Modivcare Inc., (the “Company” or “Modivcare”) (Nasdaq: MODV), a
technology-enabled healthcare services company that provides a
platform of integrated supportive care solutions addressing the
social determinants of health and improving health outcomes, today
reported financial results for the three and six months ended June
30, 2023.
Second Quarter 2023
Highlights:
- Service revenue of $699.1 million, an 11.3% increase as
compared to $628.2 million in the second quarter of 2022
- Net loss of $190.9 million or $13.47 per diluted common share,
primarily attributable to goodwill impairment of $183.1
million
- Adjusted EBITDA(1) of $52.4 million, adjusted net income(1) of
$20.8 million and adjusted EPS(1) of $1.47 per diluted common
share
- Cash used in operating activities during the quarter of $108.2
million along with capex spend of $8.9 million
- Contract payables decreased by $78.5 million to $109.1 million
and contract receivables increased by $17.4 million to $119.8
million, resulting in net contract receivables of $10.7 million as
of June 30, 2023
- $126.5 million drawn on the $325.0 million revolving credit
facility as of June 30, 2023
- Amended credit agreement’s maximum Total Net Leverage Ratio to
provide improved access to liquidity
(1) Non-GAAP financial measure
reconciliations and other related information about non-GAAP
financial measures provided below
"Modivcare continues to transform into a more efficient
tech-enabled platform with a differentiated offering in the health
care services market. Revenue growth of 11% during the second
quarter of 2023 was driven by strong growth across our Home and
Mobility businesses,” stated L. Heath Sampson, President, and CEO.
“Our Home division is benefiting from our centralization and
standardization initiatives, which helped drive double-digit
revenue and Adjusted EBITDA growth. We made significant progress on
our move towards One Modivcare during the second quarter by
accelerating the creation of a longitudinal member profile that
will allow us to improve member experience, lower costs, and
generate proactive outcome-based insights. Membership in our
Mobility division increased 2% sequentially driven by expansions of
existing contracts, with 5% Medicare Advantage growth and 1%
Medicaid member growth, despite the initial impact of Medicaid
redeterminations. However, in the near-term, increased utilization
and related higher call volumes in NEMT, along with new contract
win implementation delays, and contract attrition from prior years,
prompted us to revise our 2023 full-year Adjusted EBITDA guidance
to an updated range of $200 million to $210 million. Our cash flow
was also negatively impacted during the second quarter of 2023 due
to a $96 million decline in our contract payables, net of
receivables. We expect positive cash flow in the second half of the
year, as collections on our contract receivables align with or
exceed declines on our contract payables. Despite the near-term
challenges, we believe our business is well positioned to generate
strong long-term performance as we continue to drive us towards our
unique One Modivcare vision."
2023 Guidance
We updated our revenue and adjusted EBITDA guidance ranges as
follows ($ in millions):
Updated
Previous
Low
High
Low
High
Revenue
$
2,750
$
2,800
$
2,575
$
2,600
Adjusted EBITDA
$
200
$
210
$
225
$
235
Guidance excludes the effects of any future merger or
acquisition activity and is based on the current operating
environment.
Second Quarter 2023 Results
For the second quarter of 2023, the Company reported revenue of
$699.1 million, an increase of 11.3% from $628.2 million in the
second quarter of 2022. The increase in revenue is primarily
attributable to a 1.5% increase in membership and an 9.0% increase
in revenue per member per month in our NEMT segment coupled with a
3.4% increase in hours worked and a 7.2% increase in rate per hour
in our Personal Care segment.
Our operating loss was $175.8 million, or 25.1% of revenue, in
the second quarter of 2023, compared to operating income of $23.1
million, or 3.7% of revenue, in the second quarter of 2022. Net
loss in the second quarter of 2023 was $190.9 million, or $13.47
per diluted common share, compared to net income of $3.3 million,
or $0.24 per diluted common share, in the second quarter of 2022.
Both the operating loss and the net loss for the second quarter of
2023 are primarily attributable to the non-cash goodwill impairment
of $183.1 million.
Adjusted EBITDA was $52.4 million, or 7.5% of revenue, in the
second quarter of 2023, compared to $60.2 million, or 9.6% of
revenue, in the second quarter of 2022. Our Adjusted EBITDA
decreased primarily as a result of a $17.5 million decrease in the
NEMT segment. This decrease was driven by increased service expense
per trip and higher than expected trip volume, as well as contract
losses that impacted NEMT's operating margin. Accordingly, adjusted
net income in the second quarter of 2023 was $20.8 million, or
$1.47 per diluted common share, compared to $28.1 million, or $1.99
per diluted common share, in the second quarter of 2022.
