Modivcare Reports Third Quarter 2024 Financial Results; Affirms 2024 Guidance

Rhea-AI Summary

Modivcare (MODV) reported Q3 2024 financial results with service revenue of $702.0 million, up 2.2% year-over-year. The company posted a net loss of $26.6 million, or -$1.87 per diluted share. Adjusted EBITDA was $43.2 million with adjusted net income of $6.4 million. NEMT segment revenue grew 1.3%, PCS segment revenue increased 4.7%, while RPM segment revenue declined 1.7%. The company affirmed its 2024 guidance with revenue between $2,700-$2,900 million and adjusted EBITDA of $170-$180 million, expecting >10% Adjusted EBITDA growth in 2025.

Positive

• Service revenue increased 2.2% YoY to $702.0 million
• Personal Care Services segment revenue grew 4.7%
• Contract receivables reduced by $55.4 million
• Successfully refinanced $500.0 million Senior Unsecured Notes

Negative

• Net loss widened to $26.6 million from $4.3 million YoY
• Adjusted EBITDA declined to $43.2 million from $51.3 million YoY
• Operating income decreased to $5.3 million from $12.0 million YoY
• Interest expense increased by $10.6 million
• RPM segment revenue declined 1.7%
• Incurred $11.8 million loss on debt extinguishment

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 health outcomes, today reported financial results for the three and nine months ended September 30, 2024.

Third Quarter 2024 Summary:

• Service revenue of $702.0 million increased 2.2% from the third quarter of 2023

• Net loss of $26.6 million, or negative $1.87 per diluted common share

• Adjusted EBITDA⁽¹⁾ of $43.2 million, adjusted net income⁽¹⁾ of $6.4 million and adjusted EPS⁽¹⁾ of $0.45 per diluted common share

• Cash provided by operating activities during the quarter of $9.3 million and free cash flow⁽²⁾ of $1.5 million

• Contract receivables, net of contract payables, of $63.1 million as of September 30, 2024

______________________________
(1)	Non-GAAP financial measure reconciliations and other related information about non-GAAP financial measures provided below.
(2)	Free cash flow, a non-GAAP financial measure, is calculated by us as cash flow from operations less our capital expenditures during the period of $7.7 million that is included in our purchase of property and equipment line in our Unaudited Condensed Consolidated Statements of Cash Flows provided below.

“This quarter has demonstrated positive momentum, reflected in both operational enhancements and strengthened relationships, even amid shifts in the broader healthcare market. We delivered solid third-quarter results, reporting $43 million of adjusted EBITDA and a 2% increase in consolidated revenue, driven primarily by 5% growth in our personal care services segment,” stated L. Heath Sampson, President and CEO. “During the quarter, we proactively amended our credit agreement, securing temporary relief on debt covenants. Our bank group continues to be constructive and supportive as we work toward a long-term solution for our covenants that provides us with the time to thoughtfully and strategically assess the best approach to de-lever our balance sheet and optimize value for stakeholders. Additionally, we achieved significant collections in contract receivables, reducing net receivables by $55 million, and we made meaningful progress in resetting our capitated payment thresholds within our shared risk NEMT contracts, as contractually designed. These actions are expected to improve our cash conversion cycle and enhance future free cash flow.”

Sampson continued, “Our transformation efforts have laid a strong foundation across each segment, positioning us to meet our client needs today while anticipating tomorrow’s demands in this dynamic market. Our strategic initiatives are driving substantial cost savings in our NEMT segment, with a strong deal pipeline encompassing new business, renewals, and expansions. Our personal care services segment is steadily growing with improving margins, while remote patient monitoring margins have risen to 37%, supported by operational efficiencies and delivering innovative value to our clients. We are confident in our ability to further differentiate our offerings, achieve cost savings, and drive growth in 2025. We remain fully committed to creating value within each segment, deleveraging our balance sheet, and ultimately enhancing stakeholder value.”

Guidance*

We affirm our revenue and adjusted EBITDA guidance ranges as follows ($ in millions):

			Fiscal Year 2024
	Revenue		$2,700 - $2,900
	Adjusted EBITDA		$170 - $180

The Company continues to expect Adjusted EBITDA growth in excess of 10% in 2025, based on current 2024 guidance.

*Guidance excludes the effects of any future merger, acquisition or disposition activity and is based on the current operating environment.

Third Quarter 2024 Results

For the third quarter of 2024, the Company reported $702.0 million in revenue, a 2.2% increase from the $686.9 million reported in the third quarter of 2023. NEMT segment revenue grew by $6.3 million or 1.3% and PCS segment revenue grew by $8.5 million or 4.7%, while RPM segment revenue declined $0.3 million or 1.7%, as compared to the third quarter of 2023.

Our operating income was $5.3 million, or 0.7% of revenue, in the third quarter of 2024, compared to operating income of $12.0 million, or 1.8% of revenue, in the third quarter of 2023. Net loss in the third quarter of 2024 was $26.6 million, or negative $1.87 per diluted common share, compared to net loss of $4.3 million, or negative $0.30 per diluted common share in the third quarter of 2023. The increase in net loss for the third quarter of 2024 from the third quarter of 2023 was driven by an increase in interest expense of $10.6 million as well as a loss on extinguishment of debt of $11.8 million that was incurred during the third quarter of 2024 related to the refinancing of our Senior Notes due 2025.

Adjusted EBITDA was $43.2 million, or 6.2% of revenue, in the third quarter of 2024, compared to $51.3 million, or 7.5% of revenue, in the third quarter of 2023. Adjusted net income in the third quarter of 2024 was $6.4 million, or $0.45 per diluted common share, compared to adjusted net income of $20.5 million, or $1.44 per diluted common share, in the third quarter of 2023.

