0001220754FALSE00012207542023-08-032023-08-03

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 8-K 
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): November 2, 2023
ModivCare Inc.
(Exact name of registrant as specified in its charter)
 
Delaware001-3422186-0845127
(State or other jurisdiction of
incorporation or organization)		(Commission File Number)(I.R.S. Employer
Identification No.)
6900 E Layton Avenue, 12th Floor,Denver,Colorado80237
(Address of principal executive offices) (Zip Code)

(303) 728-7012
(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of exchange on which registered
Common Stock, $0.001 par value per shareMODVThe NASDAQ Global Select Market
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
¨






Item 2.02 Results of Operations and Financial Condition.

On November 2, 2023, ModivCare Inc. ("ModivCare" or the "Company") issued a press release announcing its financial results for the quarter ended September 30, 2023. A copy of the press release is being furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit
Number		Description
99.1
101Cover Page Interactive Data File - the cover page XBRL tags are embedded within the iXBRL document.
104The cover page from this Current Report on Form 8-K, formatted as Inline XBRL.
 



Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
  ModivCare Inc.
Date: November 2, 2023  By: /s/ L. Heath Sampson
  Name: L. Heath Sampson
  Title: Chief Executive Officer




modivcarea.jpg
Modivcare Reports Third Quarter 2023
Financial Results; Maintains Guidance

Denver, CO – November 2, 2023 – 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, 2023.

Third Quarter 2023 Highlights:
•Service revenue of $686.9 million, a 6.0% increase as compared to $647.8 million in the third quarter of 2022
•Net loss of $4.3 million or $0.30 per diluted common share
•Adjusted EBITDA(1) of $51.3 million, adjusted net income(1) of $20.5 million and adjusted EPS(1) of $1.44 per diluted common share
•Cash provided by operating activities during the quarter of $53.5 million and free cash flow(2) of $44.7 million
•Contract receivables increased by $9.5 million to $129.3 million and contract payables increased by $24.5 million to $133.6 million, resulting in net contract payables of $4.3 million as of September 30, 2023
•Repaid $43.5 million on the $325.0 million revolving credit facility, reducing the balance drawn to $83.0 million as of September 30, 2023
•$138.0 million of NEMT managed Medicaid total contract value (TCV) won during third quarter 2023; awarded a state Medicaid expansion in the northeast that will be implemented in mid-2024 once finalized; national MCO contract won earlier in 2023 implemented during the quarter

(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 $8.9 million that is included in our purchase of property and equipment line in our Statements of Cash Flows provided below.

"We're pleased to announce strong Q3 2023 results, highlighted by adjusted EBITDA of $51 million, $54 million of cash flow from operations, and $45 million of free cash flow," said L. Heath Sampson, President and CEO. "We have addressed internal inefficiencies in our operations and are now leveraging new technologies to deliver high quality care at a lower cost. The net result can be seen in our strong profitability and cash flow this quarter, which enabled us to reduce our outstanding revolver balance by one-third and improved our leverage ratio. Since taking on the role of CEO a year ago, our transformation has been comprehensive. We've initiated foundational shifts in our operating model, transitioning to a more unified, customer-centric strategy. While making these pivotal investments, we've maintained focus on our balance sheet. By generating cash, we aim to demonstrate to the market that our platform is not only resilient in the face of short-term challenges but also well-positioned for sustainable growth and margin expansion."

Mr. Sampson continued, "In our NEMT business, we've achieved meaningful operational improvements, including a notable sequential uptick in our margins. While navigating near-term complexities like Medicaid redetermination, we've excelled in customer service level agreements, leading to significant new contract wins. Our personal care services segment, has made rapid strides in 2023, setting the stage for improved growth and margins in 2024. Our remote patient monitoring segment continues to grow with high margins and acts as a digital gateway for members to access care. When integrated with our NEMT and personal care services, we can unlock unique customer value and diversify our revenue streams. In summary, our transformation is not merely aspirational; it's a tangible reality that is driving measurable outcomes and positioning us for long-term success. I want to extend my deepest gratitude to our dedicated team, many of whom are managing multiple change-oriented roles in addition to their core responsibilities."




2023 Guidance

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

2023 Guidance
LowHigh
Revenue$2,750 $2,800 
Adjusted EBITDA$200 $210 

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

Third Quarter 2023 Results

For the third quarter of 2023, the Company reported $686.9 million in revenue, a 6.0% increase from $647.8 million in the third quarter of 2022. The revenue growth was driven by a 9.7% increase in total paid trips in our NEMT segment coupled with a 2.3% increase in hours worked and a 3.9% increase in rate per hour in our personal care services segment, partially offset by a 3.6% decrease in revenue per paid trip in our NEMT segment.

