Modivcare Inc. (the “Company” or “Modivcare”) (Nasdaq: MODV), a
technology-enabled healthcare services company that provides a
platform of integrated supportive care solutions focused on
improving health outcomes, today reported financial results for the
three and nine months ended September 30, 2024.
Third Quarter 2024
Summary:
- Service revenue of $702.0 million increased 2.2% from the third
quarter of 2023
- Net loss of $26.6 million, or negative $1.87 per diluted common
share
- Adjusted EBITDA(1) of $43.2 million, adjusted net income(1) of
$6.4 million and adjusted EPS(1) of $0.45 per diluted common
share
- Cash provided by operating activities during the quarter of
$9.3 million and free cash flow(2) of $1.5 million
- Contract receivables, net of contract payables, of $63.1
million as of September 30, 2024
______________________________
(1)
Non-GAAP financial measure reconciliations
and other related information about non-GAAP financial measures
provided below.
(2)
Free cash flow, a non-GAAP financial
measure, is calculated by us as cash flow from operations less our
capital expenditures during the period of $7.7 million that is
included in our purchase of property and equipment line in our
Unaudited Condensed Consolidated Statements of Cash Flows provided
below.
“This quarter has demonstrated positive momentum, reflected in
both operational enhancements and strengthened relationships, even
amid shifts in the broader healthcare market. We delivered solid
third-quarter results, reporting $43 million of adjusted EBITDA and
a 2% increase in consolidated revenue, driven primarily by 5%
growth in our personal care services segment,” stated L. Heath
Sampson, President and CEO. “During the quarter, we proactively
amended our credit agreement, securing temporary relief on debt
covenants. Our bank group continues to be constructive and
supportive as we work toward a long-term solution for our covenants
that provides us with the time to thoughtfully and strategically
assess the best approach to de-lever our balance sheet and optimize
value for stakeholders. Additionally, we achieved significant
collections in contract receivables, reducing net receivables by
$55 million, and we made meaningful progress in resetting our
capitated payment thresholds within our shared risk NEMT contracts,
as contractually designed. These actions are expected to improve
our cash conversion cycle and enhance future free cash flow.”
Sampson continued, “Our transformation efforts have laid a
strong foundation across each segment, positioning us to meet our
client needs today while anticipating tomorrow’s demands in this
dynamic market. Our strategic initiatives are driving substantial
cost savings in our NEMT segment, with a strong deal pipeline
encompassing new business, renewals, and expansions. Our personal
care services segment is steadily growing with improving margins,
while remote patient monitoring margins have risen to 37%,
supported by operational efficiencies and delivering innovative
value to our clients. We are confident in our ability to further
differentiate our offerings, achieve cost savings, and drive growth
in 2025. We remain fully committed to creating value within each
segment, deleveraging our balance sheet, and ultimately enhancing
stakeholder value.”
Guidance*
We affirm our revenue and adjusted EBITDA guidance ranges as
follows ($ in millions):
Fiscal Year 2024
Revenue
$2,700 - $2,900
Adjusted EBITDA
$170 - $180
The Company continues to expect Adjusted EBITDA growth in excess
of 10% in 2025, based on current 2024 guidance.
*Guidance excludes the effects of any future merger, acquisition
or disposition activity and is based on the current operating
environment.
Third Quarter 2024 Results
For the third quarter of 2024, the Company reported $702.0
million in revenue, a 2.2% increase from the $686.9 million
reported in the third quarter of 2023. NEMT segment revenue grew by
$6.3 million or 1.3% and PCS segment revenue grew by $8.5 million
or 4.7%, while RPM segment revenue declined $0.3 million or 1.7%,
as compared to the third quarter of 2023.
Our operating income was $5.3 million, or 0.7% of revenue, in
the third quarter of 2024, compared to operating income of $12.0
million, or 1.8% of revenue, in the third quarter of 2023. Net loss
in the third quarter of 2024 was $26.6 million, or negative $1.87
per diluted common share, compared to net loss of $4.3 million, or
negative $0.30 per diluted common share in the third quarter of
2023. The increase in net loss for the third quarter of 2024 from
the third quarter of 2023 was driven by an increase in interest
expense of $10.6 million as well as a loss on extinguishment of
debt of $11.8 million that was incurred during the third quarter of
2024 related to the refinancing of our Senior Notes due 2025.
Adjusted EBITDA was $43.2 million, or 6.2% of revenue, in the
third quarter of 2024, compared to $51.3 million, or 7.5% of
revenue, in the third quarter of 2023. Adjusted net income in the
third quarter of 2024 was $6.4 million, or $0.45 per diluted common
share, compared to adjusted net income of $20.5 million, or $1.44
per diluted common share, in the third quarter of 2023.
Cash provided by operations during the quarter was $9.3 million
as compared to $53.5 million of cash provided by operations during
the third quarter of 2023. Changes in operating assets and
liabilities during the quarter include a decrease in contract
receivables of $55.4 million, net, and a decrease in contract
payables of $39.6 million, net. Net cash used in investing
activities during the quarter was $7.7 million, primarily due to
capitalized investments in technology and purchases of monitoring
devices. Net cash provided by financing activities during the
quarter was $36.3 million, which resulted in a quarter ended
balance on the Company's revolving credit facility of $228.0
million.
During the third quarter, the Company successfully refinanced
its $500.0 million Senior Unsecured Notes due 2025 at a redemption
premium of 1.469% on the aggregate original principal amount of the
2025 Notes. The 2025 Notes were redeemed in conjunction with the
funding of a Term Loan Facility in an aggregate principal amount of
$525.0 million.