Cash provided by operations during the quarter was $9.3 million as compared to $53.5 million of cash provided by operations during the third quarter of 2023. Changes in operating assets and liabilities during the quarter include a decrease in contract receivables of $55.4 million, net, and a decrease in contract payables of $39.6 million, net. Net cash used in investing activities during the quarter was $7.7 million, primarily due to capitalized investments in technology and purchases of monitoring devices. Net cash provided by financing activities during the quarter was $36.3 million, which resulted in a quarter ended balance on the Company's revolving credit facility of $228.0 million.

During the third quarter, the Company successfully refinanced its $500.0 million Senior Unsecured Notes due 2025 at a redemption premium of 1.469% on the aggregate original principal amount of the 2025 Notes. The 2025 Notes were redeemed in conjunction with the funding of a Term Loan Facility in an aggregate principal amount of $525.0 million.

Third Quarter 2024 Earnings Conference Call

Modivcare will hold a conference call to discuss its financial results on Thursday, November 7, 2024 at 8:30 a.m. ET. To access the call, please dial:

US toll-free: 1 (888) 437-3179
International: 1 (862) 298-0702

You may also access the conference call via webcast at investors.modivcare.com, where the call will also be archived.

About Modivcare

Modivcare Inc. ("Modivcare" or the "Company") is a technology-enabled healthcare services company that provides a suite of integrated supportive care solutions for public and private payors and their members. Our value-based solutions address the social determinants of health (SDoH) by connecting members to essential care services. By doing so, Modivcare helps health plans manage risks, reduce costs, and improve health outcomes. Modivcare is a provider of non-emergency medical transportation (NEMT), personal care services (PCS), and remote patient monitoring solutions (RPM). The company also holds a minority equity investment in CCHN Holdings (d/b/a Matrix Medical Network), an independent, at scale provider of comprehensive in-home health assessments in the U.S. To learn more about Modivcare, please visit www.modivcare.com.

Non-GAAP Financial Measures and Adjustments

In addition to the financial measures prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP"), the information contained herein may include presentations for the Company and its segments (as noted and applicable) of: (1) EBITDA, Adjusted EBITDA, Adjusted G&A expense, Adjusted EBITDA margin, Adjusted Net Income (Loss), and Adjusted EPS, all of which are non-GAAP financial measures considered by management to be performance measures; and (2) free cash flow, which is a non-GAAP financial measure considered by management to be a liquidity measure. EBITDA is defined as net income (loss) before: (1) interest expense, net; (2) provision (benefit) for income taxes; and (3) depreciation and amortization. Adjusted EBITDA is calculated as EBITDA before (as applicable): (1) restructuring and related costs; (2) transaction and integration costs; (3) settlement related costs; (4) a one-time payor collection settlement; (5) stock-based compensation; (6) impairment of goodwill; (7) loss on debt extinguishment; and (8) equity in net (income) loss of investee, net of tax. Adjusted EBITDA margin is calculated as Adjusted EBITDA divided by service revenue, net. Adjusted Net Income (Loss) is calculated as net income (loss) before (as applicable): (1) restructuring and related costs; (2) transaction and integration costs; (3) settlement related costs; (4) a one-time payor collection settlement; (5) stock-based compensation; (6) impairment of goodwill; (7) loss on debt extinguishment; (8) equity in net (income) loss of investee, net of tax; (9) intangible asset amortization expense; and (10) the income tax impact of such adjustments. Adjusted EPS is calculated as Adjusted Net Income (Loss) divided by the diluted weighted-average number of common shares outstanding as calculated for Adjusted Net Income (Loss). Adjusted G&A expense is calculated as G&A expense before (as applicable): (1) restructuring and related costs; (2) transaction and integration costs; (3) settlement related costs; and (4) stock-based compensation. Free cash flow is calculated as cash flow from operations less our applicable capital expenditures included in our purchase of property and equipment line in our Consolidated Statements of Cash Flows.

Reconciliations of the non-GAAP financial measures used herein to their most directly comparable GAAP financial measures that are not included in the discussion above are included below. We do not provide guidance for net income (loss) in this presentation on a basis consistent with GAAP or a reconciliation of forward-looking non-GAAP financial measure (Adjusted EBITDA) to its most directly comparable GAAP financial measure (net income (loss)) on a forward-looking basis because we are unable to predict items contained in the GAAP financial measure without unreasonable efforts. Our non-GAAP performance measures exclude expenses and amounts that are not driven by our core operating results and may be one time in nature. Excluding these expenses makes comparisons with prior periods as well as to other companies in our industry more meaningful. We believe such measures allow investors to gain a better understanding of the factors and trends affecting the ongoing operations of our business. We consider our core operations to be the ongoing activities to provide services from which we earn revenue, including direct operating costs and indirect costs to support these activities. As a result, our net income or loss in equity investee is excluded from these measures, as we do not have the ability to manage the venture, allocate resources within the venture, or directly control its operations or performance. Our free cash flow presentation (as applicable) reflects an additional way of viewing our liquidity that, when viewed together with our GAAP results, provides management, investors, and other users of our financial information with a more complete understanding of factors and trends affecting our cash flows. Our use of the term free cash flow is not intended to imply, and no inference should be made, however, that any reported amounts are free to be used without restriction for discretionary expenditures, as our use of these funds may be restricted by the terms of our outstanding indebtedness, including our credit facility, and otherwise earmarked for other non-discretionary expenditures.

Our non-GAAP financial measures may not provide information that is directly comparable to that provided by other companies in our industry, as other companies in our industry may calculate non-GAAP financial measures differently. In addition, there are limitations in using non-GAAP financial measures because they are not prepared in accordance with GAAP, may be different from non-GAAP financial measures used by other companies, and exclude expenses that may have a material impact on our reported financial results. The presentation of non-GAAP financial measures is not intended to be considered in isolation from or as a substitute for the most directly comparable financial measures prepared in accordance with GAAP. We urge you to review the reconciliations of our non-GAAP financial measures to their most directly comparable GAAP financial measures included below, and not to rely on any single financial measure to evaluate our business.

