Modivcare Reports Second Quarter 2022 Financial Results and Updates 2022 Guidance

Rhea-AI Summary

Modivcare reported strong financial results for Q2 2022, with revenue of $628.2 million, marking a 32.4% increase from Q2 2021. Net income stood at $3.3 million or $0.24 per diluted share. Adjusted EBITDA reached $60.2 million. The company raised its 2022 guidance to reflect strong performance, projecting revenue between $2,375 million and $2,400 million, and adjusted EBITDA between $210 million and $220 million. Modivcare continues to expand its services, including acquisitions and improving patient outcomes.

Positive

• Revenue increased by 32.4% to $628.2 million compared to Q2 2021.
• Adjusted EBITDA rose to $60.2 million.
• 2022 guidance raised to $2,375 million - $2,400 million in revenue.
• Acquired Guardian Medical Monitoring to enhance remote patient monitoring.

Negative

• Net income decreased to $3.3 million from $13.7 million in Q2 2021.
• Operating income fell to $23.1 million, or 3.7% of revenue, compared to 5.8% in Q2 2021.
• Adjusted net income decreased to $28.1 million from $30.3 million in Q2 2021.

DENVER--(BUSINESS WIRE)-- Modivcare Inc., (the “Company” or “Modivcare”) (Nasdaq: MODV), a technology-enabled healthcare services company that provides a platform of integrated supportive care solutions focused on improving patient outcomes, today reported financial results for the three and six months ended June 30, 2022.

Second Quarter 2022 Highlights:

• Revenue of $628.2 million, a 32.4% increase as compared to $474.4 million in Q2 2021
• Net income of $3.3 million or $0.24 per diluted common share
• Adjusted EBITDA of $60.2 million, Adjusted Net Income of $28.1 million and Adjusted EPS of $1.99
• 2022 guidance increased to account for strong second quarter and year-to-date results
• Net cash used in operating activities during the quarter of $17.9 million
• Cash and cash equivalents of $88.0 million as of June 30, 2022, with $1,000.0 million principal amount of debt outstanding related to the Senior Unsecured Notes due 2025 and 2029
• Undrawn $325.0 million revolving credit facility as of June 30, 2022

“We reported solid second quarter 2022 results with Adjusted EBITDA of $60 million and revenue growth of 32 percent driven by 23 percent growth from our non-emergency medical transportation business,” said Heath Sampson, Interim Chief Executive Officer and Chief Financial Officer. “We delivered on several strategic initiatives during the quarter, including expanding our national remote patient monitoring footprint with the acquisition of Guardian Medical Monitoring and aligning more closely with our transportation providers. We also hosted our inaugural investor day where we issued 2022 guidance, which we increased this morning, and provided a long-term outlook with 2025 targets for revenue of $3 billion and Adjusted EBITDA of $300 million. I am pleased with our progress as we continue to improve outcomes and better serve patients through our unique supportive care platform that addresses the social determinants of health by broadening access to care for the nearly 34 million members we serve. I want to thank our 20,000 team members for their hard work and dedication as they are the foundation of the care and services we provide that help empower patients.”

Second Quarter 2022 Results

For the second quarter of 2022, the Company reported revenue of $628.2 million, an increase of 32.4% from $474.4 million in the second quarter of 2021.

Operating income was $23.1 million, or 3.7% of revenue, in the second quarter of 2022, compared to operating income of $27.5 million, or 5.8% of revenue, in the second quarter of 2021. Net income in the second quarter of 2022 was $3.3 million, or $0.24 per diluted common share, compared to net income of $13.7 million, or $0.96 per diluted common share, in the second quarter of 2021.

Adjusted EBITDA was $60.2 million, or 9.6% of revenue, in the second quarter of 2022, compared to $53.1 million, or 11.2% of revenue, in the second quarter of 2021.

Adjusted Net Income in the second quarter of 2022 was $28.1 million, or $1.99 per diluted common share, compared to $30.3 million, or $2.14 per diluted common share, in the second quarter of 2021.