Cash used in operations during the quarter was $108.2 million as
compared to $17.9 million during the second quarter of 2022. The
primary use of cash during the quarter was a net $78.5 million
reduction in contract payables, coupled with a $17.4 million
increase in contract receivables, for a total use of cash of $95.9
million. As of the quarter end, we are in a net contract
receivables position of $10.7 million.
During the second quarter, a goodwill impairment of $183.1
million was recognized, as the Company performed its annual
goodwill impairment assessment and determined that based on its
qualitative assessment for each reporting unit, factors existed
which required the Company to perform a quantitative assessment to
test its goodwill for impairment. These factors included a decline
in the market price of the Company's common stock and general
economic and market volatility.
Second Quarter Earnings Conference Call
Modivcare will hold a conference call to discuss its financial
results on Friday, August 4, 2023 at 8:30 a.m. ET. To access the
call, please dial:
US toll-free: 1 (877) 407-8037 International: 1
(201) 689-8037
You may also access the conference call via webcast at
investors.modivcare.com, where the call will also be archived.
About Modivcare
Modivcare Inc. (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 are intended to 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 (as applicable) EBITDA,
Adjusted EBITDA and Adjusted G&A expense for the Company and
its segments, Adjusted EBITDA margin for the Company's segments
(other than its Corporate segment), and Adjusted Net Income and
Adjusted EPS for the Company, all of which are performance measures
that are not recognized under GAAP. 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) cash settled equity, (5)
stock-based compensation, (6) impairment of goodwill, (7) COVID-19
related costs, net of grant income, 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 is calculated as net income (loss) before: (1) restructuring
and related costs, (2) transaction and integration costs, (3)
settlement related costs, (4) cash settled equity, (5) stock-based
compensation, (6) impairment of goodwill, (7) equity in net
(income) loss of investee, net of tax (8) intangible asset
amortization expense, (9) COVID-19 related costs, net of grant
income, and (10) 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, (4) cash settled equity, and
(5) stock-based compensation. Reconciliations of the non-GAAP
financial measures to their most directly comparable GAAP financial
measures are included below. We do not provide guidance for net
income (loss) in this presentation on a basis consistent with GAAP
or a reconciliation of forward-looking non-GAAP financial measures
to their most directly comparable GAAP financial measures on a
forward-looking basis because we are unable to predict items
contained in the GAAP financial measures without unreasonable
efforts. Our non-GAAP performance measures exclude expenses and
amounts that are not driven by our core operating results and may
be one time in nature. Excluding these expenses makes comparisons
with prior periods as well as to other companies in our industry
more meaningful. We believe such measures allow investors to gain a
better understanding of the factors and trends affecting the
ongoing operations of our business. We consider our core operations
to be the ongoing activities to provide services from which we earn
revenue, including direct operating costs and indirect costs to
support these activities. As a result, our net income or loss in
equity investee is excluded from these measures, as we do not have
the ability to manage the venture, allocate resources within the
venture, or directly control its operations or performance.
Our non-GAAP financial measures may not provide information that
is directly comparable to that provided by other companies in our
industry, as other companies in our industry may calculate non-GAAP
financial measures differently. In addition, there are limitations
in using non-GAAP financial measures because they are not prepared
in accordance with GAAP, may be different from non-GAAP financial
measures used by other companies, and exclude expenses that may
have a material impact on our reported financial results. The
presentation of non-GAAP financial measures is not intended to be
considered in isolation from or as a substitute for the most
directly comparable financial measures prepared in accordance with
GAAP. We urge you to review the reconciliations of our non-GAAP
financial measures to the most directly comparable GAAP financial
measures included below, and not to rely on any single financial
measure to evaluate our business.