Forward-Looking Statements

Certain statements contained in this press release constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are predictive in nature and are frequently identified by the use of terms such as “may,” “will,” “should,” “expect,” “believe,” “estimate,” “intend,” and similar words indicating possible future expectations, events or actions. The updated guidance discussed herein constitutes forward-looking statements. Such forward-looking statements are based on current expectations, assumptions, estimates and projections about our business and our industry, and are not guarantees of our future performance. These statements are subject to a number of known and unknown risks, uncertainties and other factors, many of which are beyond our ability to control or predict, which may cause actual results to be materially different from those expressed or implied herein, including but not limited to: government or private insurance program funding reductions or limitations; implementation of alternative payment models or the transition of Medicaid and Medicare beneficiaries to Managed Care Organizations; our inability to control reimbursement rates received for our services; cost containment initiatives undertaken by private third-party payors and an inability to maintain or reduce our cost of services below rates set forth by our payors; inadequacies in, or security breaches of, our information technology systems, including those intended to protect our clients’ confidential information; the effects of any public health emergency; changes in the funding, financial viability or our relationships with our payors; delays in collection, or non-collection, of our accounts receivable; any impairment of our goodwill and long-lived assets; any failure to maintain or to develop reliable, efficient and secure information technology systems; any inability to attract and retain qualified employees; any disruptions from acquisition or acquisition integration efforts; weakening of general economic conditions, including the impact of inflationary pressures, rising interest rates, labor shortages, higher labor costs and supply chain challenges; estimated income taxes being different from income taxes that we ultimately pay; pandemics and other infectious diseases; our contracts not surviving until the end of their stated terms, or not being renewed or extended; our failure to compete effectively in the marketplace; our not being awarded contracts through the government’s requests for proposals process, or our awarded contracts not being profitable; any failure to satisfy our contractual obligations or to maintain existing pledged performance and payment bonds; any failure to estimate accurately the cost of performing our contracts; any misclassification of the drivers we engage as independent contractors rather than as employees; significant interruptions in our communication and data services; not successfully executing on our strategies in the face of our competition; any inability to maintain relationships with existing patient referral sources; certificates of need laws or other regulatory and licensure obligations that may adversely affect our personal care integration efforts and expansion into new markets; any failure to obtain the consent of the New York Department of Health to manage the day to day operations of our licensed in-home personal care services agency business; changes in the case-mix of our personal care patients, or changes in payor mix or payment methodologies; our loss of existing favorable managed care contracts; labor disputes or disruptions, in particular in New York; becoming subject to malpractice, professional negligence, medical liability or other similar claims; our operating in the competitive remote patient monitoring industry, and failing to develop and enhance related technology applications; any failure to innovate and provide services that are useful to customers and to achieve and maintain market acceptance; our lack of sole decision-making authority with respect to our minority investment in Matrix and any failure by Matrix to achieve positive financial position and results of operations; any legal challenges to the relationships or arrangements between our virtual clinical care management services and the unaffiliated physician-owned professional corporation through which such services are provided; any failure to comply with applicable data interoperability and information blocking rules; the lapse of temporary telehealth flexibilities currently permitted under the Consolidated Appropriations Act of 2023; the cost of our compliance with laws; changes to the regulatory landscape applicable to our businesses; changes in budgetary priorities of the government entities or private insurance programs that fund our services; regulations relating to privacy and security of patient and service user information; actions for false claims or recoupment of funds; civil penalties or loss of business for failing to comply with bribery, corruption and other regulations governing business with public organizations; increasing scrutiny and changing expectations with respect to environmental, social and governance matters; changes to, or violations of, licensing regulations, including regulations governing surveys and audits; our contracts being subject to audit and modification by the payors with whom we contract; a loss of Medicaid coverage by a significant number of Medicaid beneficiaries following the expiration of the COVID-19 public health emergency under the Families First Coronavirus Response Act (2020); our existing debt agreements containing restrictions, financial covenants and cross-default provisions that limit our flexibility in operating our business; our substantial indebtedness and lease obligations and ability to generate or distribute sufficient cash to service our indebtedness; the expiration of our existing credit agreement or any loss of available financing alternatives; our ability to incur substantial additional indebtedness or to issue additional equity; the results of the remediation of our identified material weaknesses in internal control over financial reporting; future sales of our common stock by existing stockholders; any stock price volatility; our dependence on our subsidiaries to fund our operations and expenses; securities analysts failing to publish research or publishing misleading or unfavorable research about us; and the effects of applicable anti-takeover provisions.

The Company has provided additional information about the foregoing and other risks facing our business in our annual report on Form 10-K and subsequent periodic and current reports filed with the Securities and Exchange Commission that could impact future performance. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made and are expressly qualified in their entirety by the cautionary statements set forth herein and in our filings with the Securities and Exchange Commission, which you should read in their entirety before making an investment decision with respect to our securities. We undertake no obligation to update or revise any forward-looking statements contained in this release, whether as a result of new information, future events or otherwise, except as required by applicable law.