The year-over-year increase in revenue was primarily due to incremental revenue of $42.4 million and $16.7 million associated with the acquisitions of Care Finders and VRI, respectively. NEMT revenue also increased year-over-year due to higher trip volume which drove higher revenue per member in Q2 2022.

Adjusted EBITDA increased in the second quarter of 2022 due to incremental contribution from Care Finders and VRI. This was partially offset by higher corporate general and administrative cost as the Company continued to make investments in its employees and technology.

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 six months ended June 30, 2021 to conform to this presentation.

Updated 2022 Guidance

We are updating our 2022 guidance as follows ($ in millions):

		Updated						Previous
		Low			High			Low			High
Revenue		$	2,375		$	2,400		$	2,350		$	2,375
Adjusted EBITDA		$	210		$	220		$	203		$	213

Guidance excludes the effect of any future acquisitions and is based on the current operating environment.

Investor Presentation and Conference Call

Modivcare will hold a conference call to discuss its financial results on Thursday, August 4, 2022 at 8:00 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 also will be archived.

About Modivcare

Modivcare Inc. (“Modivcare”) (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 and Adjusted EBITDA margin for the Company and its segments, Adjusted Net Income and Adjusted EPS for the Company, and Adjusted G&A expense for the Company’s segments, which are performance measures that are not recognized under GAAP. EBITDA is defined as income (loss) from continuing operations, net of taxes, 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 charges, including severance and office closure and professional services costs, (2) certain transaction and related costs, (3) cash settled equity, (4) stock-based compensation, (5) COVID-19 related costs, net of grant income, and (6) equity in net (income) loss of investee. Adjusted EBITDA margin is calculated as Adjusted EBITDA, divided by Service revenue, net. Adjusted Net Income is calculated as income from continuing operations, net of taxes, before: (1) restructuring and related charges including severance and office closure and professional services costs, (2) certain transaction and related costs, (3) cash settled equity, (4) stock-based compensation, (5) equity in net (income) loss of investee, (6) intangible amortization expense, (7) COVID-19 related costs, net of grant income, (8) tax impacts from the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"), and (9) the income tax impact of such adjustments. Adjusted EPS is calculated as Adjusted Net Income less (as applicable): the sum of (1) dividends on convertible preferred stock plus (2) income allocated to participating securities, 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 charges, (2) transaction costs, (3) cash settled equity, and (4) stock-based compensation. 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. In addition, 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. 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 filings 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 June 30,							Six months ended June 30,
			2022			2021				2022			2021
Service revenue, net		$	628,215		$	474,448			$	1,202,690		$	928,058
Grant income			3,330			852				3,798			3,500
Operating expenses:
Service expense			504,230			379,565				963,545			739,898
General and administrative expense			79,411			56,465				156,219			111,390
Depreciation and amortization			24,758			11,820				48,704			24,059
Total operating expenses			608,399			447,850				1,168,468			875,347
Operating income			23,146			27,450				38,020			56,211
Other expenses:
Interest expense, net			15,472			8,287				30,872			16,710
Income before income taxes and equity method investment			7,674			19,163				7,148			39,501
Provision for income taxes			2,291			5,671				1,930			10,410
Equity in net (income) loss of investee, net of tax			2,055			(180	)			1,572			(3,421	)
Net income		$	3,328		$	13,672			$	3,646		$	32,512
Earnings per common share:
Basic		$	0.24		$	0.97			$	0.26		$	2.30
Diluted		$	0.24		$	0.96			$	0.26		$	2.27
Weighted-average number of common shares outstanding:
Basic			14,047,459			14,025,325				14,035,588			14,151,946
Diluted			14,115,471			14,175,594				14,122,730			14,329,794