Forward-Looking Statements
Certain statements contained in this press release constitute
“forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements are
predictive in nature and are frequently identified by the use of
terms such as “may,” “will,” “should,” “expect,” “believe,”
“estimate,” “intend,” and similar words indicating possible future
expectations, events or actions. The updated guidance discussed
herein constitutes forward-looking statements. Such forward-looking
statements are based on current expectations, assumptions,
estimates and projections about our business and our industry, and
are not guarantees of our future performance. These statements are
subject to a number of known and unknown risks, uncertainties and
other factors, many of which are beyond our ability to control or
predict, which may cause actual results to be materially different
from those expressed or implied herein, including but not limited
to: government or private insurance program funding reductions or
limitations; implementation of alternative payment models or the
transition of Medicaid and Medicare beneficiaries to Managed Care
Organizations; our inability to control reimbursement rates
received for our services; cost containment initiatives undertaken
by private third-party payors and an inability to maintain or
reduce our cost of services below rates set forth by our payors;
the effects of a public health emergency; inadequacies in our
information technology systems; changes in the funding, financial
viability or our relationships with our payors; pandemics and other
infectious diseases; disruptions to our contact center operations
caused by health epidemics or pandemics; delays in collection of
our accounts receivable; any impairment of our goodwill and
long-lived assets; any failure to maintain or to develop reliable,
efficient and secure information technology systems; any inability
to attract and retain qualified employees; any disruptions from
acquisition or acquisition integration efforts; estimated income
taxes being different from income taxes that we ultimately pay; our
contracts not surviving until the end of their stated terms, or not
being renewed or extended; our failure to compete effectively in
the marketplace; our not being awarded contracts through the
government’s requests for proposals process, or our awarded
contracts not being profitable; any failure to satisfy our
contractual obligations or to maintain existing pledged performance
and payment bonds; any failure to estimate accurately the cost of
performing our contracts; any misclassification of the drivers we
engage as independent contractors rather than as employees;
significant interruptions in our communication and data services;
not successfully executing on our strategies in the face of our
competition; any inability to maintain relationships with existing
patient referral sources; certificates of need laws or other
regulatory and licensure obligations that may adversely affect our
personal care integration efforts and expansion into new markets;
any failure to obtain the consent of the New York Department of
Health to manage the day to day operations of our licensed in-home
personal care services agency business; changes in the case-mix of
our personal care patients, or changes in payor mix or payment
methodologies; our loss of existing favorable managed care
contracts; our experiencing labor shortages in qualified employees
and management; labor disputes or disruptions, in particular in New
York; becoming subject to malpractice or other similar claims; our
operating in the competitive remote patient monitoring industry,
and failing to develop and enhance related technology applications;
any failure to innovate and provide services that are useful to
customers and to achieve and maintain market acceptance; our lack
of sole decision-making authority with respect to our minority
investment in Matrix and any failure by Matrix to achieve positive
financial position and results of operations; the cost of our
compliance with laws; changes to the regulatory landscape
applicable to our businesses; changes in budgetary priorities of
the government entities or private insurance programs that fund our
services; regulations relating to privacy and security of patient
and service user information; actions for false claims or
recoupment of funds; civil penalties or loss of business for
failing to comply with bribery, corruption and other regulations
governing business with public organizations; changes to, or
violations of, licensing regulations; our contracts being subject
to audit and modification by the payors with whom we contract; a
loss of Medicaid coverage by a significant number of Medicaid
beneficiaries following the expiration of the COVID-19 public
health emergency under the Families First Coronavirus Response Act
(2020); our existing debt agreements containing restrictions that
limit our flexibility in operating our business; our substantial
indebtedness and lease obligations; any loss of available financing
alternatives; our ability to incur substantial additional
indebtedness; and the results of the remediation of our identified
material weaknesses in internal control over financial
reporting.
The Company has provided additional information about the risks
facing our business in our annual report on Form 10-K and
subsequent periodic and current reports most recently filed with
the Securities and Exchange Commission that could impact future
performance. You are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date the
statement was made and are expressly qualified in their entirety by
the cautionary statements set forth herein and in our filings with
the Securities and Exchange Commission, which you should read in
their entirety before making an investment decision with respect to
our securities. We undertake no obligation to update or revise any
forward-looking statements contained in this release, whether as a
result of new information, future events or otherwise, except as
required by applicable law.
Modivcare Inc.