Modivcare Inc.
Unaudited Condensed Consolidated Statements of Operations
(in thousands, except share and per share data)
	Three months ended September 30,								Nine months ended September 30,
		2024				2023				2024				2023
Service revenue, net	$	702,037			$	686,925			$	2,084,787			$	2,048,338
Grant income		—				551				—				4,649
Operating expenses:
Service expense		597,934				579,214				1,769,600				1,718,735
General and administrative expense		70,903				70,142				224,145				229,095
Depreciation and amortization		27,940				26,077				82,795				77,679
Impairment of goodwill		—				—				105,302				183,100
Total operating expenses		696,777				675,433				2,181,842				2,208,609
Operating income (loss)		5,260				12,043				(97,055	)			(155,622	)
Interest expense, net		28,493				17,844				67,129				50,769
Loss on debt extinguishment		11,797				—				11,797				—
Loss before income taxes and equity method investment		(35,030	)			(5,801	)			(175,981	)			(206,391	)
Income tax benefit		11,070				1,659				2,055				4,362
Equity in net income (loss) of investee, net of tax		(2,644	)			(160	)			(3,862	)			2,821
Net loss	$	(26,604	)		$	(4,302	)		$	(177,788	)		$	(199,208	)
Loss per common share:
Basic	$	(1.87	)		$	(0.30	)		$	(12.50	)		$	(14.06	)
Diluted	$	(1.87	)		$	(0.30	)		$	(12.50	)		$	(14.06	)
Weighted-average number of common shares outstanding:
Basic		14,253,192				14,182,839				14,224,155				14,169,537
Diluted		14,253,192				14,182,839				14,224,155				14,169,537

Modivcare Inc.
Unaudited Condensed Consolidated Balance Sheets
(in thousands)
	September 30, 2024				December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	48,336			$	2,217
Accounts receivable, net		248,683				222,537
Contract receivables		110,431				143,960
Other current assets(1)		55,999				36,209
Total current assets		463,449				404,923
Property and equipment, net		84,451				85,629
Goodwill		680,252				785,554
Intangible assets, net		301,598				360,935
Equity investment		35,835				41,531
Operating lease right-of-use assets		39,839				39,776
Other long-term assets		46,324				48,927
Total assets	$	1,651,748			$	1,767,275
Liabilities and stockholders' equity (deficit)
Current liabilities:
Accounts payable	$	52,109			$	55,241
Accrued contract payables		47,300				117,488
Accrued expenses and other current liabilities		145,289				127,901
Accrued transportation costs		95,023				97,245
Current portion of operating lease liabilities		8,548				8,727
Short-term debt		233,250				113,800
Total current liabilities		581,519				520,402
Long-term debt, net of deferred financing costs		986,125				983,757
Operating lease liabilities, less current portion		34,364				33,784
Other long-term liabilities(2)		66,736				73,137
Total liabilities		1,668,744				1,611,080
Stockholders' equity (deficit)
Stockholders' equity (deficit)		(16,996	)			156,195
Total liabilities and stockholders' equity (deficit)	$	1,651,748			$	1,767,275

(1)	Includes other receivables, prepaid expenses and other current assets and short-term restricted cash.
(2)	Includes other long-term liabilities and deferred tax liabilities

Modivcare Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
(in thousands)
	Three months ended September 30,								Nine months ended September 30,
		2024				2023				2024				2023
Operating activities
Net loss	$	(26,604	)		$	(4,302	)		$	(177,788	)		$	(199,208	)
Depreciation and amortization		27,940				26,077				82,795				77,679
Stock-based compensation		530				1,743				4,792				4,029
Equity in net (income) loss of investee		3,670				222				5,360				(3,915	)
Deferred income taxes		(12,340	)			(4,971	)			(6,753	)			(15,235	)
Impairment of goodwill		—				—				105,302				183,100
Loss on debt extinguishment		11,797				—				11,797				—
Reduction of right-of-use asset		2,370				2,924				7,289				9,875
Other non-cash items(1)		1,894				1,331				4,752				3,907
Changes in operating assets and liabilities:
Contract receivables		48,914				(9,512	)			33,528				(58,143	)
Contract payables		(39,594	)			24,483				(70,188	)			(60,710	)
Long-term contract receivables		6,512				—				—				427
Other changes in operating assets and liabilities(2)		(15,816	)			15,552				(37,339	)			867
Net cash provided by (used in) operating activities		9,273				53,547				(36,453	)			(57,327	)
Investing activities
Purchase of property and equipment		(7,728	)			(8,878	)			(22,281	)			(31,143	)
Net cash used in investing activities		(7,728	)			(8,878	)			(22,281	)			(31,143	)
Financing activities
Net proceeds from short-term debt		45,000				(43,500	)			114,200				83,000
Issuance of long-term debt		525,000				—				525,000				—
Repayment of long-term debt		(508,657	)			—				(508,657	)			—
Payments of debt issuance costs		(24,649	)			—				(25,512	)			(376	)
Restricted stock surrendered for employee tax payment		(435	)			(21	)			(591	)			(861	)
Other financing activities		(2	)			—				396				346
Net cash provided by (used in) financing activities		36,257				(43,521	)			104,836				82,109
Net change in cash, cash equivalents and restricted cash		37,802				1,148				46,102				(6,361	)
Cash, cash equivalents and restricted cash at beginning of period		11,082				7,466				2,782				14,975
Cash, cash equivalents and restricted cash at end of period	$	48,884			$	8,614			$	48,884			$	8,614

(1)	Includes amortization of deferred financing costs and debt discount.
(2)	Includes accounts receivable and other receivables, prepaid expenses and other current assets, accounts payable and accrued expenses, accrued transportation costs and other changes in operating assets and liabilities.

