,810
)
(208
)
32,908
3,035
Equity in net income (loss) of investee,
net of tax
71
—
—
(30,035
)
(29,964
)
Net Income (loss)
78,567
9,760
497
(120,630
)
(31,806
)
Interest expense, net
—
—
—
61,961
61,961
Income tax provision (benefit)
26,855
2,810
208
(32,908
)
(3,035
)
Depreciation and amortization
28,709
51,025
19,854
827
100,415
EBITDA
134,131
63,595
20,559
(90,750
)
127,535
Restructuring and related costs(1)
25,228
757
63
950
26,998
Transaction and integration costs(2)
4,225
7,550
2,927
9,269
23,971
Settlement related costs
5,500
—
—
4,064
9,564
Stock-based compensation(3)
—
190
86
5,792
6,068
COVID-19 related costs, net of grant
income
129
(2,327
)
—
—
(2,198
)
Equity in net (income) loss of investee,
net of tax
(71
)
—
—
30,035
29,964
Adjusted EBITDA
$
169,142
$
69,765
$
23,635
$
(40,640
)
$
221,902
(1)
Includes professional fees for strategic
initiatives, organizational consolidation costs, severance and
other professional fees.
(2)
Consists of fees incurred for SOX
implementation and business integration efforts.
(3)
Includes cash settled equity balances.
Modivcare Inc.
Unaudited Reconciliation of
Non-GAAP Financial Measures
Adjusted Net Income and
Adjusted Net Income per Common Share:
(in thousands, except share and
per share data)
Three Months Ended December
31,
Year Ended December
31,
2023
2022
2023
2022
Net loss
$
(5,252
)
$
(6,947
)
$
(204,460
)
$
(31,806
)
Restructuring and related costs(1)
3,233
13,863
36,704
26,998
Transaction and integration costs(2)
1,796
7,659
4,682
23,971
Settlement related costs
1,194
3,564
10,127
9,564
Stock-based compensation(3)
2,016
1,842
5,501
6,068
Impairment of goodwill
—
—
183,100
—
Equity in net (income) loss of investee,
net of tax
2,534
1,944
(287
)
29,964
Intangible amortization expense
19,775
20,381
79,232
80,359
COVID-19 related costs, net of grant
income(4)
—
67
—
(2,198
)
Income tax impact of adjustments
(6,848
)
(12,555
)
(34,681
)
(39,518
)
Adjusted net income
$
18,448
$
29,818
$
79,918
$
103,402
Adjusted EPS
$
1.29
$
2.11
$
5.60
$
7.32
Diluted weighted-average number of common
shares outstanding
14,326,957
14,149,333
14,272,709
14,126,912
(1)
Includes professional fees for strategic
initiatives, organizational consolidation costs, severance and
other professional fees.
(2)
Consists of fees incurred related to SOX
implementation and business integration efforts.
(3)
Includes cash settled equity balances.
(4)
COVID-19 related costs were added back as
one-time items through 2022. As the Public Health Emergency ended
in 2023 and the effects of COVID-19 have become normal course of
business, COVID-19 related items are no longer added back in
2023.
Modivcare Inc.
Unaudited Key Statistical and
Financial Data
(in thousands, except for
statistical data)
Three months ended
Year ended
Three months ended
December 31, 2023
December 31, 2022
% Change
December 31, 2023
December 31, 2022
% Change
September 30, 2023
QoQ % Change
NEMT Segment
Service revenue, net
$
499,058
$
458,993
8.7
%
$
1,951,447
$
1,768,442
10.3
%
$
485,951
2.7
%
Purchased services expense
371,590
331,708
12.0
%
1,456,796
1,267,006
15.0
%
363,594
2.2
%
Payroll and other expense
60,596
54,938
10.3
%
252,994
220,441
14.8
%
64,427
(5.9
)%
Service expense
$
432,186
$
386,646
11.8
%
$
1,709,790
$
1,487,447
14.9
%
$
428,021
1.0
%
Gross profit
$
66,872
$
72,347
(7.6
)%