Modivcare Inc.
Unaudited Condensed Consolidated Balance Sheets
(in thousands)
		June 30, 2022			December 31, 2021
Assets
Current assets:
Cash and cash equivalents		$	87,956		$	133,139
Accounts receivable, net			272,402			233,121
Other current assets (1)			35,426			43,574
Total current assets			395,784			409,834
Property and equipment, net			62,739			53,549
Goodwill and intangible assets, net			1,448,982			1,415,000
Equity investment			80,364			83,069
Operating lease right-of-use assets			40,326			43,750
Other long-term assets			31,368			22,223
Total assets		$	2,059,563		$	2,027,425
Liabilities and stockholders' equity
Current liabilities:
Accounts payable		$	10,622		$	8,690
Accrued contract payables			278,052			281,586
Accrued expenses and other current liabilities			123,503			123,791
Accrued transportation costs			131,282			103,294
Current portion of operating lease liabilities			9,973			9,873
Total current liabilities			553,432			527,234
Long-term debt, net of deferred financing costs			977,261			975,225
Operating lease liabilities, less current portion			32,508			34,524
Long-term contracts payables			3,686			—
Other long-term liabilities (2)			110,736			117,175
Total liabilities			1,677,623			1,654,158
Stockholders' equity
Stockholders' equity			381,940			373,267
Total liabilities and stockholders' equity		$	2,059,563		$	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)
		Six months ended June 30,
			2022				2021
Operating activities
Net income		$	3,646			$	32,512
Depreciation and amortization			48,704				24,059
Stock-based compensation			4,496				2,659
Equity in net (income) loss of investee			2,358				(4,770	)
Deferred income taxes			(14,493	)			(2,843	)
Reduction of right-of-use asset			5,757				7,341
Other non-cash items (1)			645				(136	)
Changes in working capital (2)			93				110,969
Net cash provided by operating activities			51,206				169,791
Investing activities
Purchase of property and equipment			(15,899	)			(8,132	)
Acquisition, net of cash acquired			(78,861	)			(15,843	)
Net cash used in investing activities			(94,760	)			(23,975	)
Financing activities
Proceeds from debt			100,000				—
Repayment of debt			(100,000	)			—
Debt issuance costs			(2,415	)			—
Repurchase of common stock, for treasury			—				(39,040	)
Proceeds from common stock issued pursuant to stock option exercise			1,138				2,335
Restricted stock surrendered for employee tax payment			(607	)			(820	)
Other financing activities			—				(41	)
Net cash used in financing activities			(1,884	)			(37,566	)
Net change in cash, cash equivalents and restricted cash			(45,438	)			108,250
Cash, cash equivalents and restricted cash at beginning of period			133,422				183,356
Cash, cash equivalents and restricted cash at end of period		$	87,984			$	291,606

(1)		Includes provision for doubtful accounts and amortization of deferred financing costs and debt discount.
(2)		Includes accounts receivable and other 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, 2022
	NEMT			Personal Care				RPM				Corporate (3)				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
Other expenses:
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
Provision (benefit) for income taxes		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
Provision (benefit) for income taxes		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 charges (1)		4,852			—				—				354				5,206
Transaction 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 (income) 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 charges include professional services costs and severance and recruiting costs.
(2)		Transaction costs include SOX integration efforts at recently acquired subsidiaries and acquisition costs.
(3)		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. Through this reorganization, it was also determined that the Matrix Investment is no longer a reportable segment, and is now reported within the Corporate segment. Prior period segment amounts have been reclassified to conform to the current presentation.