Unaudited Condensed
Consolidated Statements of Operations
(in thousands, except share and
per share data)
Three months ended June
30,
Six months ended June
30,
2023
2022
2023
2022
Service revenue, net
$
699,107
$
628,215
$
1,361,413
$
1,202,690
Grant income
2,634
3,330
4,098
3,798
Operating expenses:
Service expense
589,255
504,230
1,139,521
963,545
General and administrative expense
79,240
79,411
158,953
156,219
Depreciation and amortization
25,909
24,758
51,602
48,704
Impairment of goodwill
183,100
—
183,100
—
Total operating expenses
877,504
608,399
1,533,176
1,168,468
Operating income (loss)
(175,763
)
23,146
(167,665
)
38,020
Interest expense, net
16,967
15,472
32,925
30,872
Income (loss) before income taxes and
equity method investment
(192,730
)
7,674
(200,590
)
7,148
Income tax (provision) benefit
830
(2,291
)
2,703
(1,930
)
Equity in net income (loss) of investee,
net of tax
956
(2,055
)
2,981
(1,572
)
Net income (loss)
$
(190,944
)
$
3,328
$
(194,906
)
$
3,646
Earnings (loss) per common share:
Basic
$
(13.47
)
$
0.24
$
(13.76
)
$
0.26
Diluted
$
(13.47
)
$
0.24
$
(13.76
)
$
0.26
Weighted-average number of common shares
outstanding:
Basic
14,170,617
14,047,459
14,162,776
14,035,588
Diluted
14,170,617
14,115,471
14,162,776
14,122,730
Modivcare Inc.
Unaudited Condensed
Consolidated Balance Sheets
(in thousands)
June 30, 2023
December 31, 2022
Assets
Current assets:
Cash and cash equivalents
$
6,898
$
14,451
Accounts receivable, net
224,013
223,210
Contract receivables
119,763
71,131
Other current assets(1)
42,275
37,362
Total current assets
392,949
346,154
Property and equipment, net
78,922
69,138
Goodwill
785,554
968,654
Intangible assets, net
400,287
439,409
Equity investment
45,114
41,303
Operating lease right-of-use assets
39,301
39,405
Other long-term assets
42,893
40,209
Total assets
$
1,785,020
$
1,944,272
Liabilities and stockholders'
equity
Current liabilities:
Short-term borrowings
$
126,500
$
—
Accounts payable
56,047
54,959
Accrued contract payables
109,094
194,287
Accrued expenses and other current
liabilities
138,178
135,860
Accrued transportation costs
94,118
96,851
Current portion of operating lease
liabilities
9,298
9,640
Total current liabilities
533,235
491,597
Long-term debt, net of deferred financing
costs
981,526
979,361
Operating lease liabilities, less current
portion
32,396
32,088
Other long-term liabilities(2)
76,422
86,670
Total liabilities
1,623,579
1,589,716
Stockholders' equity
Stockholders' equity
161,441
354,556
Total liabilities and stockholders'
equity
$
1,785,020
$
1,944,272
(1)
Includes other receivables, prepaid
expenses and other current assets and short-term restricted
cash.
(2)
Includes other long-term liabilities and
deferred tax liabilities.
Modivcare Inc.
Unaudited Condensed
Consolidated Statements of Cash Flows
(in thousands)
Six months ended June
30,
2023
2022
Operating activities
Net income (loss)
$
(194,906
)
$
3,646
Depreciation and amortization
51,602
48,704
Stock-based compensation
2,286
4,496
Equity in net (income) loss of
investee
(4,137
)
2,358
Deferred income taxes
(10,264
)
(14,493
)
Impairment of goodwill
183,100
—
Reduction of right-of-use asset
6,951
5,757
Other non-cash items(1)
(108
)
(6,495
)
Changes in working capital(2)
(145,398
)
7,233
Net cash provided by (used in) operating
activities
(110,874
)
51,206
Investing activities
Purchase of property and equipment
(22,265
)
(15,899
)
Acquisitions, net of cash acquired
—
(78,861
)
Net cash used in investing activities
(22,265
)
(94,760
)
Financing activities
Proceeds from short-term borrowings
126,500
—
Debt issuance costs
(376
)
(2,415
)
Proceeds from common stock issued pursuant
to stock option exercise
31
1,138
Restricted stock surrendered for employee
tax payment
(840
)
(607
)
Other financing activities
315
—
Net cash provided by (used in) financing
activities
125,630
(1,884
)
Net change in cash, cash equivalents and
restricted cash
(7,509
)
(45,438
)
Cash, cash equivalents and restricted cash
at beginning of period
14,975
133,422
Cash, cash equivalents and restricted cash
at end of period
$
7,466
$
87,984
(1)
Includes amortization of deferred
financing costs and debt discount and other assets.