Our operating income was $12.0 million, or 1.8% of revenue, in the third quarter of 2023, compared to operating income of $12.4 million, or 1.9% of revenue, in the third quarter of 2022. Net loss in the third quarter of 2023 was $4.3 million, or $0.30 per diluted common share, compared to net loss of $28.5 million, or $2.03 per diluted common share, in the third quarter of 2022. While our operating income remained relatively flat period over period, the net loss in 2022 is higher due to our allocated percentage of a one-time impairment taken at our Matrix investment.

Adjusted EBITDA was $51.3 million, or 7.5% of revenue, in the third quarter of 2023, compared to $51.8 million, or 8.0% of revenue, in the third quarter of 2022. Our Adjusted EBITDA was largely consistent, primarily related to a $4.1 million decrease in adjusted EBITDA at our NEMT segment, offset by a $4.1 million increase in adjusted EBITDA at our corporate segment. The NEMT segment's decrease was driven by increased payroll and other expense per trip and higher than expected trip volume. Accordingly, adjusted net income in the third quarter of 2023 was $20.5 million, or $1.44 per diluted common share, compared to $22.7 million, or $1.61 per diluted common share, in the third quarter of 2022.

Cash generated from operations during the quarter was $53.5 million as compared to $5.7 million of cash used in operations during the third quarter of 2022. The primary source of cash during the quarter was a $24.5 million build in contract payables, coupled with a $21.3 million decrease in accounts receivable. We used $43.5 million of this cash to pay down our revolving credit facility and ended the quarter with $83.0 million drawn.

Third Quarter Earnings Conference Call

Modivcare will hold a conference call to discuss its financial results on Friday, November 3, 2023 at 8:30 a.m. ET. To access the call, please dial:

US toll-free: 1 (877) 407-8037
International: 1 (201) 689-8037

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

About Modivcare

Modivcare Inc. ("Modivcare" or the "Company") is a technology-enabled healthcare services company that provides a suite of integrated supportive care solutions for public and private payors and their members. Our value-based solutions address the social determinants of health (SDoH) by connecting members to essential care services. By doing so, Modivcare helps health plans manage risks, reduce costs, and improve overall health outcomes. Modivcare is a provider of non-emergency medical transportation (NEMT), personal care services (PCS), and remote patient monitoring (RPM) solutions. To learn more about Modivcare, please visit www.modivcare.com.


Non-GAAP Financial Measures and Adjustments

In addition to the financial measures prepared in accordance with generally accepted accounting principles in the United States ("GAAP"), this press release includes (as applicable) EBITDA, Adjusted EBITDA and Adjusted G&A expense for the Company and its segments, Adjusted EBITDA margin for the Company's segments (other than its Corporate segment), and Adjusted Net Income and Adjusted EPS for the Company, all of which are performance measures that are not recognized under GAAP, and also free cash flow for the Company, which is a liquidity measure that is not recognized under GAAP. EBITDA is defined as net income (loss) before: (1) interest expense, net, (2) provision (benefit) for income taxes, and (3) depreciation and amortization. Adjusted EBITDA is calculated as EBITDA before (as applicable): (1) restructuring and related costs, (2) transaction and integration costs, (3) settlement related costs, (4) stock-based compensation, (5) impairment of goodwill, as applicable, (6) equity in net (income) loss of investee, net of tax, and (7) COVID-19 related costs, net of grant income. Adjusted EBITDA margin is calculated as Adjusted EBITDA, divided by service revenue, net. Adjusted Net Income is calculated as net income (loss) before: (1) restructuring and related costs, (2) transaction and integration costs, (3) settlement related costs, (4) stock-based compensation, (5) impairment of goodwill, as applicable, (6) equity in net (income) loss of investee, net of tax (7) intangible asset amortization expense, (8) COVID-19 related costs, net of grant income, and (9) the income tax impact of such adjustments. Adjusted EPS is calculated as Adjusted Net Income divided by the diluted weighted-average number of common shares outstanding as calculated for Adjusted Net Income. Adjusted G&A expense is calculated as G&A expense before (as applicable): (1) restructuring and related costs, (2) transaction and integration costs, (3) settlement related costs and (4) stock-based compensation. Free cash flow is calculated as cash flow from operations less our applicable capital expenditures included in our purchase of property and equipment line in our Statements of Cash Flows. Reconciliations of the non-GAAP financial measures to their most directly comparable GAAP financial measures that are not included in the discussion above are included below. We do not provide guidance for net income (loss) in this presentation on a basis consistent with GAAP or a reconciliation of forward-looking non-GAAP financial measures to their most directly comparable GAAP financial measures on a forward-looking basis because we are unable to predict items contained in the GAAP financial measures without unreasonable efforts. Our non-GAAP performance measures exclude expenses and amounts that are not driven by our core operating results and may be one time in nature. Excluding these expenses makes comparisons with prior periods as well as to other companies in our industry more meaningful. We believe such measures allow investors to gain a better understanding of the factors and trends affecting the ongoing operations of our business. We consider our core operations to be the ongoing activities to provide services from which we earn revenue, including direct operating costs and indirect costs to support these activities. As a result, our net income or loss in equity investee is excluded from these measures, as we do not have the ability to manage the venture, allocate resources within the venture, or directly control its operations or performance. Our non-GAAP liquidity measure is included because it 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 the reported amounts are free to be used without restriction for discretionary expenditures, as our use of these funds may be restricted by the terms of our outstanding indebtedness, including our credit facility, and otherwise earmarked for other non-discretionary expenditures.