Modivcare Inc. Unaudited Reconciliation of Non-GAAP Financial Measures Segment Information and Adjusted EBITDA (in thousands)
	Three months ended September 30, 2024
	NEMT				PCS				RPM				Corporate and Other				Total
Service revenue, net	$	492,253			$	188,518			$	19,448			$	1,818			$	702,037
Operating expenses:
Service expense		436,549				151,745				8,018				1,622				597,934
General and administrative expense		30,758				23,823				4,332				11,990				70,903
Depreciation and amortization		7,645				12,918				7,073				304				27,940
Total operating expenses		474,952				188,486				19,423				13,916				696,777
Operating income (loss)		17,301				32				25				(12,098	)			5,260
Interest expense, net		—				—				—				28,493				28,493
Loss on debt extinguishment		—				—				—				11,797				11,797
Income (loss) before income taxes and equity method investment		17,301				32				25				(52,388	)			(35,030	)
Income tax benefit (provision)		(4,490	)			(24	)			(7	)			15,591				11,070
Equity in net income (loss) of investee, net of tax		151				—				—				(2,795	)			(2,644	)
Net income (loss)		12,962				8				18				(39,592	)			(26,604	)
Interest expense, net		—				—				—				28,493				28,493
Income tax provision (benefit)		4,490				24				7				(15,591	)			(11,070	)
Depreciation and amortization		7,645				12,918				7,073				304				27,940
EBITDA		25,097				12,950				7,098				(26,386	)			18,759
Restructuring and related costs(1)		249				15				45				—				309
Transaction and integration costs		—				146				2				1,219				1,367
Settlement related costs		—				2,610				—				—				2,610
Payor collection settlement(2)		5,368				—				—				—				5,368
Stock-based compensation		—				—				—				340				340
Loss on debt extinguishment		—				—				—				11,797				11,797
Equity in net (income) loss of investee, net of tax		(151	)			—				—				2,795				2,644
Adjusted EBITDA	$	30,563			$	15,721			$	7,145			$	(10,235	)		$	43,194

(1)	Restructuring and related costs include professional fees for strategic initiatives, organizational consolidation costs, severance and other professional fees.
(2)	Amount represents a one-time, non-recurring settlement in connection with a dispute with a payor for which the Company will cease performing services beginning in 2025, which resulted in an adjustment to historical contracts receivable recorded for the payor beginning with calendar year 2021.

Modivcare Inc. Unaudited Reconciliation of Non-GAAP Financial Measures Segment Information and Adjusted EBITDA (in thousands)
	Three months ended September 30, 2023
	NEMT				PCS				RPM				Corporate and Other				Total
Service revenue, net	$	485,951			$	179,979			$	19,779			$	1,216			$	686,925
Grant income		—				551				—				—				551
Operating expenses:
Service expense		428,021				143,078				6,934				1,181				579,214
General and administrative expense		25,433				20,252				5,685				18,772				70,142
Depreciation and amortization		6,814				12,850				6,174				239				26,077
Total operating expenses		460,268				176,180				18,793				20,192				675,433
Operating income (loss)		25,683				4,350				986				(18,976	)			12,043
Interest expense, net		—				—				—				17,844				17,844
Income (loss) before income taxes and equity method investment		25,683				4,350				986				(36,820	)			(5,801	)
Income tax benefit (provision)		(6,994	)			(1,208	)			(279	)			10,140				1,659
Equity in net income (loss) of investee, net of tax		142				—				—				(302	)			(160	)
Net income (loss)		18,831				3,142				707				(26,982	)			(4,302	)
Interest expense, net		—				—				—				17,844				17,844
Income tax provision (benefit)		6,994				1,208				279				(10,140	)			(1,659	)
Depreciation and amortization		6,814				12,850				6,174				239				26,077
EBITDA		32,639				17,200				7,160				(19,039	)			37,960
Restructuring and related costs(1)		2,711				—				—				6,205				8,916
Transaction and integration costs(2)		101				431				22				605				1,159
Settlement related costs		(25	)			—				—				1,474				1,449
Stock-based compensation		—				—				—				1,690				1,690
Equity in net (income) loss of investee, net of tax		(142	)			—				—				302				160
Adjusted EBITDA	$	35,284			$	17,631			$	7,182			$	(8,763	)		$	51,334

(1)	Restructuring and related costs include professional fees for strategic initiatives, organizational consolidation costs, severance and other professional fees.
(2)	Transaction and integration costs consist of fees incurred related to Sarbanes-Oxley Act of 2002 implementation and business integration efforts.

Modivcare Inc. Unaudited Reconciliation of Non-GAAP Financial Measures Segment Information and Adjusted EBITDA (in thousands)
	Nine months ended September 30, 2024
	NEMT				PCS				RPM				Corporate and Other				Total
Service revenue, net	$	1,462,236			$	558,696			$	58,575			$	5,280			$	2,084,787
Operating expenses:
Service expense		1,288,162				451,049				24,556				5,833				1,769,600
General and administrative expense		95,701				72,152				15,780				40,512				224,145
Depreciation and amortization		22,602				38,506				20,834				853				82,795
Impairment of goodwill		—				—				105,302				—				105,302
Total operating expenses		1,406,465				561,707				166,472				47,198				2,181,842
Operating income (loss)		55,771				(3,011	)			(107,897	)			(41,918	)			(97,055	)
Interest expense, net		—				—				—				67,129				67,129
Loss on debt extinguishment		—				—				—				11,797				11,797
Income (loss) before income taxes and equity method investment		55,771				(3,011	)			(107,897	)			(120,844	)			(175,981	)
Income tax benefit (provision)		(14,512	)			866				726				14,975				2,055
Equity in net income (loss) of investee, net of tax		269				—				—				(4,131	)			(3,862	)
Net income (loss)		41,528				(2,145	)			(107,171	)			(110,000	)			(177,788	)
Interest expense, net		—				—				—				67,129				67,129
Income tax provision (benefit)		14,512				(866	)			(726	)			(14,975	)			(2,055	)
Depreciation and amortization		22,602				38,506				20,834				853				82,795
EBITDA		78,642				35,495				(87,063	)			(56,993	)			(29,919	)
Restructuring and related costs(1)		9,192				1,321				1,244				1,638				13,395
Transaction and integration costs		52				2,023				102				1,293				3,470
Settlement related costs		—				3,415				—				—				3,415
Payor collection settlement(2)		5,368				—				—				—				5,368
Stock-based compensation		—				—				—				4,090				4,090
Impairment of goodwill		—				—				105,302				—				105,302
Loss on debt extinguishment		—				—				—				11,797				11,797
Equity in net (income) loss of investee, net of tax		(269	)			—				—				4,131				3,862
Adjusted EBITDA	$	92,985			$	42,254			$	19,585			$	(34,044	)		$	120,780