Third Quarter 2024 Earnings Conference Call
Modivcare will hold a conference call to discuss its financial
results on Thursday, November 7, 2024 at 8:30 a.m. ET. To access
the call, please dial:
US toll-free: 1 (888) 437-3179 International: 1
(862) 298-0702
You may also access the conference call via webcast at
investors.modivcare.com, where the call will also be archived.
About Modivcare
Modivcare Inc. ("Modivcare" or the "Company") is a
technology-enabled healthcare services company that provides a
suite of integrated supportive care solutions for public and
private payors and their members. Our value-based solutions address
the social determinants of health (SDoH) by connecting members to
essential care services. By doing so, Modivcare helps health plans
manage risks, reduce costs, and improve health outcomes. Modivcare
is a provider of non-emergency medical transportation (NEMT),
personal care services (PCS), and remote patient monitoring
solutions (RPM). The company also holds a minority equity
investment in CCHN Holdings (d/b/a Matrix Medical Network), an
independent, at scale provider of comprehensive in-home health
assessments in the U.S. To learn more about Modivcare, please visit
www.modivcare.com.
Non-GAAP Financial Measures and Adjustments
In addition to the financial measures prepared in accordance
with generally accepted accounting principles in the United States
of America ("GAAP"), the information contained herein may include
presentations for the Company and its segments (as noted and
applicable) of: (1) EBITDA, Adjusted EBITDA, Adjusted G&A
expense, Adjusted EBITDA margin, Adjusted Net Income (Loss), and
Adjusted EPS, all of which are non-GAAP financial measures
considered by management to be performance measures; and (2) free
cash flow, which is a non-GAAP financial measure considered by
management to be a liquidity measure. EBITDA is defined as net
income (loss) before: (1) interest expense, net; (2) provision
(benefit) for income taxes; and (3) depreciation and amortization.
Adjusted EBITDA is calculated as EBITDA before (as applicable): (1)
restructuring and related costs; (2) transaction and integration
costs; (3) settlement related costs; (4) a one-time payor
collection settlement; (5) stock-based compensation; (6) impairment
of goodwill; (7) loss on debt extinguishment; and (8) equity in net
(income) loss of investee, net of tax. Adjusted EBITDA margin is
calculated as Adjusted EBITDA divided by service revenue, net.
Adjusted Net Income (Loss) is calculated as net income (loss)
before (as applicable): (1) restructuring and related costs; (2)
transaction and integration costs; (3) settlement related costs;
(4) a one-time payor collection settlement; (5) stock-based
compensation; (6) impairment of goodwill; (7) loss on debt
extinguishment; (8) equity in net (income) loss of investee, net of
tax; (9) intangible asset amortization expense; and (10) the income
tax impact of such adjustments. Adjusted EPS is calculated as
Adjusted Net Income (Loss) divided by the diluted weighted-average
number of common shares outstanding as calculated for Adjusted Net
Income (Loss). Adjusted G&A expense is calculated as G&A
expense before (as applicable): (1) restructuring and related
costs; (2) transaction and integration costs; (3) settlement
related costs; and (4) stock-based compensation. Free cash flow is
calculated as cash flow from operations less our applicable capital
expenditures included in our purchase of property and equipment
line in our Consolidated Statements of Cash Flows.
Reconciliations of the non-GAAP financial measures used herein
to their most directly comparable GAAP financial measures that are
not included in the discussion above are included below. We do not
provide guidance for net income (loss) in this presentation on a
basis consistent with GAAP or a reconciliation of forward-looking
non-GAAP financial measure (Adjusted EBITDA) to its most directly
comparable GAAP financial measure (net income (loss)) on a
forward-looking basis because we are unable to predict items
contained in the GAAP financial measure without unreasonable
efforts. Our non-GAAP performance measures exclude expenses and
amounts that are not driven by our core operating results and may
be one time in nature. Excluding these expenses makes comparisons
with prior periods as well as to other companies in our industry
more meaningful. We believe such measures allow investors to gain a
better understanding of the factors and trends affecting the
ongoing operations of our business. We consider our core operations
to be the ongoing activities to provide services from which we earn
revenue, including direct operating costs and indirect costs to
support these activities. As a result, our net income or loss in
equity investee is excluded from these measures, as we do not have
the ability to manage the venture, allocate resources within the
venture, or directly control its operations or performance. Our
free cash flow presentation (as applicable) reflects an additional
way of viewing our liquidity that, when viewed together with our
GAAP results, provides management, investors, and other users of
our financial information with a more complete understanding of
factors and trends affecting our cash flows. Our use of the term
free cash flow is not intended to imply, and no inference should be
made, however, that any reported amounts are free to be used
without restriction for discretionary expenditures, as our use of
these funds may be restricted by the terms of our outstanding
indebtedness, including our credit facility, and otherwise
earmarked for other non-discretionary expenditures.
Our non-GAAP financial measures may not provide information that
is directly comparable to that provided by other companies in our
industry, as other companies in our industry may calculate non-GAAP
financial measures differently. In addition, there are limitations
in using non-GAAP financial measures because they are not prepared
in accordance with GAAP, may be different from non-GAAP financial
measures used by other companies, and exclude expenses that may
have a material impact on our reported financial results. The
presentation of non-GAAP financial measures is not intended to be
considered in isolation from or as a substitute for the most
directly comparable financial measures prepared in accordance with
GAAP. We urge you to review the reconciliations of our non-GAAP
financial measures to their most directly comparable GAAP financial
measures included below, and not to rely on any single financial
measure to evaluate our business.