Modivcare Inc. Unaudited Reconciliation of Non-GAAP Financial Measures Segment Information and Adjusted EBITDA (in thousands)
	Three months ended June 30, 2021
	NEMT			Personal Care				Corporate (3)				Total
Service revenue, net	$	364,760		$	109,688			$	—			$	474,448
Grant income		—			852				—				852
Operating expenses:
Service expense		292,656			86,909				—				379,565
General and administrative expense		28,099			14,775				13,591				56,465
Depreciation and amortization		6,936			4,884				—				11,820
Total operating expenses		327,691			106,568				13,591				447,850
Operating income (loss)		37,069			3,972				(13,591	)			27,450
Interest expense, net		—			—				8,287				8,287
Income (loss) before income taxes and equity method investment		37,069			3,972				(21,878	)			19,163
Provision (benefit) for income taxes		10,019			918				(5,266	)			5,671
Equity in net income of investee, net of tax		—			—				(180	)			(180	)
Net Income (loss)		27,050			3,054				(16,432	)			13,672
Interest expense, net		—			—				8,287				8,287
Provision (benefit) for income taxes		10,019			918				(5,266	)			5,671
Depreciation and amortization		6,936			4,884				—				11,820
EBITDA		44,005			8,856				(13,411	)			39,450
Restructuring and related charges (1)		4,044			—				557				4,601
Transaction costs (2)		247			1,245				1,974				3,466
Cash settled equity		—			—				4,452				4,452
Stock-based compensation		—			76				1,340				1,416
COVID-19 related costs, net of grant income		114			(248	)			—				(134	)
Equity in net income of investee, net of tax		—			—				(180	)			(180	)
Adjusted EBITDA	$	48,410		$	9,929			$	(5,268	)		$	53,071

(1)		Restructuring and related charges include professional services costs of $3.5 million and severance and office closure costs of $1.0 million.
(2)		Transaction costs include Circulation management incentive plan costs and acquisition costs related to Simplura Health Group and National MedTrans.
(3)		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. Through this reorganization, it was also determined that the Matrix Investment is no longer a reportable segment, and is now reported within the Corporate segment. Prior period segment amounts have been reclassified to conform to the current presentation, with the exception of the RPM segment, which is not included in Q2 of 2021 as it was purchased in Q3 of 2021.

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 (3)				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
Provision (benefit) for income taxes		16,138			2,241				(247	)			(16,202	)			1,930
Equity in net loss (income) 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
Provision (benefit) for income taxes		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 (income) 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 charges include professional services costs and severance and recruiting costs.
(2)		Transaction costs include SOX integration efforts at recently acquired subsidiaries and acquisition costs.
(3)		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. Through this reorganization, it was also determined that the Matrix Investment is no longer a reportable segment, and is now reported within the Corporate segment. Prior period segment amounts have been reclassified to conform to the current presentation.

Modivcare Inc. Unaudited Reconciliation of Non-GAAP Financial Measures Segment Information and Adjusted EBITDA (in thousands)
	Six months ended June 30, 2021
	NEMT			Personal Care				Corporate (3)				Total
Service revenue, net	$	708,176		$	219,882			$	—			$	928,058
Grant income		—			3,500				—				3,500
Operating expenses:
Service expense		565,072			174,826				—				739,898
General and administrative expense		56,086			29,804				25,500				111,390
Depreciation and amortization		14,248			9,811				—				24,059
Total operating expenses		635,406			214,441				25,500				875,347
Operating income (loss)		72,770			8,941				(25,500	)			56,211
Interest expense, net		—			—				16,710				16,710
Income (loss) before income taxes and equity method investment		72,770			8,941				(42,210	)			39,501
Provision (benefit) for income taxes		19,423			2,356				(11,369	)			10,410
Equity in net income of investee, net of tax		—			—				(3,421	)			(3,421	)
Net Income (loss)		53,347			6,585				(27,420	)			32,512
Interest expense, net		—			—				16,710				16,710
Provision (benefit) for income taxes		19,423			2,356				(11,369	)			10,410
Depreciation and amortization		14,248			9,811				—				24,059
EBITDA		87,018			18,752				(22,079	)			83,691
Restructuring and related charges (1)		7,538			—				763				8,301
Transaction costs (2)		210			2,290				4,644				7,144
Cash settled equity		—			—				6,545				6,545
Stock-based compensation		—			76				2,489				2,565
COVID-19 related costs, net of grant income		453			(2,100	)			—				(1,647	)
Equity in net income of investee, net of tax		—			—				(3,421	)			(3,421	)
Adjusted EBITDA	$	95,219		$	19,018			$	(11,059	)		$	103,178

(1)		Restructuring and related charges include professional services costs of $6.4 million and severance and office closure costs of $1.7 million.
(2)		Transaction costs include Circulation management incentive plan costs and acquisition costs related to Simplura Health Group and National MedTrans.
(3)		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. Through this reorganization, it was also determined that the Matrix Investment is no longer a reportable segment, and is now reported within the Corporate segment. Prior period segment amounts have been reclassified to conform to the current presentation, with the exception of the RPM segment, which is not included in YTD 2021 as it was purchased in Q3 of 2021.

