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, 2022.
Fourth Quarter 2022 Highlights:
Service revenue of $653.9 million, a 14% increase as compared to $575.8 million in the fourth quarter of 2021
Net loss of $6.9 million, or $0.49 per diluted common share
Adjusted EBITDA of $59.7 million, adjusted net income of $29.8 million and adjusted EPS of $2.11 per diluted common share
Net cash used in operating activities during the quarter of $56.0 million
Cash and cash equivalents of $14.5 million as of December 31, 2022, with $1,000.0 million principal amount of debt outstanding related to the Senior Unsecured Notes due 2025 and 2029
Full Year 2022 Highlights:
Service revenue of $2,504.4 million, a 25% increase as compared to $1,996.9 million in 2021
Net loss of $31.8 million, or $2.26 per diluted common share
Adjusted EBITDA of $221.9 million, adjusted net income of $103.4 million and adjusted EPS of $7.32 per diluted common share
Net cash used in operating activities in 2022 of $10.4 million
On February 3, 2022, Modivcare Inc. entered into a new senior secured revolving credit facility with total borrowing capacity of $325.0 million and a maturity date in February 2027. This new facility was undrawn at closing and replaces the Company’s prior $225.0 million revolving credit facility.
“We reported strong financial results for 2022 with revenue and Adjusted EBITDA exceeding the high end of our guidance ranges. Solid fourth quarter 2022 results were highlighted by 14 percent revenue growth, driven by mid-teens membership growth and 12 percent growth from our personal care business,” said Heath Sampson, President and Chief Executive Officer. “Our 2023 guidance affirms our confidence in continued growth this year and our long-term outlook. As we continue our journey to become One Modivcare, which is aligning across all of our supportive care services to better serve the needs of our members and customers, we are focused on building for scale, driving efficiencies, and growing our business in 2023. I am grateful and proud of our team’s dedication and hard work. Our supportive care services are uniquely positioned to provide the highest quality, best-in-class member experience for approximately 35 million members in the most cost-effective manner for our customers and the healthcare system.”
2023 Guidance
Our 2023 guidance is as follows ($ in millions):
Low
High
Revenue
$
2,575
$
2,600
Adjusted EBITDA
$
225
$
235
Guidance excludes the effects of any future merger or acquisition activity and is based on the current operating environment.
Fourth Quarter 2022 Results
For the fourth quarter of 2022, the Company reported revenue of $653.9 million, an increase of 14% from $575.8 million in the fourth quarter of 2021.
Operating income was $6.6 million, or 1% of revenue, in the fourth quarter of 2022, compared to $20.2 million, or 4% of revenue, in the fourth quarter of 2021. Net loss was $6.9 million, or $0.49 per common share in the fourth quarter of 2022, compared to $31.5 million, or $2.25 per common share, in the fourth quarter of 2021.
Adjusted EBITDA was $59.7 million, or 9% of revenue, in the fourth quarter of 2022, compared to $57.5 million, or 10% of revenue, in the fourth quarter of 2021.
Adjusted net income in the fourth quarter of 2022 was $29.8 million or $2.11 per diluted common share, compared to $29.8 million, or $2.11 per diluted common share, in the fourth quarter of 2021.
Full Year 2022 Results
For the full year 2022, the Company reported revenue of $2,504.4 million, an increase of 25% from $1,996.9 million in 2021.
Operating income was $57.1 million, or 2% of revenue, for 2022, compared to $89.4 million, or 4% of revenue, for 2021. Net loss in 2022 was $31.8 million, or $2.26 per common share, compared to a net loss of $6.6 million, or $0.47 per common share, in 2021.
Adjusted EBITDA for 2022 was $221.9 million or 9% of revenue, compared to $205.0 million, or 10% of revenue, in 2021.
Adjusted net income for 2022 was $103.4 million or $7.32 per diluted common share, compared to $112.4 million, or $7.90 per diluted common share, for 2021.
Organizational Consolidation and Change in Segments
We operate four reportable business segments: NEMT, Personal Care, RPM, and Corporate and Other. Effective January 1, 2022, the Company completed its segment reorganization which resulted in the addition of a Corporate segment that includes the costs associated with the Company’s corporate operations. The operating results of our Corporate segment include our activities related to executive, accounting, finance, internal audit, tax, legal and certain strategic and corporate development functions for each segment, as well as the results of our Matrix investment. The Company reclassified certain costs associated with this reorganization for the three and twelve months ended December 31, 2021 to conform to this presentation.
Fourth Quarter Earnings Conference Call
Modivcare will hold a conference call to discuss its financial results on Thursday, February 23, 2023 at 8:00 a.m. ET. To access the call, please dial:
US toll-free: 1 (887) 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 address the social determinants of health (SDoH), enable greater access to care, reduce costs, and improve outcomes. We are a leading provider of non-emergency medical transportation (NEMT), personal care and remote patient monitoring. To learn more about Modivcare, please visit www.modivcare.com.