(2)
Includes accounts receivable and other
receivables, contract 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,
2023
NEMT
Personal Care
RPM
Corporate and Other
Total
Service revenue, net
$
496,975
$
180,325
$
19,211
$
2,596
$
699,107
Grant income
—
2,634
—
—
2,634
Operating expenses:
Service expense
441,897
138,468
6,705
2,185
589,255
General and administrative expense
28,337
20,565
5,327
25,011
79,240
Depreciation and amortization
6,739
12,872
6,059
239
25,909
Impairment of goodwill
—
137,331
45,769
—
183,100
Total operating expenses
476,973
309,236
63,860
27,435
877,504
Operating income (loss)
20,002
(126,277
)
(44,649
)
(24,839
)
(175,763
)
Interest expense, net
—
—
—
16,967
16,967
Income (loss) before income taxes and
equity method investment
20,002
(126,277
)
(44,649
)
(41,806
)
(192,730
)
Income tax (provision) benefit
(5,402
)
(3,095
)
(316
)
9,643
830
Equity in net income of investee, net of
tax
189
—
—
767
956
Net income (loss)
14,789
(129,372
)
(44,965
)
(31,396
)
(190,944
)
Interest expense, net
—
—
—
16,967
16,967
Income tax provision (benefit)
5,402
3,095
316
(9,643
)
(830
)
Depreciation and amortization
6,739
12,872
6,059
239
25,909
EBITDA
26,930
(113,405
)
(38,590
)
(23,833
)
(148,898
)
Restructuring and related costs(1)
2,055
—
—
8,055
10,110
Transaction and integration costs
—
173
16
665
854
Settlement related costs
—
—
—
7,209
7,209
Stock-based compensation
—
—
—
947
947
Impairment of goodwill
—
137,331
45,769
—
183,100
Equity in net income of investee, net of
tax
(189
)
—
—
(767
)
(956
)
Adjusted EBITDA
$
28,796
$
24,099
$
7,195
$
(7,724
)
$
52,366
(1)
Restructuring and related costs include
professional fees for strategic initiatives, organizational
consolidation costs, severance and other professional fees.
Modivcare Inc.
Unaudited Reconciliation of
Non-GAAP Financial Measures
Segment Information and
Adjusted EBITDA
(in thousands)
Three months ended June 30,
2022
NEMT
Personal Care
RPM
Corporate and Other
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
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
Income tax (provision) benefit
(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
Income tax provision (benefit)
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 costs(1)
4,852
—
—
354
5,206
Transaction and integration 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 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 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)
Six months ended June 30,
2023
NEMT
Personal Care
RPM
Corporate and Other
Total
Service revenue, net
$
966,438
$
354,456
$
37,923
$
2,596
$
1,361,413
Grant income
—
4,098
—
—
4,098
Operating expenses:
Service expense
849,583
274,558
13,195
2,185
1,139,521
General and administrative expense
62,212
43,228
11,096
42,417
158,953
Depreciation and amortization
13,505
25,740
11,913
444
51,602
Impairment of goodwill
—
137,331
45,769
—
183,100
Total operating expenses
925,300
480,857
81,973
45,046
1,533,176
Operating income (loss)
41,138
(122,303
)
(44,050
)
(42,450
)
(167,665
)
Interest expense, net
—
—
—
32,925
32,925
Income (loss) before income taxes and
equity method investment
41,138
(122,303
)
(44,050
)
(75,375
)
(200,590
)
Income tax (provision) benefit
(11,020
)
(4,244
)
(486
)
18,453
2,703
Equity in net income of investee, net of
tax
842
—
—
2,139
2,981
Net income (loss)
30,960
(126,547
)
(44,536
)
(54,783
)
(194,906
)
Interest expense, net
—
—
—
32,925
32,925
Income tax provision (benefit)
11,020
4,244
486
(18,453
)
(2,703
)
Depreciation and amortization
13,505
25,740
11,913
444
51,602
EBITDA
55,485
(96,563
)
(32,137
)
(39,867
)
(113,082
)
Restructuring and related costs(1)
9,154
—
—
15,401
24,555
Transaction and integration costs
—
450
48
1,229
1,727
Settlement related costs
275
—
—
7,209
7,484
Stock-based compensation
—
—
—
1,795
1,795
Impairment of goodwill
—
137,331
45,769
—
183,100
Equity in net income of investee, net of
tax
(842
)
—
—
(2,139
)
(2,981
)
Adjusted EBITDA
$
64,072
$
41,218
$
13,680
$
(16,372
)
$
102,598
(1)
Restructuring and related costs include
professional fees for strategic initiatives, organizational
consolidation costs, severance and other professional fees.