Forward-Looking Statements
Certain statements contained in this press release constitute
“forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements are
predictive in nature and are frequently identified by the use of
terms such as “may,” “will,” “should,” “expect,” “believe,”
“estimate,” “intend,” and similar words indicating possible future
expectations, events or actions. The updated guidance discussed
herein constitutes forward-looking statements. Such forward-looking
statements are based on current expectations, assumptions,
estimates and projections about our business and our industry, and
are not guarantees of our future performance. These statements are
subject to a number of known and unknown risks, uncertainties and
other factors, many of which are beyond our ability to control or
predict, which may cause actual results to be materially different
from those expressed or implied herein, including but not limited
to: government or private insurance program funding reductions or
limitations; implementation of alternative payment models or the
transition of Medicaid and Medicare beneficiaries to Managed Care
Organizations; our inability to control reimbursement rates
received for our services; cost containment initiatives undertaken
by private third-party payors and an inability to maintain or
reduce our cost of services below rates set forth by our payors;
inadequacies in, or security breaches of, our information
technology systems, including those intended to protect our
clients’ confidential information; the effects of any public health
emergency; changes in the funding, financial viability or our
relationships with our payors; delays in collection, or
non-collection, of our accounts receivable; any impairment of our
goodwill and long-lived assets; any failure to maintain or to
develop reliable, efficient and secure information technology
systems; any inability to attract and retain qualified employees;
any disruptions from acquisition or acquisition integration
efforts; weakening of general economic conditions, including the
impact of inflationary pressures, rising interest rates, labor
shortages, higher labor costs and supply chain challenges;
estimated income taxes being different from income taxes that we
ultimately pay; pandemics and other infectious diseases; our
contracts not surviving until the end of their stated terms, or not
being renewed or extended; our failure to compete effectively in
the marketplace; our not being awarded contracts through the
government’s requests for proposals process, or our awarded
contracts not being profitable; any failure to satisfy our
contractual obligations or to maintain existing pledged performance
and payment bonds; any failure to estimate accurately the cost of
performing our contracts; any misclassification of the drivers we
engage as independent contractors rather than as employees;
significant interruptions in our communication and data services;
not successfully executing on our strategies in the face of our
competition; any inability to maintain relationships with existing
patient referral sources; certificates of need laws or other
regulatory and licensure obligations that may adversely affect our
personal care integration efforts and expansion into new markets;
any failure to obtain the consent of the New York Department of
Health to manage the day to day operations of our licensed in-home
personal care services agency business; changes in the case-mix of
our personal care patients, or changes in payor mix or payment
methodologies; our loss of existing favorable managed care
contracts; labor disputes or disruptions, in particular in New
York; becoming subject to malpractice, professional negligence,
medical liability or other similar claims; our operating in the
competitive remote patient monitoring industry, and failing to
develop and enhance related technology applications; any failure to
innovate and provide services that are useful to customers and to
achieve and maintain market acceptance; our lack of sole
decision-making authority with respect to our minority investment
in Matrix and any failure by Matrix to achieve positive financial
position and results of operations; any legal challenges to the
relationships or arrangements between our virtual clinical care
management services and the unaffiliated physician-owned
professional corporation through which such services are provided;
any failure to comply with applicable data interoperability and
information blocking rules; the lapse of temporary telehealth
flexibilities currently permitted under the Consolidated
Appropriations Act of 2023; the cost of our compliance with laws;
changes to the regulatory landscape applicable to our businesses;
changes in budgetary priorities of the government entities or
private insurance programs that fund our services; regulations
relating to privacy and security of patient and service user
information; actions for false claims or recoupment of funds; civil
penalties or loss of business for failing to comply with bribery,
corruption and other regulations governing business with public
organizations; increasing scrutiny and changing expectations with
respect to environmental, social and governance matters; changes
to, or violations of, licensing regulations, including regulations
governing surveys and audits; our contracts being subject to audit
and modification by the payors with whom we contract; a loss of
Medicaid coverage by a significant number of Medicaid beneficiaries
following the expiration of the COVID-19 public health emergency
under the Families First Coronavirus Response Act (2020); our
existing debt agreements containing restrictions, financial
covenants and cross-default provisions that limit our flexibility
in operating our business; our substantial indebtedness and lease
obligations and ability to generate or distribute sufficient cash
to service our indebtedness; the expiration of our existing credit
agreement or any loss of available financing alternatives; our
ability to incur substantial additional indebtedness or to issue
additional equity; the results of the remediation of our identified
material weaknesses in internal control over financial reporting;
future sales of our common stock by existing stockholders; any
stock price volatility; our dependence on our subsidiaries to fund
our operations and expenses; securities analysts failing to publish
research or publishing misleading or unfavorable research about us;
and the effects of applicable anti-takeover provisions.
The Company has provided additional information about the
foregoing and other risks facing our business in our annual report
on Form 10-K and subsequent periodic and current reports filed with
the Securities and Exchange Commission that could impact future
performance. You are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date the
statement was made and are expressly qualified in their entirety by
the cautionary statements set forth herein and in our filings with
the Securities and Exchange Commission, which you should read in
their entirety before making an investment decision with respect to
our securities. We undertake no obligation to update or revise any
forward-looking statements contained in this release, whether as a
result of new information, future events or otherwise, except as
required by applicable law.
Modivcare Inc.