(1)	Restructuring and related costs include professional fees for strategic initiatives, organizational consolidation costs, severance and other professional fees.
(2)	Amount represents a one-time, non-recurring settlement in connection with a dispute with a payor for which the Company will cease performing services beginning in 2025, which resulted in an adjustment to historical contracts receivable recorded for the payor beginning with calendar year 2021.

Modivcare Inc. Unaudited Reconciliation of Non-GAAP Financial Measures Segment Information and Adjusted EBITDA (in thousands)
	Nine months ended September 30, 2023
	NEMT				PCS				RPM				Corporate and Other				Total
Service revenue, net	$	1,452,389			$	534,435			$	57,702			$	3,812			$	2,048,338
Grant income		—				4,649				—				—				4,649
Operating expenses:
Service expense		1,277,604				417,636				20,129				3,366				1,718,735
General and administrative expense		87,645				63,480				16,781				61,189				229,095
Depreciation and amortization		20,319				38,590				18,087				683				77,679
Impairment of goodwill		—				137,331				45,769				—				183,100
Total operating expenses		1,385,568				657,037				100,766				65,238				2,208,609
Operating income (loss)		66,821				(117,953	)			(43,064	)			(61,426	)			(155,622	)
Interest expense, net		—				—				—				50,769				50,769
Income (loss) before income taxes and equity method investment		66,821				(117,953	)			(43,064	)			(112,195	)			(206,391	)
Income tax benefit (provision)		(18,014	)			(5,452	)			(765	)			28,593				4,362
Equity in net income of investee, net of tax		984				—				—				1,837				2,821
Net income (loss)		49,791				(123,405	)			(43,829	)			(81,765	)			(199,208	)
Interest expense, net		—				—				—				50,769				50,769
Income tax provision (benefit)		18,014				5,452				765				(28,593	)			(4,362	)
Depreciation and amortization		20,319				38,590				18,087				683				77,679
EBITDA		88,124				(79,363	)			(24,977	)			(58,906	)			(75,122	)
Restructuring and related costs(1)		11,865				—				—				21,606				33,471
Transaction and integration costs(2)		101				881				70				1,834				2,886
Settlement related costs		250				—				—				8,683				8,933
Stock-based compensation		—				—				—				3,485				3,485
Impairment of goodwill		—				137,331				45,769				—				183,100
Equity in net income of investee, net of tax		(984	)			—				—				(1,837	)			(2,821	)
Adjusted EBITDA	$	99,356			$	58,849			$	20,862			$	(25,135	)		$	153,932

(1)	Restructuring and related costs include professional fees for strategic initiatives, organizational consolidation costs, severance and other professional fees.
(2)	Transaction and integration costs consist of fees incurred related to Sarbanes-Oxley Act of 2002 implementation and business integration efforts

Modivcare Inc. Unaudited Reconciliation of Non-GAAP Financial Measures Adjusted Net Income and Adjusted Net Income per Common Share (in thousands, except share and per share data)
	Three months ended September 30,								Nine months ended September 30,
		2024				2023				2024				2023
Net loss	$	(26,604	)		$	(4,302	)		$	(177,788	)		$	(199,208	)
Restructuring and related costs(1)		309				8,916				13,395				33,471
Transaction and integration costs(2)		1,367				1,159				3,470				2,886
Settlement related costs		2,610				1,449				3,415				8,933
Payor collection settlement(3)		5,368				—				5,368				—
Stock-based compensation		340				1,690				4,090				3,485
Impairment of goodwill		—				—				105,302				183,100
Loss on debt extinguishment		11,797				—				11,797				—
Equity in net (income) loss of investee, net of tax		2,644				160				3,862				(2,821	)
Intangible asset amortization expense		19,715				19,748				59,259				59,457
Tax effected impact of adjustments		(11,144	)			(8,327	)			(27,063	)			(27,833	)
Adjusted net income	$	6,402			$	20,493			$	5,107			$	61,470
Adjusted earnings per share	$	0.45			$	1.44			$	0.36			$	4.33
Diluted weighted-average number of common shares outstanding		14,262,751				14,218,141				14,251,313				14,209,787

(1)	Restructuring and related costs include professional fees for strategic initiatives, organizational consolidation costs, severance and other professional fees.
(2)	Transaction and integration costs consist of fees incurred related to SOX implementation and business integration efforts.
(3)	Amount represents a one-time, non-recurring settlement in connection with a dispute with a payor for which the Company will cease performing services beginning in 2025, which resulted in an adjustment to historical contracts receivable recorded for the payor beginning with calendar year 2021.