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,
		2022				2021				2022				2021
Net income	$	3,328			$	13,672			$	3,646			$	32,512
Restructuring and related charges(1)		5,206				4,601				11,046				8,301
Transaction costs(2)		7,702				3,466				11,413				7,144
Cash settled equity		20				4,452				7				6,545
Stock-based compensation		2,670				1,416				4,136				2,565
Equity in net income of investee, net of tax		2,055				(180	)			1,572				(3,421	)
Intangible amortization expense		19,752				9,148				39,251				18,649
COVID-19 related costs, net of grant income		(3,344	)			(134	)			(2,873	)			(1,647	)
Tax effected impact of adjustments		(9,299	)			(6,100	)			(18,224	)			(11,417	)
Adjusted Net Income	$	28,090			$	30,341			$	49,974			$	59,231
Adjusted EPS	$	1.99			$	2.14			$	3.54			$	4.13
Diluted weighted-average number of common shares outstanding		14,115,471				14,175,594				14,122,730				14,329,794

(1)		Restructuring and related charges include severance, organizational consolidation costs and professional fees.
(2)		Transaction costs include certain transaction-related expenses and SOX 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, 2022				June 30, 2021				% Change			June 30, 2022				June 30, 2021				% Change			March 31, 2022				QoQ % Change
NEMT Segment
Service revenue, net	$	448,733			$	364,760			23.0	%		$	849,653			$	708,176			20.0	%		$	400,920			11.9	%
Purchased services expense		317,213				245,015			29.5	%			595,160				468,309			27.1	%			277,947			14.1	%
Payroll and other expense		56,511				47,641			18.6	%			110,660				96,763			14.4	%			54,149			4.4	%
Service expense	$	373,724			$	292,656			27.7	%		$	705,820			$	565,072			24.9	%		$	332,096			12.5	%
Gross profit	$	75,009			$	72,104			4.0	%		$	143,833			$	143,104			0.5	%		$	68,824			9.0	%
Gross margin		16.7	%			19.8	%						16.9	%			20.2	%						17.2	%
G&A expense	$	33,588			$	28,099			19.5	%		$	70,921			$	56,086			26.5	%		$	37,333			(10.0	)%
G&A expense adjustments:
Restructuring and related charges		4,852				4,044			20.0	%			10,456				7,538			38.7	%			5,604			(13.4	)%
Transaction costs		—				247			—	%			—				210			—	%			—			—	%
Adjusted G&A expense	$	28,736			$	23,808			20.7	%		$	60,465			$	48,338			25.1	%		$	31,729			(9.4	)%
Adjusted G&A expense % of revenue		6.4	%			6.5	%						7.1	%			6.8	%						7.9	%
Net income	$	24,466			$	27,050			(9.6	) %		$	42,212			$	53,347			(20.9	) %		$	17,746			37.9	%
Net income margin		5.5	%			7.4	%						5.0	%			7.5	%						4.4	%
Adjusted EBITDA	$	46,307			$	48,410			(4.3	)%		$	83,524			$	95,219			(12.3	)%		$	37,217			24.4	%
Adjusted EBITDA margin		10.3	%			13.3	%						9.8	%			13.4	%						9.3	%
Total paid trips (in thousands)		7,831				6,657			17.6	%			14,942				13,276			12.5	%			7,111			10.1	%
Average monthly members (in thousands)		33,792				29,756			13.6	%			32,984				30,102			9.6	%			32,176			5.0	%
Revenue per member per month	$	4.43			$	4.09			8.3	%		$	4.29			$	3.92			9.4	%		$	4.15			6.7	%
Revenue per trip	$	57.30			$	54.79			4.6	%		$	56.86			$	53.34			6.6	%		$	56.38			1.6	%
Monthly utilization		7.7	%			7.5	%						7.6	%			7.4	%						7.4	%
Purchased services per trip	$	40.51			$	36.81			10.1	%		$	39.83			$	35.27			12.9	%		$	39.09			3.6	%
Payroll and other per trip	$	7.22			$	7.16			0.8	%		$	7.41			$	7.29			1.6	%		$	7.61			(5.1	) %