Unaudited Condensed
Consolidated Statements of Operations
(in thousands, except share and
per share data)
Three months ended September
30,
Nine months ended September
30,
2024
2023
2024
2023
Service revenue, net
$
702,037
$
686,925
$
2,084,787
$
2,048,338
Grant income
—
551
—
4,649
Operating expenses:
Service expense
597,934
579,214
1,769,600
1,718,735
General and administrative expense
70,903
70,142
224,145
229,095
Depreciation and amortization
27,940
26,077
82,795
77,679
Impairment of goodwill
—
—
105,302
183,100
Total operating expenses
696,777
675,433
2,181,842
2,208,609
Operating income (loss)
5,260
12,043
(97,055
)
(155,622
)
Interest expense, net
28,493
17,844
67,129
50,769
Loss on debt extinguishment
11,797
—
11,797
—
Loss before income taxes and equity method
investment
(35,030
)
(5,801
)
(175,981
)
(206,391
)
Income tax benefit
11,070
1,659
2,055
4,362
Equity in net income (loss) of investee,
net of tax
(2,644
)
(160
)
(3,862
)
2,821
Net loss
$
(26,604
)
$
(4,302
)
$
(177,788
)
$
(199,208
)
Loss per common share:
Basic
$
(1.87
)
$
(0.30
)
$
(12.50
)
$
(14.06
)
Diluted
$
(1.87
)
$
(0.30
)
$
(12.50
)
$
(14.06
)
Weighted-average number of common shares
outstanding:
Basic
14,253,192
14,182,839
14,224,155
14,169,537
Diluted
14,253,192
14,182,839
14,224,155
14,169,537
Modivcare Inc.
Unaudited Condensed
Consolidated Balance Sheets
(in thousands)
September 30, 2024
December 31, 2023
Assets
Current assets:
Cash and cash equivalents
$
48,336
$
2,217
Accounts receivable, net
248,683
222,537
Contract receivables
110,431
143,960
Other current assets(1)
55,999
36,209
Total current assets
463,449
404,923
Property and equipment, net
84,451
85,629
Goodwill
680,252
785,554
Intangible assets, net
301,598
360,935
Equity investment
35,835
41,531
Operating lease right-of-use assets
39,839
39,776
Other long-term assets
46,324
48,927
Total assets
$
1,651,748
$
1,767,275
Liabilities and stockholders' equity
(deficit)
Current liabilities:
Accounts payable
$
52,109
$
55,241
Accrued contract payables
47,300
117,488
Accrued expenses and other current
liabilities
145,289
127,901
Accrued transportation costs
95,023
97,245
Current portion of operating lease
liabilities
8,548
8,727
Short-term debt
233,250
113,800
Total current liabilities
581,519
520,402
Long-term debt, net of deferred financing
costs
986,125
983,757
Operating lease liabilities, less current
portion
34,364
33,784
Other long-term liabilities(2)
66,736
73,137
Total liabilities
1,668,744
1,611,080
Stockholders' equity (deficit)
Stockholders' equity (deficit)
(16,996
)
156,195
Total liabilities and stockholders' equity
(deficit)
$
1,651,748
$
1,767,275
(1)
Includes other receivables, prepaid
expenses and other current assets and short-term restricted
cash.
(2)
Includes other long-term liabilities and
deferred tax liabilities
Modivcare Inc.
Unaudited Condensed
Consolidated Statements of Cash Flows
(in thousands)
Three months ended September
30,
Nine months ended September
30,
2024
2023
2024
2023
Operating activities
Net loss
$
(26,604
)
$
(4,302
)
$
(177,788
)
$
(199,208
)
Depreciation and amortization
27,940
26,077
82,795
77,679
Stock-based compensation
530
1,743
4,792
4,029
Equity in net (income) loss of
investee
3,670
222
5,360
(3,915
)
Deferred income taxes
(12,340
)
(4,971
)
(6,753
)
(15,235
)
Impairment of goodwill
—
—
105,302
183,100
Loss on debt extinguishment
11,797
—
11,797
—
Reduction of right-of-use asset
2,370
2,924
7,289
9,875
Other non-cash items(1)
1,894
1,331
4,752
3,907
Changes in operating assets and
liabilities:
Contract receivables
48,914
(9,512
)
33,528
(58,143
)
Contract payables
(39,594
)
24,483
(70,188
)
(60,710
)
Long-term contract receivables
6,512
—
—
427
Other changes in operating assets and
liabilities(2)
(15,816
)
15,552
(37,339
)
867
Net cash provided by (used in) operating
activities
9,273
53,547
(36,453
)
(57,327
)
Investing activities
Purchase of property and equipment
(7,728
)
(8,878
)
(22,281
)
(31,143
)
Net cash used in investing activities
(7,728
)
(8,878
)
(22,281
)
(31,143
)
Financing activities
Net proceeds from short-term debt
45,000
(43,500
)
114,200
83,000
Issuance of long-term debt
525,000
—
525,000
—
Repayment of long-term debt
(508,657
)
—
(508,657
)
—
Payments of debt issuance costs
(24,649
)
—
(25,512
)
(376
)
Restricted stock surrendered for employee
tax payment
(435
)
(21
)
(591
)
(861
)
Other financing activities
(2
)
—
396
346
Net cash provided by (used in) financing
activities
36,257
(43,521
)
104,836
82,109
Net change in cash, cash equivalents and
restricted cash
37,802
1,148
46,102
(6,361
)
Cash, cash equivalents and restricted cash
at beginning of period
11,082
7,466
2,782
14,975
Cash, cash equivalents and restricted cash
at end of period
$
48,884
$
8,614
$
48,884
$
8,614
(1)
Includes amortization of deferred
financing costs and debt discount.
(2)
Includes accounts receivable and other
receivables, prepaid expenses and other current assets, accounts
payable and accrued expenses, accrued transportation costs and
other changes in operating assets and liabilities.
Modivcare Inc.