Modivcare Inc. Unaudited Key Statistical and Financial Data (in thousands, except for statistical data)
	Three months ended											Nine months ended											Three months ended
	September 30, 2024				September 30, 2023				% Change			September 30, 2024				September 30, 2023				% Change			June 30, 2024				QoQ % Change
NEMT Segment
Service revenue, net	$	492,253			$	485,951			1.3	%		$	1,462,236			$	1,452,389			0.7	%		$	490,677			0.3	%
Purchased services expense		383,769				363,594			5.5	%			1,119,248				1,085,206			3.1	%			372,579			3.0	%
Payroll and other expense		52,780				64,427			(18.1	)%			168,914				192,398			(12.2	)%			55,377			(4.7	)%
Service expense	$	436,549			$	428,021			2.0	%		$	1,288,162			$	1,277,604			0.8	%		$	427,956			2.0	%
Gross profit	$	55,704			$	57,930			(3.8	)%		$	174,074			$	174,785			(0.4	)%		$	62,721			(11.2	)%
Gross margin		11.3	%			11.9	%						11.9	%			12.0	%						12.8	%
G&A expense	$	30,758			$	25,433			20.9	%		$	95,701			$	87,645			9.2	%		$	33,123			(7.1	)%
G&A expense adjustments:
Restructuring and related costs		249				2,711			(90.8	)%			9,192				11,865			(22.5	)%			5,704			(95.6	)%
Transaction and integration costs		—				101			(100.0	)%			52				101			(48.5	)%			—			N/M
Settlement related costs		—				(25	)		(100.0	)%			—				250			(100.0	)%			—			N/M
Adjusted G&A expense	$	30,509			$	22,646			34.7	%		$	86,457			$	75,429			14.6	%		$	27,419			11.3	%
Adjusted G&A expense % of revenue		6.2	%			4.7	%						5.9	%			5.2	%						5.6	%
Net income	$	12,962			$	18,831			(31.2	)%		$	41,528			$	49,791			(16.6	)%		$	16,398			(21.0	)%
Net income margin		2.6	%			3.9	%						2.8	%			3.4	%						3.3	%
Adjusted EBITDA	$	30,563			$	35,284			(13.4	)%		$	92,985			$	99,356			(6.4	)%		$	35,302			(13.4	)%
Adjusted EBITDA margin		6.2	%			7.3	%						6.4	%			6.8	%						7.2	%
Total paid trips (thousands)		9,418				8,824			6.7	%			27,257				25,761			5.8	%			9,031			4.3	%
Average monthly members (thousands)		30,023				33,660			(10.8	)%			29,599				33,892			(12.7	)%			29,703			1.1	%
Revenue per member per month	$	5.47			$	4.81			13.7	%		$	5.49			$	4.76			15.3	%		$	5.51			(0.7	)%
Revenue per trip	$	52.27			$	55.07			(5.1	)%		$	53.65			$	56.38			(4.8	)%		$	54.33			(3.8	)%
Monthly utilization		10.5	%			8.7	%						10.2	%			8.4	%						10.1	%
Purchased services per trip	$	40.75			$	41.21			(1.1	)%		$	41.06			$	42.13			(2.5	)%		$	41.26			(1.2	)%
Payroll and other per trip	$	5.60			$	7.30			(23.3	)%		$	6.20			$	7.47			(17.0	)%		$	6.13			(8.6	)%
Total service expense per trip	$	46.35			$	48.51			(4.5	)%		$	47.26			$	49.60			(4.7	)%		$	47.39			(2.2	)%

N/M - Not Meaningful. Certain figures in the tables above do not provide meaningful percentage comparison, thus, the percentage has been removed.

Modivcare Inc. Unaudited Key Statistical and Financial Data (in thousands, except for statistical data)
	Three months ended											Nine months ended											Three months ended
	September 30, 2024				September 30, 2023				% Change			September 30, 2024				September 30, 2023				% Change			June 30, 2024				QoQ % Change
PCS Segment
Service revenue, net	$	188,518			$	179,979			4.7	%		$	558,696			$	534,435			4.5	%		$	186,610			1.0	%
Service expense		151,745				143,078			6.1	%			451,049				417,636			8.0	%			149,866			1.3	%
Gross profit	$	36,773			$	36,901			(0.3	)%		$	107,647			$	116,799			(7.8	)%		$	36,744			0.1	%
Gross margin		19.5	%			20.5	%						19.3	%			21.9	%						19.7	%
G&A expense	$	23,823			$	20,252			17.6	%		$	72,152			$	63,480			13.7	%		$	23,897			(0.3	)%
G&A expense adjustments
Restructuring and related costs		15				—			N/M				1,321				—			N/M				1,179			(98.7	)%
Transaction and integration costs		146				431			(66.1	)%			2,023				881			129.6	%			431			(66.1	)%
Settlement related costs		2,610				—			N/M				3,415				—			N/M				805			224.2	%
Adjusted G&A expense	$	21,052			$	19,821			6.2	%		$	65,393			$	62,599			4.5	%		$	21,482			(2.0	)%
Adjusted G&A expense % of revenue		11.2	%			11.0	%						11.7	%			11.7	%						11.5	%
Net income (loss)	$	8			$	3,142			(99.7	)%		$	(2,145	)		$	(123,405	)		(98.3	)%		$	121			(93.4	)%
Net income (loss) margin		—	%			1.7	%						(0.4	)%			(23.1	)%						0.1	%
Adjusted EBITDA	$	15,721			$	17,631			(10.8	)%		$	42,254			$	58,849			(28.2	)%		$	15,262			3.0	%
Adjusted EBITDA margin		8.3	%			9.8	%						7.6	%			11.0	%						8.2	%
Total hours (thousands)		7,174				6,995			2.6	%			21,187				20,752			2.1	%			7,048			1.8	%
Revenue per hour	$	26.28			$	25.73			2.1	%		$	26.37			$	25.75			2.4	%		$	26.48			(0.8	)%
Service expense per hour	$	21.15			$	20.45			3.4	%		$	21.29			$	20.13			5.8	%		$	21.26			(0.5	)%

N/M - Not Meaningful. Certain figures in the tables above do not provide meaningful percentage comparison, thus, the percentage has been removed.

