Modivcare Reports Fourth Quarter and Full Year 2023 Financial Results; Issues 2024 Guidance
Modivcare Inc. (MODV) reported its financial results for the fourth quarter and full year of 2023, showing positive growth in service revenue and adjusted EBITDA. The company also won significant new contracts in the NEMT sector, although it faced a net loss and negative free cash flow for the period.
Positive
Service revenue for the fourth quarter of 2023 was $702.8 million, marking a 7.5% increase from the same period in 2022.
Adjusted EBITDA for the same quarter was $50.5 million, with adjusted net income of $18.4 million and adjusted EPS of $1.29 per diluted common share.
The company experienced a net loss of $5.3 million, or $0.37 per diluted common share for the fourth quarter.
Modivcare won $216.2 million of NEMT TCV in the fourth quarter of 2023, contributing to total new wins that are expected to outpace contract attrition in 2024.
Full-year 2023 service revenue was $2,751.2 million, a 9.9% increase from 2022, with adjusted EBITDA of $204.4 million and adjusted EPS of $5.60 per diluted common share.
The company reported a net loss of $204.5 million, or $14.43 per diluted common share for the full year 2023.
Modivcare faced negative free cash flow of $125.3 million for the year, with net cash used in operating activities amounting to $83.0 million.
Contract receivables increased by $72.8 million to $144.0 million, while contract payables decreased by $76.8 million to $117.5 million in 2023.
The company also secured $463.5 million of NEMT TCV in 2023, along with additional wins in remote patient monitoring.
Negative
Modivcare reported a net loss of $5.3 million for the fourth quarter and $204.5 million for the full year of 2023, indicating financial challenges.
The company faced negative free cash flow of $36.8 million in the fourth quarter and $125.3 million for the full year, raising concerns about liquidity.
Despite winning new contracts, Modivcare's net loss and negative free cash flow suggest potential financial strain and operational challenges.
Contract receivables increased significantly in 2023, which could impact cash flow and liquidity management for the company.
Modivcare's reliance on a single delayed payment from a client led to negative free cash flow in the fourth quarter, highlighting potential risks in client relationships.
The reported financial results of Modivcare Inc. indicate a mixed performance. The 7.5% increase in service revenue year-over-year for the fourth quarter signifies growth, which is a positive signal for investors assessing the company's top-line expansion. However, the reported net loss of $5.3 million , contrasted with the previous year and the negative free cash flow raise concerns about the company's profitability and liquidity management. The increase in contract receivables coupled with a decrease in contract payables suggests a potential issue with cash collections, which could impact the company's short-term financial health.
Furthermore, the use of adjusted EBITDA and adjusted net income as a performance measure can give a clearer picture of operational efficiency by excluding non-recurring items. However, investors should be cautious and consider the GAAP measures as well to understand the full financial picture. The amendment of the leverage covenant suggests that the company is taking steps to maintain liquidity, yet it also implies that there might be concerns regarding debt levels and the ability to meet original covenant terms.
Modivcare's announcement of winning $463.5 million of NEMT TCV (Total Contract Value) and securing managed Medicaid contracts indicates a strong market position and the potential for future revenue streams. The ability to outpace contract attrition in 2024 could lead to sustained growth. However, the negative free cash flow reported may limit the company's ability to invest in further growth or innovation without additional financing. The market's response to these results will likely hinge on the balance between growth prospects and current financial challenges.
Investors should also consider industry trends, such as the increasing demand for healthcare services and supportive care solutions, which could play in Modivcare's favor. Nevertheless, the competitive landscape in the healthcare services sector can affect the company's ability to capitalize on these opportunities.
The reported increase in service revenue reflects the growing demand for technology-enabled healthcare services and supportive care solutions. Modivcare's focus on improving patient outcomes through integrated services is in line with industry trends towards value-based care. The acquisition of sizable managed Medicaid contracts indicates that the company is effectively leveraging its offerings to secure significant market opportunities.
However, the negative free cash flow and net loss reported raise questions about the cost structure and scalability of the company's business model. The healthcare industry is known for its tight margins and high regulatory burden, which could be contributing factors to these financial challenges. Investors should monitor how Modivcare manages these industry-specific risks while pursuing growth.
02/22/2024 - 04:05 PM
DENVER --(BUSINESS WIRE)--
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 7.5% increase as compared to $653.9 million
Net loss of $5.3 million $0.37
Adjusted EBITDA(1) of $50.5 million (1) of $18.4 million (1) of $1.29
Net cash used in operating activities during the quarter of $25.6 million (2) of $36.8 million
Contract receivables increased by $14.7 million $144.0 million $16.1 million $117.5 million $26.5 million
$216.2 million (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 $325.0 million
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 9.9% increase as compared to $2,504.4 million
Net loss of $204.5 million $14.43
Adjusted EBITDA(1) of $204.4 million (1) of $79.9 million (1) of $5.60
Net cash used in operating activities in 2023 of $83.0 million (2) of $125.3 million
Contract receivables increased by $72.8 million $144.0 million $76.8 million $117.5 million
In 2023, won $463.5 million (3) or $141.8 million (3) , as well as $10.6 million (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 $30 million
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 7.5% from $653.9 million 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 2.2% of revenue, in the fourth quarter of 2023, compared to $6.6 million 1.0% of revenue, in the fourth quarter of 2022. Net loss was $5.3 million $0.37 $6.9 million $0.49 16.2% lower general and administrative costs related to fewer one-time costs for restructuring and integration activities.
Adjusted EBITDA was $50.5 million 7.2% of revenue, in the fourth quarter of 2023, compared to $59.7 million 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 $1.29 $29.8 million $2.11
Net cash used in operating activities during the quarter was $25.6 million $56.0 million $16.1 million $14.7 million $35.9 million $11.1 million $31.0 million $113.8 million
Full Year 2023 Results
For the full year 2023, the Company reported revenue of $2,751.2 million 9.9% from $2,504.4 million 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 5.1% of revenue, for 2023, compared to income from operations of $57.1 million 2.3% of revenue, for 2022. Net loss in 2023 was $204.5 million $14.43 $31.8 million $2.26 $183.1 million
Adjusted EBITDA for 2023 was $204.4 million 7.4% of revenue, compared to $221.9 million 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 $5.60 $103.4 million $7.32
Net cash used in operating activities during the year was $83.0 million $10.4 million $76.8 million $72.8 million $42.3 million $113.1 million $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: International:
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@modivcare.com
Source: Modivcare Inc.
Modivcare reported service revenue of $702.8 million for the fourth quarter of 2023, a 7.5% increase from the same period in 2022.
The adjusted EBITDA for Modivcare in the fourth quarter of 2023 was $50.5 million.
Modivcare reported a net loss of $5.3 million, or $0.37 per diluted common share for the fourth quarter of 2023.
Modivcare won $216.2 million of NEMT TCV in the fourth quarter of 2023.
Modivcare reported service revenue of $2,751.2 million for the full year of 2023, a 9.9% increase from 2022.
The adjusted EBITDA for Modivcare for the full year of 2023 was $204.4 million.