Unaudited Reconciliation of
Non-GAAP Financial Measures
Segment Information and
Adjusted EBITDA
(in thousands)
Three months ended September
30, 2024
NEMT
PCS
RPM
Corporate and Other
Total
Service revenue, net
$
492,253
$
188,518
$
19,448
$
1,818
$
702,037
Operating expenses:
Service expense
436,549
151,745
8,018
1,622
597,934
General and administrative expense
30,758
23,823
4,332
11,990
70,903
Depreciation and amortization
7,645
12,918
7,073
304
27,940
Total operating expenses
474,952
188,486
19,423
13,916
696,777
Operating income (loss)
17,301
32
25
(12,098
)
5,260
Interest expense, net
—
—
—
28,493
28,493
Loss on debt extinguishment
—
—
—
11,797
11,797
Income (loss) before income taxes and
equity method investment
17,301
32
25
(52,388
)
(35,030
)
Income tax benefit (provision)
(4,490
)
(24
)
(7
)
15,591
11,070
Equity in net income (loss) of investee,
net of tax
151
—
—
(2,795
)
(2,644
)
Net income (loss)
12,962
8
18
(39,592
)
(26,604
)
Interest expense, net
—
—
—
28,493
28,493
Income tax provision (benefit)
4,490
24
7
(15,591
)
(11,070
)
Depreciation and amortization
7,645
12,918
7,073
304
27,940
EBITDA
25,097
12,950
7,098
(26,386
)
18,759
Restructuring and related costs(1)
249
15
45
—
309
Transaction and integration costs
—
146
2
1,219
1,367
Settlement related costs
—
2,610
—
—
2,610
Payor collection settlement(2)
5,368
—
—
—
5,368
Stock-based compensation
—
—
—
340
340
Loss on debt extinguishment
—
—
—
11,797
11,797
Equity in net (income) loss of investee,
net of tax
(151
)
—
—
2,795
2,644
Adjusted EBITDA
$
30,563
$
15,721
$
7,145
$
(10,235
)
$
43,194
(1)
Restructuring and related costs include
professional fees for strategic initiatives, organizational
consolidation costs, severance and other professional fees.
(2)
Amount represents a one-time,
non-recurring settlement in connection with a dispute with a payor
for which the Company will cease performing services beginning in
2025, which resulted in an adjustment to historical contracts
receivable recorded for the payor beginning with calendar year
2021.
Modivcare Inc.
Unaudited Reconciliation of
Non-GAAP Financial Measures
Segment Information and
Adjusted EBITDA
(in thousands)
Three months ended September
30, 2023
NEMT
PCS
RPM
Corporate and Other
Total
Service revenue, net
$
485,951
$
179,979
$
19,779
$
1,216
$
686,925
Grant income
—
551
—
—
551
Operating expenses:
Service expense
428,021
143,078
6,934
1,181
579,214
General and administrative expense
25,433
20,252
5,685
18,772
70,142
Depreciation and amortization
6,814
12,850
6,174
239
26,077
Total operating expenses
460,268
176,180
18,793
20,192
675,433
Operating income (loss)
25,683
4,350
986
(18,976
)
12,043
Interest expense, net
—
—
—
17,844
17,844
Income (loss) before income taxes and
equity method investment
25,683
4,350
986
(36,820
)
(5,801
)
Income tax benefit (provision)
(6,994
)
(1,208
)
(279
)
10,140
1,659
Equity in net income (loss) of investee,
net of tax
142
—
—
(302
)
(160
)
Net income (loss)
18,831
3,142
707
(26,982
)
(4,302
)
Interest expense, net
—
—
—
17,844
17,844
Income tax provision (benefit)
6,994
1,208
279
(10,140
)
(1,659
)
Depreciation and amortization
6,814
12,850
6,174
239
26,077
EBITDA
32,639
17,200
7,160
(19,039
)
37,960
Restructuring and related costs(1)
2,711
—
—
6,205
8,916
Transaction and integration costs(2)
101
431
22
605
1,159
Settlement related costs
(25
)
—
—
1,474
1,449
Stock-based compensation
—
—
—
1,690
1,690
Equity in net (income) loss of investee,
net of tax
(142
)
—
—
302
160
Adjusted EBITDA
$
35,284
$
17,631
$
7,182
$
(8,763
)
$
51,334
(1)
Restructuring and related costs include
professional fees for strategic initiatives, organizational
consolidation costs, severance and other professional fees.
(2)
Transaction and integration costs consist
of fees incurred related to Sarbanes-Oxley Act of 2002
implementation and business integration efforts.
Modivcare Inc.
Unaudited Reconciliation of
Non-GAAP Financial Measures
Segment Information and
Adjusted EBITDA
(in thousands)
Nine months ended September
30, 2024
NEMT
PCS
RPM
Corporate and Other
Total
Service revenue, net
$
1,462,236
$
558,696
$
58,575
$
5,280
$
2,084,787
Operating expenses:
Service expense
1,288,162
451,049
24,556
5,833
1,769,600
General and administrative expense
95,701
72,152
15,780
40,512
224,145
Depreciation and amortization
22,602
38,506
20,834
853
82,795
Impairment of goodwill
—
—
105,302
—
105,302
Total operating expenses
1,406,465
561,707
166,472
47,198
2,181,842
Operating income (loss)
55,771
(3,011
)
(107,897
)
(41,918
)
(97,055
)
Interest expense, net
—
—
—
67,129
67,129
Loss on debt extinguishment
—
—
—
11,797
11,797
Income (loss) before income taxes and
equity method investment
55,771
(3,011
)
(107,897
)
(120,844
)
(175,981
)
Income tax benefit (provision)
(14,512
)
866
726
14,975
2,055
Equity in net income (loss) of investee,
net of tax
269
—
—
(4,131
)
(3,862
)
Net income (loss)
41,528
(2,145
)
(107,171
)
(110,000
)
(177,788
)
Interest expense, net
—
—
—
67,129
67,129
Income tax provision (benefit)
14,512
(866
)
(726
)
(14,975
)
(2,055
)
Depreciation and amortization
22,602
38,506
20,834
853
82,795
EBITDA
78,642
35,495
(87,063
)
(56,993
)
(29,919
)
Restructuring and related costs(1)
9,192
1,321
1,244
1,638
13,395
Transaction and integration costs
52
2,023
102
1,293
3,470
Settlement related costs
—
3,415
—
—
3,415
Payor collection settlement(2)
5,368
—
—
—
5,368
Stock-based compensation
—
—
—
4,090
4,090
Impairment of goodwill
—
—
105,302
—
105,302
Loss on debt extinguishment
—
—
—
11,797
11,797
Equity in net (income) loss of investee,
net of tax
(269
)
—
—
4,131
3,862
Adjusted EBITDA
$
92,985
$
42,254
$
19,585
$
(34,044
)
$
120,780
(1)
Restructuring and related costs include
professional fees for strategic initiatives, organizational
consolidation costs, severance and other professional fees.