Modivcare Inc.
Unaudited Reconciliation of
Non-GAAP Financial Measures
Segment Information and
Adjusted EBITDA
(in thousands)
Six months ended June 30,
2022
NEMT
Personal Care
RPM
Corporate and Other
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
Income tax (provision) benefit
(16,138
)
(2,241
)
247
16,202
(1,930
)
Equity in net loss 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
Income tax provision (benefit)
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 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 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 June
30,
Six months ended June
30,
2023
2022
2023
2022
Net income (loss)
$
(190,944
)
$
3,328
$
(194,906
)
$
3,646
Restructuring and related costs(1)
10,110
5,206
24,555
11,046
Transaction and integration costs(2)
854
7,702
1,727
11,413
Settlement related costs
7,209
—
7,484
—
Cash settled equity
—
20
—
7
Stock-based compensation
947
2,670
1,795
4,136
Impairment of goodwill
183,100
—
183,100
—
Equity in net (income) loss of investee,
net of tax
(956
)
2,055
(2,981
)
1,572
Intangible asset amortization expense
19,808
19,752
39,709
39,251
COVID-19 related costs, net of grant
income
—
(3,344
)
—
(2,873
)
Tax effected impact of adjustments
(9,352
)
(9,299
)
(19,506
)
(18,224
)
Adjusted net income
$
20,776
$
28,090
$
40,977
$
49,974
Adjusted EPS
$
1.47
$
1.99
$
2.89
$
3.54
Diluted weighted-average number of common
shares outstanding
14,173,854
14,115,471
14,178,375
14,122,730
(1)
Restructuring and related costs include
professional fees for strategic initiatives, organizational
consolidation costs, severance and other professional fees.
(2)
Transaction and integration costs consist
of fees incurred related to SOX implementation and business
integration efforts.
Modivcare Inc.
Unaudited Key Statistical and
Financial Data
(in thousands, except for
statistical data)
Three months ended
Six months ended
Three months ended
June 30, 2023
June 30, 2022
% Change
June 30, 2023
June 30, 2022
% Change
March 31, 2023
QoQ % Change
NEMT Segment
Service revenue, net
$
496,975
$
448,733
10.8
%
$
966,438
$
849,653
13.7
%
$
469,463
5.9
%
Purchased services expense
377,192
317,213
18.9
%
721,612
595,160
21.2
%
344,420
9.5
%
Payroll and other expense
64,705
56,511
14.5
%
127,971
110,660
15.6
%
63,266
2.3
%
Service expense
$
441,897
$
373,724
18.2
%
$
849,583
$
705,820
20.4
%
$
407,686
8.4
%
Gross profit
$
55,078
$
75,009
(26.6
)%
$
116,855
$
143,833
(18.8
)%
$
61,777
(10.8
)%
Gross margin
11.1
%
16.7
%
12.1
%
16.9
%
13.2
%
G&A expense
$
28,337
$
33,588
(15.6
)%
$
62,212
$
70,921
(12.3
)%
$
33,875
(16.3
)%
G&A expense adjustments:
Restructuring and related costs
2,055
4,852
(57.6
)%
9,154
10,456
(12.5
)%
7,099
(71.1
)%
Settlement related costs
—
—
N/M
275
—
N/M
275
N/M
Adjusted G&A expense
$
26,282
$
28,736
(8.5
)%
$
52,783
$
60,465
(12.7
)%
$
26,501
(0.8
)%
Adjusted G&A expense % of revenue
5.3
%
6.4
%
5.5
%
7.1
%
5.6
%
Net income
$
14,789
$
24,466
(39.6
)%
$
30,960
$