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, 2022				June 30, 2021				% Change			June 30, 2022				June 30, 2021				% Change			March 31, 2022				QoQ % Change
Personal Care Segment
Service revenue, net	$	162,737			$	109,688			48.4	%		$	322,435			$	219,882			46.6	%		$	159,698			1.9	%
Service expense		124,445				86,909			43.2	%			246,677				174,826			41.1	%			122,232			1.8	%
Gross profit	$	38,292			$	22,779			68.1	%		$	75,758			$	45,056			68.1	%		$	37,466			2.2	%
Gross Margin		23.5	%			20.8	%						23.5	%			20.5	%						23.5	%
G&A expense	$	23,346			$	14,775			58.0	%		$	46,479			$	29,804			55.9	%		$	23,133			0.9	%
G&A expense adjustments
Restructuring and related charges		—				—			—	%			181				—			—	%			181			(100.0	)%
Transaction costs		2,830				1,245			127.3	%			4,103				2,290			79.2	%			1,273			122.3	%
Stock-based compensation		173				76			127.6	%			190				76			150.0	%			17			917.6	%
Adjusted G&A expense	$	20,343			$	13,454			51.2	%		$	42,005			$	27,438			53.1	%		$	21,662			(6.1	)%
Adjusted G&A expense % of revenue		12.5	%			12.3	%						13.0	%			12.5	%						13.6	%
Net income	$	4,123			$	3,054			35.0	%		$	5,779			$	6,585			(12.2	)%		$	1,656			149.0	%
Net income margin		2.5	%			2.8	%						1.8	%			3.0	%						1.0	%
Adjusted EBITDA	$	17,901			$	9,929			80.3	%		$	34,522			$	19,018			81.5	%		$	16,621			7.7	%
Adjusted EBITDA margin		11.0	%			9.1	%						10.7	%			8.6	%						10.4	%
Total hours (in thousands)		6,705				4,629			44.8	%			13,240				9,255			43.1	%			6,535			2.6	%
Revenue per hour	$	24.27			$	23.70			2.4	%		$	24.35			$	23.76			2.5	%		$	24.44			(0.7	)%
Service expense per hour	$	18.56			$	18.77			(1.1	)%		$	18.63			$	18.89			(1.4	)%		$	18.70			(0.7	)%

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, 2022				June 30, 2021		% Change		June 30, 2022				June 30, 2021		% Change		March 31, 2022				QoQ % Change
RPM Segment
Service revenue, net	$	16,745					N/M		$	30,602					N/M		$	13,857			20.8	%
Service expense		6,061					N/M			11,048					N/M			4,987			21.5	%
Gross profit	$	10,684					N/M		$	19,554					N/M		$	8,870			20.5	%
Gross Margin		63.8	%							63.9	%							64.0	%
G&A expense	$	6,742					N/M		$	11,704					N/M		$	4,962			35.9	%
G&A expense adjustments
Restructuring and related charges		—					N/M			24					N/M			24			(100.0	)%
Transaction costs		1,635					N/M			2,282					N/M			647			152.7	%
Stock-based compensation		57					N/M			86					N/M			29			96.6	%
Adjusted G&A expense	$	5,050					N/M		$	9,312					N/M		$	4,262			18.5	%
Adjusted G&A expense % of revenue		30.2	%							30.4	%							30.8	%
Net income (loss)	$	(475	)				N/M		$	(637	)				N/M		$	(162	)		193.2	%
Net income (loss) margin		(2.8	)%							(2.1	)%							(1.2	)%
Adjusted EBITDA	$	5,634					N/M		$	10,242					N/M		$	4,608			22.3	%
Adjusted EBITDA margin		33.6	%							33.5	%							33.3	%
Average monthly members (in thousands)		203					N/M			186					N/M			169			20.1	%
Revenue per member per month	$	27.50					N/M		$	27.42					N/M		$	27.33			0.6	%
Service expense per member per month	$	9.95					N/M		$	9.90					N/M		$	9.84			1.1	%