(2)
Amount represents a one-time,
non-recurring settlement in connection with a dispute with a payor
for which the Company will cease performing services beginning in
2025, which resulted in an adjustment to historical contracts
receivable recorded for the payor beginning with calendar year
2021.
Modivcare Inc.
Unaudited Reconciliation of
Non-GAAP Financial Measures
Segment Information and
Adjusted EBITDA
(in thousands)
Nine months ended September
30, 2023
NEMT
PCS
RPM
Corporate and Other
Total
Service revenue, net
$
1,452,389
$
534,435
$
57,702
$
3,812
$
2,048,338
Grant income
—
4,649
—
—
4,649
Operating expenses:
Service expense
1,277,604
417,636
20,129
3,366
1,718,735
General and administrative expense
87,645
63,480
16,781
61,189
229,095
Depreciation and amortization
20,319
38,590
18,087
683
77,679
Impairment of goodwill
—
137,331
45,769
—
183,100
Total operating expenses
1,385,568
657,037
100,766
65,238
2,208,609
Operating income (loss)
66,821
(117,953
)
(43,064
)
(61,426
)
(155,622
)
Interest expense, net
—
—
—
50,769
50,769
Income (loss) before income taxes and
equity method investment
66,821
(117,953
)
(43,064
)
(112,195
)
(206,391
)
Income tax benefit (provision)
(18,014
)
(5,452
)
(765
)
28,593
4,362
Equity in net income of investee, net of
tax
984
—
—
1,837
2,821
Net income (loss)
49,791
(123,405
)
(43,829
)
(81,765
)
(199,208
)
Interest expense, net
—
—
—
50,769
50,769
Income tax provision (benefit)
18,014
5,452
765
(28,593
)
(4,362
)
Depreciation and amortization
20,319
38,590
18,087
683
77,679
EBITDA
88,124
(79,363
)
(24,977
)
(58,906
)
(75,122
)
Restructuring and related costs(1)
11,865
—
—
21,606
33,471
Transaction and integration costs(2)
101
881
70
1,834
2,886
Settlement related costs
250
—
—
8,683
8,933
Stock-based compensation
—
—
—
3,485
3,485
Impairment of goodwill
—
137,331
45,769
—
183,100
Equity in net income of investee, net of
tax
(984
)
—
—
(1,837
)
(2,821
)
Adjusted EBITDA
$
99,356
$
58,849
$
20,862
$
(25,135
)
$
153,932
(1)
Restructuring and related costs include
professional fees for strategic initiatives, organizational
consolidation costs, severance and other professional fees.
(2)
Transaction and integration costs consist
of fees incurred related to Sarbanes-Oxley Act of 2002
implementation and business integration efforts
Modivcare Inc.
Unaudited Reconciliation of
Non-GAAP Financial Measures
Adjusted Net Income and
Adjusted Net Income per Common Share
(in thousands, except share and
per share data)
Three months ended September
30,
Nine months ended September
30,
2024
2023
2024
2023
Net loss
$
(26,604
)
$
(4,302
)
$
(177,788
)
$
(199,208
)
Restructuring and related costs(1)
309
8,916
13,395
33,471
Transaction and integration costs(2)
1,367
1,159
3,470
2,886
Settlement related costs
2,610
1,449
3,415
8,933
Payor collection settlement(3)
5,368
—
5,368
—
Stock-based compensation
340
1,690
4,090
3,485
Impairment of goodwill
—
—
105,302
183,100
Loss on debt extinguishment
11,797
—
11,797
—
Equity in net (income) loss of investee,
net of tax
2,644
160
3,862
(2,821
)
Intangible asset amortization expense
19,715
19,748
59,259
59,457
Tax effected impact of adjustments
(11,144
)
(8,327
)
(27,063
)
(27,833
)
Adjusted net income
$
6,402
$
20,493
$
5,107
$
61,470
Adjusted earnings per share
$
0.45
$
1.44
$
0.36
$
4.33
Diluted weighted-average number of common
shares outstanding
14,262,751
14,218,141
14,251,313
14,209,787
(1)
Restructuring and related costs include
professional fees for strategic initiatives, organizational
consolidation costs, severance and other professional fees.
(2)
Transaction and integration costs consist
of fees incurred related to SOX implementation and business
integration efforts.
(3)
Amount represents a one-time,
non-recurring settlement in connection with a dispute with a payor
for which the Company will cease performing services beginning in
2025, which resulted in an adjustment to historical contracts
receivable recorded for the payor beginning with calendar year
2021.
Modivcare Inc.