$
241,657
$
280,995
(14.0
)%
$
57,930
15.4
%
Gross margin
13.4
%
15.8
%
12.4
%
15.9
%
11.9
%
G&A expense
$
27,710
$
44,199
(37.3
)%
$
115,355
$
146,935
(21.5
)%
$
25,433
9.0
%
G&A expense adjustments:
Restructuring and related costs
658
13,869
(95.3
)%
12,523
25,228
(50.4
)%
2,711
(75.7
)%
Transaction and integration costs
(101
)
4,219
(102.4
)%
—
4,225
N/M
101
N/M
Settlement related costs
—
—
N/M
250
5,500
(95.5
)%
(25
)
N/M
Adjusted G&A expense
$
27,153
$
26,111
4.0
%
$
102,582
$
111,982
(8.4
)%
$
22,646
19.9
%
Adjusted G&A expense % of revenue
5.4
%
5.7
%
5.3
%
6.3
%
4.7
%
Net income
$
23,557
$
17,204
36.9
%
$
73,348
$
78,567
(6.6
)%
$
18,831
25.1
%
Net income margin
4.7
%
3.7
%
3.8
%
4.4
%
3.9
%
Adjusted EBITDA
$
39,719
$
46,260
(14.1
)%
$
139,075
$
169,142
(17.8
)%
$
35,284
12.6
%
Adjusted EBITDA margin
8.0
%
10.1
%
7.1
%
9.6
%
7.3
%
Total paid trips (thousands)
8,798
7,807
12.7
%
34,559
30,795
12.2
%
8,824
(0.3
)%
Average monthly members (thousands)
32,914
34,819
(5.5
)%
33,648
34,203
(1.6
)%
33,660
(2.2
)%
Revenue per member per month
$
5.05
$
4.39
15.0
%
$
4.83
$
4.31
12.1
%
$
4.81
5.0
%
Revenue per trip
$
56.72
$
58.79
(3.5
)%
$
56.47
$
57.43
(1.7
)%
$
55.07
3.0
%
Utilization
8.9
%
7.5
%
8.6
%
7.5
%
8.7
%
Purchased services per trip
$
42.24
$
42.49
(0.6
)%
$
42.15
$
41.14
2.5
%
$
41.21
2.5
%
Payroll and other per trip
6.89
7.04
(2.1
)%
7.32
7.16
2.2
%
7.30
(5.6
)%
Total service expense per trip
$
49.13
$
49.53
(0.8
)%
$
49.47
$
48.30
2.4
%
$
48.51
1.3
%
N/M - Not Meaningful. Certain figures in
the tables above do not provide meaningful percentage comparison
and, thus, the percentage has been removed.
Modivcare Inc.
Unaudited Key Statistical and
Financial Data
(in thousands, except for
statistical data)
Three months ended
Year ended
Three months ended
December 31, 2023
December 31, 2022
% Change
December 31, 2023
December 31, 2022
% Change
September 30, 2023
QoQ % Change
PCS Segment
Service revenue, net
$
181,180
$
176,013
2.9
%
$
715,615
$
667,674
7.2
%
$
179,979
0.7
%
Service expense
144,283
140,642
2.6
%
561,919
520,065
8.0
%
143,078
0.8
%
Gross profit
$
36,897
$
35,371
4.3
%
$
153,696
$
147,609
4.1
%
$
36,901
—
%
Gross Margin
20.4
%
20.1
%
21.5
%
22.1
%
20.5
%
G&A expense
$
23,287
$
22,829
2.0
%
$
86,767
$
91,365
(5.0
)%
$
20,252
15.0
%
G&A expense adjustments
Restructuring and related costs
—
(6
)
N/M
—
757
N/M
—
N/M
Transaction and integration costs
1,807
1,216
48.6
%
2,688
7,550
(64.4
)%
431
319.3
%
Stock-based compensation
—
—
N/M
—
190
N/M
—
N/M
Adjusted G&A expense
$
21,480
$
21,619
(0.6
)%
$
84,079
$
82,868
1.5
%
$
19,821
8.4
%
Adjusted G&A expense % of revenue
11.9
%
12.3
%
11.7
%
12.4
%
11.0
%
Net income
$
1,235
$
2,349
(47.4
)%
$
(122,170
)
$
9,760
N/M
$
3,142
(60.7
)%
Net income margin
0.7
%
1.3
%
(17.1
)%
1.5
%
1.7
%
Adjusted EBITDA
$
15,805
$
16,559
(4.6
)%
$
74,654
$
69,765
7.0
%
$
17,631
(10.4
)%
Adjusted EBITDA margin
8.7
%
9.4
%
10.4
%
10.4
%
9.8
%
Total hours (thousands)
7,074
6,842
3.4
%
27,826
26,918
3.4
%
6,995
1.1
%
Revenue per hour
$
25.61
$
25.73
(0.5
)%
$
25.72
$
24.80
3.7
%
$
25.73
(0.5
)%
Service expense per hour
$
20.40
$
20.56
(0.8
)%
$
20.19
$
19.32
4.5
%
$
20.45
(0.2
)%
N/M - Not Meaningful. Certain figures in
the tables above do not provide meaningful percentage comparison
and, thus, the percentage has been removed.
Modivcare Inc.