Non-GAAP Financial Measures and Adjustments
In addition to the financial measures prepared in accordance with generally accepted accounting principles in the United States (“GAAP”), this press release includes EBITDA, Adjusted EBITDA, Adjusted EBITDA margin and Adjusted G&A expense for the Company and its segments, and Adjusted Net Income and Adjusted EPS for the Company, 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, including severance and organizational consolidation costs and professional services fees, (2) certain transaction and integration costs, (3) settlement related costs, (4) cash settled equity, (5) stock-based compensation, (6) COVID-19 related costs, net of grant income, and (7) 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, including severance and organizational consolidation costs and professional services fees (2) certain transaction and integration costs, (3) settlement related costs, (4) cash settled equity, (5) stock-based compensation, (6) equity in net (income) loss of investee, net of tax (7) intangible amortization expense, (8) COVID-19 related costs, net of grant income, (9) transaction related financing expense, 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. We do not provide updated 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 events to be materially different from those expressed or implied herein, including but not limited to: government or private insurance program funding reductions or limitations; alternative payment models or the transition of Medicaid and Medicare beneficiaries to Managed Care Organizations, or MCOs; our inability to control reimbursement rates received for our services; cost containment initiatives undertaken by private third-party payors; the effects of a public health emergency; inadequacies in, or security breaches of, our information technology systems, including the systems intended to protect our clients’ privacy and confidential information; any changes in the funding, financial viability or our relationships with our payors; pandemic infectious diseases, including the COVID-19 pandemic; disruptions to our contact center operations caused by health epidemics or pandemics like COVID-19; delays in collection, or non-collection, of our accounts receivable, particularly during any business integration; an impairment of our long-lived assets; any failure to maintain or to develop further reliable, efficient and secure information technology systems; an inability to attract and retain qualified employees; any acquisition or acquisition integration efforts; our contracts not surviving until the end of their stated terms, or not being renewed or extended; our failure to compete effectively in the marketplace; our not being awarded contracts through the government’s requests for proposals process, or our awarded contracts not being profitable; any failure to satisfy our contractual obligations or to maintain existing pledged performance and payment bonds; a failure to estimate accurately the cost of performing our contracts; any misclassification of the drivers we engage as independent contractors rather than as employees; significant interruptions in our communication and data services; not successfully executing on our strategies in the face of our competition; any inability to maintain relationships with existing patient referral sources; any failure to obtain the consent of the New York Department of Health to manage the day to day operations of our licensed in-home personal care services agency business that we acquired with our personal care segment; acquired unknown liabilities in connection with the acquisition of our personal care segment; changes in the case-mix of our personal care patients, or changes in payor mix or payment methodologies; our loss of existing favorable managed care contracts; our experiencing shortages in qualified employees and management; labor disputes or disruptions, in particular in New York; becoming subject to malpractice or other similar claims; and our reliance on others for the financial condition of our equity investment in Matrix.
The Company has provided additional information about the risks facing our business in our annual report on Form 10-K and subsequent periodic and current reports most recently filed with the Securities and Exchange Commission. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made and are expressly qualified in their entirety by the cautionary statements set forth herein and in our filings with the Securities and Exchange Commission, which you should read in their entirety before making an investment decision with respect to our securities. We undertake no obligation to update or revise any forward-looking statements contained in this release, whether as a result of new information, future events or otherwise, except as required by applicable law.
Modivcare Inc.
Unaudited Condensed Consolidated Statements of Operations
(in thousands except share and per share data)
Three months ended December 31,
Year ended December 31,
2022
2021
2022
2021
Service revenue, net
$
653,921
$
575,775
$
2,504,393
$
1,996,892
Grant income
2,764
1,941
7,351
5,441
Operating expenses:
Service expense
533,966
445,128
2,032,074
1,584,298
General and administrative expense
90,063
92,079
322,171
271,674
Depreciation and amortization
26,039
20,331
100,415
56,998
Total operating expenses
650,068
557,538
2,454,660
1,912,970
Operating income
6,617
20,178
57,084
89,363
Other expenses:
Interest expense, net
15,532
14,669
61,961
49,081
Income (loss) before income taxes and equity method investment
(8,915
)
5,509
(4,877
)
40,282
Provision (benefit) for income taxes
(3,912
)
208
(3,035
)
8,617
Equity in net loss of investee, net of tax
1,944
36,826
29,964
38,250
Net loss
$
(6,947
)
$
(31,525
)
$
(31,806
)
$
(6,585
)
Loss per common share:
Basic
$
(0.49
)
$
(2.25
)
$
(2.26
)
$
(0.47
)
Diluted
$
(0.49
)
$
(2.25
)
$
(2.26
)
$
(0.47
)
Weighted-average number of common shares outstanding:
Basic
14,123,013
13,998,487
14,061,839
14,054,060
Diluted
14,123,013
13,998,487
14,061,839
14,054,060
Modivcare Inc.