Unaudited Key Statistical and
Financial Data
(in thousands, except for
statistical data)
Three months ended
Nine months ended
Three months ended
September 30, 2024
September 30, 2023
% Change
September 30, 2024
September 30, 2023
% Change
June 30, 2024
QoQ % Change
NEMT Segment
Service revenue, net
$
492,253
$
485,951
1.3
%
$
1,462,236
$
1,452,389
0.7
%
$
490,677
0.3
%
Purchased services expense
383,769
363,594
5.5
%
1,119,248
1,085,206
3.1
%
372,579
3.0
%
Payroll and other expense
52,780
64,427
(18.1
)%
168,914
192,398
(12.2
)%
55,377
(4.7
)%
Service expense
$
436,549
$
428,021
2.0
%
$
1,288,162
$
1,277,604
0.8
%
$
427,956
2.0
%
Gross profit
$
55,704
$
57,930
(3.8
)%
$
174,074
$
174,785
(0.4
)%
$
62,721
(11.2
)%
Gross margin
11.3
%
11.9
%
11.9
%
12.0
%
12.8
%
G&A expense
$
30,758
$
25,433
20.9
%
$
95,701
$
87,645
9.2
%
$
33,123
(7.1
)%
G&A expense adjustments:
Restructuring and related costs
249
2,711
(90.8
)%
9,192
11,865
(22.5
)%
5,704
(95.6
)%
Transaction and integration costs
—
101
(100.0
)%
52
101
(48.5
)%
—
N/M
Settlement related costs
—
(25
)
(100.0
)%
—
250
(100.0
)%
—
N/M
Adjusted G&A expense
$
30,509
$
22,646
34.7
%
$
86,457
$
75,429
14.6
%
$
27,419
11.3
%
Adjusted G&A expense % of revenue
6.2
%
4.7
%
5.9
%
5.2
%
5.6
%
Net income
$
12,962
$
18,831
(31.2
)%
$
41,528
$
49,791
(16.6
)%
$
16,398
(21.0
)%
Net income margin
2.6
%
3.9
%
2.8
%
3.4
%
3.3
%
Adjusted EBITDA
$
30,563
$
35,284
(13.4
)%
$
92,985
$
99,356
(6.4
)%
$
35,302
(13.4
)%
Adjusted EBITDA margin
6.2
%
7.3
%
6.4
%
6.8
%
7.2
%
Total paid trips (thousands)
9,418
8,824
6.7
%
27,257
25,761
5.8
%
9,031
4.3
%
Average monthly members (thousands)
30,023
33,660
(10.8
)%
29,599
33,892
(12.7
)%
29,703
1.1
%
Revenue per member per month
$
5.47
$
4.81
13.7
%
$
5.49
$
4.76
15.3
%
$
5.51
(0.7
)%
Revenue per trip
$
52.27
$
55.07
(5.1
)%
$
53.65
$
56.38
(4.8
)%
$
54.33
(3.8
)%
Monthly utilization
10.5
%
8.7
%
10.2
%
8.4
%
10.1
%
Purchased services per trip
$
40.75
$
41.21
(1.1
)%
$
41.06
$
42.13
(2.5
)%
$
41.26
(1.2
)%
Payroll and other per trip
$
5.60
$
7.30
(23.3
)%
$
6.20
$
7.47
(17.0
)%
$
6.13
(8.6
)%
Total service expense per trip
$
46.35
$
48.51
(4.5
)%
$
47.26
$
49.60
(4.7
)%
$
47.39
(2.2
)%
N/M - Not Meaningful. Certain figures in the tables above do not
provide meaningful percentage comparison, thus, the percentage has
been removed.
Modivcare Inc.
Unaudited Key Statistical and
Financial Data
(in thousands, except for
statistical data)
Three months ended
Nine months ended
Three months ended
September 30, 2024
September 30, 2023
% Change
September 30, 2024
September 30, 2023
% Change
June 30, 2024
QoQ % Change
PCS Segment
Service revenue, net
$
188,518
$
179,979
4.7
%
$
558,696
$
534,435
4.5
%
$
186,610
1.0
%
Service expense
151,745
143,078
6.1
%
451,049
417,636
8.0
%
149,866
1.3
%
Gross profit
$
36,773
$
36,901
(0.3
)%
$
107,647
$
116,799
(7.8
)%
$
36,744
0.1
%
Gross margin
19.5
%
20.5
%
19.3
%
21.9
%
19.7
%
G&A expense
$
23,823
$
20,252
17.6
%
$
72,152
$
63,480
13.7
%
$
23,897
(0.3
)%
G&A expense adjustments
Restructuring and related costs
15
—
N/M
1,321
—
N/M
1,179
(98.7
)%
Transaction and integration costs
146
431
(66.1
)%
2,023
881
129.6
%
431
(66.1
)%
Settlement related costs
2,610
—
N/M
3,415
—
N/M
805
224.2
%
Adjusted G&A expense
$
21,052
$
19,821
6.2
%
$
65,393
$
62,599
4.5
%
$
21,482
(2.0
)%
Adjusted G&A expense % of revenue
11.2
%
11.0
%
11.7
%
11.7
%
11.5
%
Net income (loss)
$
8
$
3,142
(99.7
)%
$
(2,145
)
$
(123,405
)
(98.3
)%
$
121
(93.4
)%
Net income (loss) margin
—
%
1.7
%
(0.4
)%
(23.1
)%
0.1
%
Adjusted EBITDA
$
15,721
$
17,631
(10.8
)%
$
42,254
$
58,849
(28.2
)%
$
15,262
3.0
%
Adjusted EBITDA margin
8.3
%
9.8
%
7.6
%
11.0
%
8.2
%
Total hours (thousands)
7,174
6,995
2.6
%
21,187
20,752
2.1
%
7,048
1.8
%
Revenue per hour
$
26.28
$
25.73
2.1
%
$
26.37
$
25.75
2.4
%
$
26.48
(0.8
)%
Service expense per hour
$
21.15
$
20.45
3.4
%
$
21.29
$
20.13
5.8
%
$
21.26
(0.5
)%
N/M - Not Meaningful. Certain figures in the tables above do not
provide meaningful percentage comparison, thus, the percentage has
been removed.