42,212
(26.7
)%
$
16,171
(8.5
)%
Net income margin
3.0
%
5.5
%
3.2
%
5.0
%
3.4
%
Adjusted EBITDA
$
28,796
$
46,307
(37.8
)%
$
64,072
$
83,524
(23.3
)%
$
35,276
(18.4
)%
Adjusted EBITDA margin
5.8
%
10.3
%
6.6
%
9.8
%
7.5
%
Total paid trips (thousands)
8,735
7,831
11.5
%
16,937
14,942
13.4
%
8,202
6.5
%
Average monthly members (thousands)
34,312
33,792
1.5
%
34,008
32,984
3.1
%
33,704
1.8
%
Revenue per member per month
$
4.83
$
4.43
9.0
%
$
4.74
$
4.29
10.5
%
$
4.64
4.1
%
Revenue per trip
$
56.89
$
57.30
(0.7
)%
$
57.06
$
56.86
0.4
%
$
57.24
(0.6
)%
Monthly utilization
8.5
%
7.7
%
8.3
%
7.6
%
8.1
%
Purchased services per trip
$
43.18
$
40.51
6.6
%
$
42.61
$
39.83
7.0
%
$
41.99
2.8
%
Payroll and other per trip
$
7.41
$
7.22
2.6
%
$
7.56
$
7.41
2.0
%
$
7.71
(3.9
)%
Total service expense per trip
$
50.59
$
47.73
6.0
%
$
50.17
$
47.24
6.2
%
$
49.70
1.8
%
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
Six months ended
Three months ended
June 30, 2023
June 30, 2022
% Change
June 30, 2023
June 30, 2022
% Change
March 31, 2023
QoQ % Change
Personal Care Segment
Service revenue, net
$
180,325
$
162,737
10.8
%
$
354,456
$
322,435
9.9
%
$
174,131
3.6
%
Service expense
138,468
124,445
11.3
%
274,558
246,677
11.3
%
136,090
1.7
%
Gross profit
$
41,857
$
38,292
9.3
%
$
79,898
$
75,758
5.5
%
$
38,041
10.0
%
Gross Margin
23.2
%
23.5
%
22.5
%
23.5
%
21.8
%
G&A expense
$
20,565
$
23,346
(11.9
)%
$
43,228
$
46,479
(7.0
)%
$
22,663
(9.3
)%
G&A expense adjustments
Restructuring and related costs
—
—
N/M
—
181
N/M
—
N/M
Transaction and integration costs
173
2,830
(93.9
)%
450
4,103
(89.0
)%
277
(37.5
)%
Stock-based compensation
—
173
N/M
—
190
N/M
—
N/M
Adjusted G&A expense
$
20,392
$
20,343
0.2
%
$
42,778
$
42,005
1.8
%
$
22,386
(8.9
)%
Adjusted G&A expense % of revenue
11.3
%
12.5
%
12.1
%
13.0
%
12.9
%
Net income
$
(129,372
)
$
4,123
N/M
$
(126,547
)
$
5,779
N/M
$
2,825
N/M
Net income margin
(71.7
)%
2.5
%
(35.7
)%
1.8
%
1.6
%
Adjusted EBITDA
$
24,099
$
17,901
34.6
%
$
41,218
$
34,522
19.4
%
$
17,119
40.8
%
Adjusted EBITDA margin
13.4
%
11.0
%
11.6
%
10.7
%
9.8
%
Total hours (in thousands)
6,933
6,705
3.4
%
13,757
13,240
3.9
%
6,824
1.6
%
Revenue per hour
$
26.01
$
24.27
7.2
%
$
25.77
$
24.35
5.8
%
$
25.52
1.9
%
Service expense per hour
$
19.97
$
18.56
7.6
%
$
19.96
$
18.63
7.1
%
$
19.94
0.2
%
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
Six months ended
Three months ended
June 30, 2023
June 30, 2022
% Change
June 30, 2023
June 30, 2022
% Change
March 31, 2023
QoQ % Change
RPM Segment
Service revenue, net
$
19,211
$
16,745
14.7
%
$
37,923
$
30,602
23.9
%
$
18,712
2.7
%
Service expense
6,705
6,061
10.6
%
13,195
11,048
19.4
%
6,490
3.3
%
Gross profit
$
12,506
$
10,684
17.1
%
$
24,728
$
19,554
26.5
%
$
12,222
2.3
%
Gross Margin
65.1
%
63.8
%
65.2
%
63.9
%
65.3
%
G&A expense
$
5,327
$
6,742
(21.0
)%
$
11,096
$
11,704
(5.2
)%
$
5,769
(7.7
)%
G&A expense adjustments
Restructuring and related costs
—
—
N/M
—
24
N/M
—
N/M