Modivcare Inc. Unaudited Key Statistical and Financial Data (in thousands, except for statistical data)
	Three months ended											Nine months ended											Three months ended
	September 30, 2024				September 30, 2023				% Change			September 30, 2024				September 30, 2023				% Change			June 30, 2024				QoQ % Change
RPM Segment
Service revenue, net	$	19,448			$	19,779			(1.7	)%		$	58,575			$	57,702			1.5	%		$	19,025			2.2	%
Service expense		8,018				6,934			15.6	%			24,556				20,129			22.0	%			8,175			(1.9	)%
Gross profit	$	11,430			$	12,845			(11.0	)%		$	34,019			$	37,573			(9.5	)%		$	10,850			5.3	%
Gross margin		58.8	%			64.9	%						58.1	%			65.1	%						57.0	%
G&A expense	$	4,332			$	5,685			(23.8	)%		$	15,780			$	16,781			(6.0	)%		$	6,008			(27.9	)%
G&A expense adjustments
Restructuring and related costs		45				—			N/M				1,244				—			N/M				1,189			(96.2	)%
Transaction and integration costs		2				22			(90.9	)%			102				70			45.7	%			100			(98.0	)%
Adjusted G&A expense	$	4,285			$	5,663			(24.3	)%		$	14,434			$	16,711			(13.6	)%		$	4,719			(9.2	)%
Adjusted G&A expense % of revenue		22.0	%			28.6	%						24.6	%			29.0	%						24.8	%
Net income (loss)	$	18			$	707			(97.5	)%		$	(107,171	)		$	(43,829	)		144.5	%		$	(106,881	)		(100.0	)%
Net income (loss) margin		0.1	%			3.6	%						(183.0	)%			(76.0	)%						(561.8	)%
Adjusted EBITDA	$	7,145			$	7,182			(0.5	)%		$	19,585			$	20,862			(6.1	)%		$	6,131			16.5	%
Adjusted EBITDA margin		36.7	%			36.3	%						33.4	%			36.2	%						32.2	%
Average monthly members (thousands)		246				247			(0.4	)%			247				241			2.5	%			246			—	%
Revenue per member per month	$	26.35			$	26.69			(1.3	)%		$	26.35			$	26.60			(0.9	)%		$	25.78			2.2	%
Service expense per member per month	$	10.86			$	9.36			16.0	%		$	11.05			$	9.28			19.1	%		$	11.08			(2.0	)%

N/M - Not Meaningful. Certain figures in the tables above do not provide meaningful percentage comparison, thus, the percentage has been removed.

Modivcare Inc. Unaudited Key Statistical and Financial Data (in thousands)
	Three months ended											Nine months ended											Three months ended
	September 30, 2024				September 30, 2023				% Change			September 30, 2024				September 30, 2023				% Change			June 30, 2024				QoQ % Change
Corporate and Other Segment
G&A expense	$	11,990			$	18,772			(36.1	)%		$	40,512			$	61,189			(33.8	)%		$	13,037			(8.0	)%
G&A expense adjustments
Restructuring and related costs		—				6,205			(100.0	)%			1,638				21,606			(92.4	)%			(91	)		(100.0	)%
Transaction and integration costs		1,219				605			101.5	%			1,293				1,834			(29.5	)%			29			4103.4	%
Settlement related costs		—				1,474			(100.0	)%			—				8,683			(100.0	)%			—			N/M
Stock-based compensation		340				1,690			(79.9	)%			4,090				3,485			17.4	%			1,969			(82.7	)%
Adjusted G&A expense	$	10,431			$	8,798			18.6	%		$	33,491			$	25,581			30.9	%		$	11,130			(6.3	)%
Adjusted G&A expense % of consolidated revenue		1.5	%			1.3	%						1.6	%			1.2	%						1.6	%

	Three months ended											Nine months ended											Three months ended
	September 30, 2024				September 30, 2023				% Change			September 30, 2024				September 30, 2023				% Change			June 30, 2024				QoQ % Change
Consolidated Modivcare Inc.
G&A expense	$	70,903			$	70,142			1.1	%		$	224,145			$	229,095			(2.2	)%		$	76,065			(6.8	)%
G&A expense adjustments
Restructuring and related costs		309				8,916			(96.5	)%			13,395				33,471			(60.0	)%			7,981			(96.1	)%
Transaction and integration costs		1,367				1,159			17.9	%			3,470				2,886			20.2	%			560			144.1	%
Settlement related costs		2,610				1,449			80.1	%			3,415				8,933			(61.8	)%			805			224.2	%
Stock-based compensation		340				1,690			(79.9	)%			4,090				3,485			17.4	%			1,969			(82.7	)%
Adjusted G&A expense	$	66,277			$	56,928			16.4	%		$	199,775			$	180,320			10.8	%		$	64,750			2.4	%
Adjusted G&A expense % of consolidated revenue		9.4	%			8.3	%						9.6	%			8.8	%						9.3	%

N/M - Not Meaningful. Certain figures in the tables above do not provide meaningful percentage comparison, thus, the percentage has been removed.

View source version on businesswire.com: https://www.businesswire.com/news/home/20241106250028/en/

Investor Relations Contact

Kevin Ellich,

Head of Investor Relations

Kevin.Ellich@modivcare.com

Source: Modivcare Inc.

FAQ

What was Modivcare's (MODV) revenue growth in Q3 2024?

Modivcare's service revenue grew 2.2% year-over-year to $702.0 million in Q3 2024.

What was Modivcare's (MODV) net loss in Q3 2024?

Modivcare reported a net loss of $26.6 million, or -$1.87 per diluted share, in Q3 2024.

What is Modivcare's (MODV) revenue guidance for 2024?

Modivcare affirmed its 2024 revenue guidance range of $2,700-$2,900 million.

How did Modivcare's (MODV) different segments perform in Q3 2024?

NEMT segment revenue grew 1.3%, Personal Care Services revenue increased 4.7%, while Remote Patient Monitoring revenue declined 1.7%.