Modivcare Inc.
Unaudited Key Statistical and
Financial Data
(in thousands, except for
statistical data)
Three months ended
Nine months ended
Three months ended
September 30, 2024
September 30, 2023
% Change
September 30, 2024
September 30, 2023
% Change
June 30, 2024
QoQ % Change
RPM Segment
Service revenue, net
$
19,448
$
19,779
(1.7
)%
$
58,575
$
57,702
1.5
%
$
19,025
2.2
%
Service expense
8,018
6,934
15.6
%
24,556
20,129
22.0
%
8,175
(1.9
)%
Gross profit
$
11,430
$
12,845
(11.0
)%
$
34,019
$
37,573
(9.5
)%
$
10,850
5.3
%
Gross margin
58.8
%
64.9
%
58.1
%
65.1
%
57.0
%
G&A expense
$
4,332
$
5,685
(23.8
)%
$
15,780
$
16,781
(6.0
)%
$
6,008
(27.9
)%
G&A expense adjustments
Restructuring and related costs
45
—
N/M
1,244
—
N/M
1,189
(96.2
)%
Transaction and integration costs
2
22
(90.9
)%
102
70
45.7
%
100
(98.0
)%
Adjusted G&A expense
$
4,285
$
5,663
(24.3
)%
$
14,434
$
16,711
(13.6
)%
$
4,719
(9.2
)%
Adjusted G&A expense % of revenue
22.0
%
28.6
%
24.6
%
29.0
%
24.8
%
Net income (loss)
$
18
$
707
(97.5
)%
$
(107,171
)
$
(43,829
)
144.5
%
$
(106,881
)
(100.0
)%
Net income (loss) margin
0.1
%
3.6
%
(183.0
)%
(76.0
)%
(561.8
)%
Adjusted EBITDA
$
7,145
$
7,182
(0.5
)%
$
19,585
$
20,862
(6.1
)%
$
6,131
16.5
%
Adjusted EBITDA margin
36.7
%
36.3
%
33.4
%
36.2
%
32.2
%
Average monthly members (thousands)
246
247
(0.4
)%
247
241
2.5
%
246
—
%
Revenue per member per month
$
26.35
$
26.69
(1.3
)%
$
26.35
$
26.60
(0.9
)%
$
25.78
2.2
%
Service expense per member per month
$
10.86
$
9.36
16.0
%
$
11.05
$
9.28
19.1
%
$
11.08
(2.0
)%
N/M - Not Meaningful. Certain figures in the tables above do not
provide meaningful percentage comparison, thus, the percentage has
been removed.
Modivcare Inc.
Unaudited Key Statistical and
Financial Data
(in thousands)
Three months ended
Nine months ended
Three months ended
September 30, 2024
September 30, 2023
% Change
September 30, 2024
September 30, 2023
% Change
June 30, 2024
QoQ % Change
Corporate and Other Segment
G&A expense
$
11,990
$
18,772
(36.1
)%
$
40,512
$
61,189
(33.8
)%
$
13,037
(8.0
)%
G&A expense adjustments
Restructuring and related costs
—
6,205
(100.0
)%
1,638
21,606
(92.4
)%
(91
)
(100.0
)%
Transaction and integration costs
1,219
605
101.5
%
1,293
1,834
(29.5
)%
29
4103.4
%
Settlement related costs
—
1,474
(100.0
)%
—
8,683
(100.0
)%
—
N/M
Stock-based compensation
340
1,690
(79.9
)%
4,090
3,485
17.4
%
1,969
(82.7
)%
Adjusted G&A expense
$
10,431
$
8,798
18.6
%
$
33,491
$
25,581
30.9
%
$
11,130
(6.3
)%
Adjusted G&A expense % of consolidated
revenue
1.5
%
1.3
%
1.6
%
1.2
%
1.6
%
Three months ended
Nine months ended
Three months ended
September 30, 2024
September 30, 2023
% Change
September 30, 2024
September 30, 2023
% Change
June 30, 2024
QoQ % Change
Consolidated Modivcare Inc.
G&A expense
$
70,903
$
70,142
1.1
%
$
224,145
$
229,095
(2.2
)%
$
76,065
(6.8
)%
G&A expense adjustments
Restructuring and related costs
309
8,916
(96.5
)%
13,395
33,471
(60.0
)%
7,981
(96.1
)%
Transaction and integration costs
1,367
1,159
17.9
%
3,470
2,886
20.2
%
560
144.1
%
Settlement related costs
2,610
1,449
80.1
%
3,415
8,933
(61.8
)%
805
224.2
%
Stock-based compensation
340
1,690
(79.9
)%
4,090
3,485
17.4
%
1,969
(82.7
)%
Adjusted G&A expense
$
66,277
$
56,928
16.4
%
$
199,775
$
180,320
10.8
%
$
64,750
2.4
%
Adjusted G&A expense % of consolidated
revenue
9.4
%
8.3
%
9.6
%
8.8
%
9.3
%
N/M - Not Meaningful. Certain figures in the tables above do not
provide meaningful percentage comparison, thus, the percentage has
been removed.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241106250028/en/
Investor Relations Contact Kevin Ellich, Head of Investor
Relations Kevin.Ellich@modivcare.com
ModivCare (NASDAQ:MODV)
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