Transaction and integration costs
16
1,635
(99.0
)%
48
2,282
(97.9
)%
32
(50.0
)%
Stock-based compensation
—
57
N/M
—
86
N/M
—
N/M
Adjusted G&A expense
$
5,311
$
5,050
5.2
%
$
11,048
$
9,312
18.6
%
$
5,737
(7.4
)%
Adjusted G&A expense % of revenue
27.6
%
30.2
%
29.1
%
30.4
%
30.7
%
Net income (loss)
$
(44,965
)
$
(475
)
N/M
$
(44,536
)
$
(637
)
N/M
$
429
N/M
Net income (loss) margin
(234.1
)%
(2.8
)%
(117.4
)%
(2.1
)%
2.3
%
Adjusted EBITDA
$
7,195
$
5,634
27.7
%
$
13,680
$
10,242
33.6
%
$
6,485
10.9
%
Adjusted EBITDA margin
37.5
%
33.6
%
36.1
%
33.5
%
34.7
%
Average monthly members (in thousands)
240
203
18.2
%
237
186
27.4
%
235
2.1
%
Revenue per member per month
$
26.68
$
27.50
(3.0
)%
$
26.67
$
27.42
(2.7
)%
$
26.54
0.5
%
Service expense per member per month
$
9.31
$
9.95
(6.4
)%
$
9.28
$
9.90
(6.3
)%
$
9.21
1.1
%
N/M - Not Meaningful. Certain figures in
the tables above do not provide meaningful percentage comparison,
thus, the percentage has been removed.
Modivcare Inc.
Unaudited Key Statistical and
Financial Data
(in thousands)
Three months ended
Six months ended
Three months ended
June 30, 2023
June 30, 2022
% Change
June 30, 2023
June 30, 2022
% Change
March 31, 2023
QoQ % Change
Corporate and Other Segment
G&A expense
$
25,011
$
15,735
59.0
%
$
42,417
$
27,115
56.4
%
$
17,406
43.7
%
G&A expense adjustments
Restructuring and related costs
8,055
354
N/M
15,401
385
N/M
7,346
9.7
%
Transaction and integration costs
665
3,237
(79.5
)%
1,229
5,028
(75.6
)%
564
17.9
%
Settlement related costs
7,209
—
N/M
7,209
—
N/M
—
N/M
Cash settled equity
—
20
N/M
—
7
N/M
—
N/M
Stock-based compensation
947
2,440
(61.2
)%
1,795
3,860
(53.5
)%
848
11.7
%
Adjusted G&A expense
$
8,135
$
9,684
(16.0
)%
$
16,783
$
17,835
(5.9
)%
$
8,648
(5.9
)%
Adjusted G&A expense % of consolidated
revenue
1.2
%
1.5
%
1.2
%
1.5
%
1.3
%
Three months ended
Six months ended
Three months ended
June 30, 2023
June 30, 2022
% Change
June 30, 2023
June 30, 2022
% Change
March 31, 2023
QoQ % Change
Consolidated Modivcare Inc.
G&A expense
$
79,240
$
79,411
(0.2
)%
$
158,953
$
156,219
1.8
%
$
79,713
(0.6
)%
G&A expense adjustments
Restructuring and related costs
10,110
5,206
94.2
%
24,555
11,046
N/M
14,445
(30.0
)%
Transaction and integration costs
854
7,702
(88.9
)%
1,727
11,413
(84.9
)%
873
(2.2
)%
Settlement related costs
7,209
—
N/M
7,484
—
N/M
275
N/M
Cash settled equity
—
20
N/M
—
7
N/M
—
N/M
Stock-based compensation
947
2,670
(64.5
)%
1,795
4,136
(56.6
)%
848
11.7
%
Adjusted G&A expense
$
60,120
$
63,813
(5.8
)%
$
123,392
$
129,617
(4.8
)%
$
63,272
(5.0
)%
Adjusted G&A expense % of revenue
8.6
%
10.2
%
9.1
%
10.8
%
9.6
%
N/M - Not Meaningful. Certain figures in
the tables above do not provide meaningful percentage comparison,
thus, the percentage has been removed.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230803323189/en/
Investor Relations Contact Kevin Ellich, Head of Investor
Relations Kevin.Ellich@modivcare.com
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