Unaudited Condensed Consolidated Balance Sheets
(in thousands)
December 31,
2022
2021
Assets
Current assets:
Cash and cash equivalents
$
14,451
$
133,139
Accounts receivable, net
294,341
233,121
Other current assets (1)
37,362
43,574
Total current assets
346,154
409,834
Operating lease right-of-use assets
39,405
43,750
Property and equipment, net
69,138
53,549
Goodwill and intangible assets, net
1,408,063
1,415,000
Equity investment
41,303
83,069
Other long-term assets
40,209
22,223
Total assets
$
1,944,272
$
2,027,425
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable
$
54,959
$
8,690
Accrued contract payables
194,287
281,586
Accrued expenses and other current liabilities
135,860
123,791
Accrued transportation costs
96,851
103,294
Current portion of operating lease liabilities
9,640
9,873
Total current liabilities
491,597
527,234
Long-term debt, net of deferred financing costs
979,361
975,225
Operating lease liabilities, less current portion
32,088
34,524
Other long-term liabilities (2)
86,670
117,175
Total liabilities
1,589,716
1,654,158
Stockholders’ equity
Stockholders’ equity
354,556
373,267
Total liabilities and stockholders’ equity
$
1,944,272
$
2,027,425
(1)
Includes other receivables, prepaid expenses and other current assets and short-term restricted cash.
(2)
Includes other long-term liabilities and deferred tax liabilities.
Modivcare Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
(in thousands)
Year ended December 31,
2022
2021
Operating activities
Net loss
$
(31,806
)
$
(6,585
)
Depreciation and amortization
100,415
56,998
Stock-based compensation
6,872
5,904
Equity in net loss of investee
40,916
53,092
Deferred income taxes
(36,663
)
(17,691
)
Reduction of right-of-use asset
11,640
11,330
Other non-cash items
5,125
2,730
Changes in working capital
(106,941
)
81,062
Net cash provided by (used in) operating activities
(10,442
)
186,840
Investing activities
Purchase of property and equipment
(33,004
)
(21,316
)
Acquisitions, net of cash acquired
(78,809
)
(664,309
)
Net cash used in investing activities
(111,813
)
(685,625
)
Financing activities
Proceeds from debt
114,000
625,000
Repayment of debt
(114,000
)
(125,000
)
Repurchase of common stock, for treasury
—
(39,994
)
Payment of debt issuance costs
(2,415
)
(13,486
)
Proceeds from common stock issued pursuant to stock option exercise
6,789
3,227
Restricted stock surrendered for employee tax payment
(792
)
(896
)
Other financing activities
226
—
Net cash provided by financing activities
3,808
448,851
Net change in cash and cash equivalents
(118,447
)
(49,934
)
Cash, cash equivalents and restricted cash at beginning of period
133,422
183,356
Cash, cash equivalents and restricted cash at end of period
$
14,975
$
133,422
Modivcare Inc.
Unaudited Reconciliation of Non-GAAP Financial Measures
Segment Information and Adjusted EBITDA
(in thousands)
Three months ended December 31, 2022
NEMT
Personal
Care
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
)
Provision (benefit) for income taxes
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
Provision (benefit) for income taxes
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
Cash settled equity
—
—
—
19
19
Stock-based compensation
—
—
—
1,823
1,823
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)
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 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, 2021
NEMT
Personal
Care
RPM
Corporate
and Other
Total
Service revenue, net
$
402,528
$
157,194
$
16,053
$
—
$
575,775
Grant income
—
1,941
—
—
1,941
Operating expenses:
Service expense
316,715
123,575
4,838
—
445,128
General and administrative expense
46,532
25,098
5,575
14,874
92,079
Depreciation and amortization
7,314
9,036
3,981
—
20,331
Total operating expenses
370,561
157,709
14,394
14,874
557,538
Operating income (loss)
31,967
1,426
1,659
(14,874
)
20,178
Interest expense, net
—
—
—
14,669
14,669
Income (loss) before income taxes and equity method investment
31,967
1,426
1,659
(29,543
)
5,509
Provision (benefit) for income taxes
3,940
(42
)
341
(4,031
)
208
Equity in net loss of investee, net of tax
—
—
—
36,826
36,826
Net Income (loss)
28,027
1,468
1,318
(62,338
)
(31,525
)
Interest expense, net
—
—
—
14,669
14,669
Provision (benefit) for income taxes
3,940
(42
)
341
(4,031
)
208
Depreciation and amortization
7,314
9,036
3,981
—
20,331
EBITDA
39,281
10,462
5,640
(51,700
)
3,683
Restructuring and related costs(1)
9,550
304
—
200
10,054
Transaction and integration costs(2)
(19
)
3,463
721
2,987
7,152
Cash settled equity
—
—
—
20
20
Stock-based compensation
—
(58
)
—
1,068
1,010
COVID-19 related costs, net of grant income
101
(1,340
)
—
—
(1,239
)
Equity in net loss of investee, net of tax
—
—
—
36,826
36,826
Adjusted EBITDA
$
48,913
$
12,831
$
6,361
$
(10,599
)
$
57,506
Contacts
Investor Relations Contact
Kevin Ellich,
Head of Investor Relations
(303) 728-7012
[email protected]