N/M - Not Meaningful. The RPM Segment was established with the acquisition of VRI on September 22, 2021 and as such, these figures are not meaningful for comparative purposes.

Modivcare Inc. Unaudited Key Statistical and Financial Data (in thousands)
	Three months ended											Six months ended											Three months ended
	June 30, 2022				June 30, 2021				% Change			June 30, 2022				June 30, 2021				% Change			March 31, 2022				QoQ % Change
Corporate and Other Segment
G&A expense	$	15,735			$	13,591			15.8	%		$	27,115			$	25,500			6.3	%		$	11,380			38.3	%
G&A expense adjustments
Restructuring and related charges		354				557			(36.4	)%			385				763			(49.5	)%			31			1041.9	%
Transaction costs		3,237				1,974			64.0	%			5,028				4,644			8.3	%			1,791			80.7	%
Cash settled equity		20				4,452			(99.6	)%			7				6,545			(99.9	)%			(13	)		(253.8	)%
Stock-based compensation		2,440				1,340			82.1	%			3,860				2,489			55.1	%			1,420			71.8	%
Adjusted G&A expense	$	9,684			$	5,268			83.8	%		$	17,835			$	11,059			61.3	%		$	8,151			18.8	%
Adjusted G&A expense % of consolidated revenue		1.5	%			1.1	%						1.5	%			1.2	%						1.4	%

	Three months ended											Six months ended											Three months ended
	June 30, 2022				June 30, 2021				% Change			June 30, 2022				June 30, 2021				% Change			March 31, 2022				QoQ % Change
Consolidated Modivcare
G&A expense	$	79,411			$	56,465			40.6	%		$	156,219			$	111,390			40.2	%		$	76,808			3.4	%
G&A expense adjustments
Restructuring and related charges		5,206				4,601			13.1	%			11,046				8,301			33.1	%			5,840			(10.9	)%
Transaction costs		7,702				3,466			122.2	%			11,413				7,144			59.8	%			3,711			107.5	%
Cash settled equity		20				4,452			(99.6	)%			7				6,545			(99.9	)%			(13	)		(253.8	)%
Stock-based compensation		2,670				1,416			88.6	%			4,136				2,565			61.2	%			1,466			82.1	%
Adjusted G&A expense	$	63,813			$	42,530			50.0	%		$	129,617			$	86,835			49.3	%		$	65,804			(3.0	)%
Adjusted G&A expense % of revenue		10.2	%			9.0	%						10.8	%			9.4	%						11.5	%

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20220804005265/en/

Investor Relations Contact

Kevin Ellich,

Head of Investor Relations

(303) 728-7012

Kevin.Ellich@modivcare.com

Source: Modivcare Inc.

FAQ

What are Modivcare's financial results for Q2 2022?

Modivcare reported Q2 2022 revenue of $628.2 million, a 32.4% increase from Q2 2021, with net income of $3.3 million.

What is the guidance for Modivcare's revenue in 2022?

Modivcare's updated guidance for 2022 projects revenue between $2,375 million and $2,400 million.

What was Modivcare's adjusted EBITDA for Q2 2022?

Modivcare's adjusted EBITDA for Q2 2022 was $60.2 million.

What are the key highlights from Modivcare's investor day?

Modivcare's investor day highlighted their increased 2022 guidance and long-term goals, including $3 billion in revenue by 2025.

How did Modivcare's net income change in Q2 2022?

Modivcare's net income decreased to $3.3 million in Q2 2022, down from $13.7 million in Q2 2021.