Unaudited Key Statistical and
Financial Data
(in thousands, except for
statistical data)
Three months ended
Year ended
Three months ended
December 31, 2023
December 31, 2022
% Change
December 31, 2023
December 31, 2022
% Change
September 30, 2023
QoQ % Change
RPM Segment
Service revenue, net
$
20,239
$
18,915
7.0
%
$
77,941
$
68,277
14.2
%
$
19,779
2.3
%
Service expense
6,896
6,678
3.3
%
27,025
24,562
10.0
%
6,934
(0.5
)%
Gross profit
$
13,343
$
12,237
9.0
%
$
50,916
$
43,715
16.5
%
$
12,845
3.9
%
Gross Margin
65.9
%
64.7
%
65.3
%
64.0
%
64.9
%
G&A expense
$
6,190
$
5,636
9.8
%
$
22,971
$
23,156
(0.8
)%
$
5,685
8.9
%
G&A expense adjustments
Restructuring and related costs
—
—
N/M
—
63
N/M
—
N/M
Transaction and integration costs
16
174
(90.8
)%
86
2,927
(97.1
)%
22
(27.3
)%
Stock-based compensation
—
—
N/M
—
86
N/M
—
N/M
Adjusted G&A expense
$
6,174
$
5,462
13.0
%
$
22,885
$
20,080
14.0
%
$
5,663
9.0
%
Adjusted G&A expense % of revenue
30.5
%
28.9
%
29.4
%
29.4
%
28.6
%
Net income
$
10
$
672
(98.5
)%
$
(43,819
)
$
497
N/M
$
707
(98.6
)%
Net income margin
—
%
3.6
%
(56.2
)%
0.7
%
3.6
%
Adjusted EBITDA
$
7,169
$
6,775
5.8
%
$
28,031
$
23,635
18.6
%
$
7,182
(0.2
)%
Adjusted EBITDA margin
35.4
%
35.8
%
36.0
%
34.6
%
36.3
%
Average monthly members (thousands)
253
236
7.2
%
244
210
16.2
%
247
2.4
%
Revenue per member per month
$
26.67
$
26.72
(0.2
)%
$
26.62
$
27.09
(1.7
)%
$
26.69
(0.1
)%
Service expense per member per month
$
9.09
$
9.43
(3.6
)%
$
9.23
$
9.75
(5.3
)%
$
9.36
(2.9
)%
N/M - Not Meaningful. Certain figures in
the tables above do not provide meaningful percentage comparison,
thus, the percentage has been removed.
Modivcare Inc.
Unaudited Key Statistical and
Financial Data
(in thousands)
Three months ended
Year ended
Three months ended
December 31, 2023
December 31, 2022
% Change
December 31, 2023
December 31, 2022
% Change
September 30, 2023
QoQ % Change
Corporate and Other Segment
G&A expense
$
18,282
$
17,399
5.1
%
$
79,471
$
60,715
30.9
%
$
18,772
(2.6
)%
G&A expense adjustments
Restructuring and related costs
2,575
—
N/M
24,181
950
N/M
6,205
(58.5
)%
Transaction and integration costs
74
2,050
(96.4
)%
1,908
9,269
(79.4
)%
605
(87.8
)%
Settlement related costs
1,194
3,564
(66.5
)%
9,877
4,064
143.0
%
1,474
(19.0
)%
Stock-based compensation(1)
2,016
1,842
9.4
%
5,501
5,792
(5.0
)%
1,690
19.3
%
Adjusted G&A expense
$
12,423
$
9,943
24.9
%
$
38,004
$
40,640
(6.5
)%
$
8,798
41.2
%
Adjusted G&A expense % of consolidated
revenue
1.8
%
1.5
%
1.4
%
1.6
%
1.3
%
Three months ended
Year ended
Three months ended
December 31, 2023
December 31, 2022
% Change
December 31, 2023
December 31, 2022
% Change
September 30, 2023
QoQ % Change
Consolidated Modivcare Inc.
G&A expense
$
75,469
$
90,063
(16.2
)%
$
304,564
$
322,171
(5.5
)%
$
70,142
7.6
%
G&A expense adjustments
Restructuring and related costs
3,233
13,863
(76.7
)%
36,704
26,998
36.0
%
8,916
(63.7
)%
Transaction and integration costs
1,796
7,659
(76.6
)%
4,682
23,971
(80.5
)%
1,159
55.0
%
Settlement related costs
1,194
3,564
(66.5
)%
10,127
9,564
5.9
%
1,449
(17.6
)%
Stock-based compensation(1)
2,016
1,842
9.4
%
5,501
6,068
(9.3
)%
1,690
19.3
%
Adjusted G&A expense
$
67,230
$
63,135
6.5
%
$
247,550
$
255,570
(3.1
)%
$
56,928
18.1
%
Adjusted G&A expense % of revenue
9.6
%
9.7
%
9.0
%
10.2
%
8.3
%
(1)
Includes cash settled equity balances.
N/M - Not Meaningful. Certain figures in
the tables above do not provide meaningful percentage comparison
and, thus, the percentage has been removed.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240222760257/en/
Investor Relations Contact Kevin Ellich, Head of Investor
Relations Kevin.Ellich@modivcare.com
ModivCare (NASDAQ:MODV)
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