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

Forward-Looking Statements

Certain statements contained in this press release constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are predictive in nature and are frequently identified by the use of terms such as “may,” “will,” “should,” “expect,” “believe,” “estimate,” “intend,” and similar words indicating possible future expectations, events or actions. The updated guidance discussed herein constitutes forward-looking statements. Such forward-looking statements are based on current expectations, assumptions, estimates and projections about our business and our industry, and are not guarantees of our future performance. These statements are subject to a number of known and unknown risks, uncertainties and other factors, many of which are beyond our ability to control or predict, which may cause actual results to be materially different from those expressed or implied herein, including but not limited to: government or private insurance program funding reductions or limitations; implementation of alternative payment models or the transition of Medicaid and Medicare beneficiaries to Managed Care Organizations; our inability to control reimbursement rates received for our services; cost containment initiatives undertaken by private third-party payors and an inability to maintain or reduce our cost of services below rates set forth by our payors; the effects of a public health emergency; inadequacies in our information technology systems; changes in the funding, financial viability or


our relationships with our payors; pandemics and other infectious diseases; disruptions to our contact center operations caused by health epidemics or pandemics; delays in collection of our accounts receivable; any impairment of our goodwill and long-lived assets; any failure to maintain or to develop reliable, efficient and secure information technology systems; any inability to attract and retain qualified employees; any disruptions from acquisition or acquisition integration efforts; estimated income taxes being different from income taxes that we ultimately pay; our contracts not surviving until the end of their stated terms, or not being renewed or extended; our failure to compete effectively in the marketplace; our not being awarded contracts through the government’s requests for proposals process, or our awarded contracts not being profitable; any failure to satisfy our contractual obligations or to maintain existing pledged performance and payment bonds; any failure to estimate accurately the cost of performing our contracts; any misclassification of the drivers we engage as independent contractors rather than as employees; significant interruptions in our communication and data services; not successfully executing on our strategies in the face of our competition; any inability to maintain relationships with existing patient referral sources; certificates of need laws or other regulatory and licensure obligations that may adversely affect our personal care integration efforts and expansion into new markets; any failure to obtain the consent of the New York Department of Health to manage the day to day operations of our licensed in-home personal care services agency business; changes in the case-mix of our personal care patients, or changes in payor mix or payment methodologies; our loss of existing favorable managed care contracts; our experiencing labor shortages in qualified employees and management; labor disputes or disruptions, in particular in New York; becoming subject to malpractice or other similar claims; our operating in the competitive remote patient monitoring industry, and failing to develop and enhance related technology applications; any failure to innovate and provide services that are useful to customers and to achieve and maintain market acceptance; our lack of sole decision-making authority with respect to our minority investment in Matrix and any failure by Matrix to achieve positive financial position and results of operations; the cost of our compliance with laws; changes to the regulatory landscape applicable to our businesses; changes in budgetary priorities of the government entities or private insurance programs that fund our services; regulations relating to privacy and security of patient and service user information; actions for false claims or recoupment of funds; civil penalties or loss of business for failing to comply with bribery, corruption and other regulations governing business with public organizations; changes to, or violations of, licensing regulations; our contracts being subject to audit and modification by the payors with whom we contract; a loss of Medicaid coverage by a significant number of Medicaid beneficiaries following the expiration of the COVID-19 public health emergency under the Families First Coronavirus Response Act (2020); our existing debt agreements containing restrictions that limit our flexibility in operating our business; our substantial indebtedness and lease obligations; any loss of available financing alternatives; our ability to incur substantial additional indebtedness; and the results of the remediation of our identified material weaknesses in internal control over financial reporting.

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


Investor Relations Contact
Kevin Ellich,
Head of Investor Relations
Kevin.Ellich@modivcare.com


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Modivcare Inc.
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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,
2023202220232022
Service revenue, net$686,925 $647,782 $2,048,338 $1,850,472 
Grant income551 789 4,649 4,587 
Operating expenses:  
    Service expense579,214 534,563 1,718,735 1,498,108 
    General and administrative expense70,142 75,889 229,095 232,108 
    Depreciation and amortization26,077 25,672 77,679 74,376 
    Impairment of goodwill— — 183,100 — 
Total operating expenses675,433 636,124 2,208,609 1,804,592 
Operating income (loss)12,043 12,447 (155,622)50,467 
Interest expense, net17,844 15,557 50,769 46,429 
Income (loss) before income taxes and equity method investment
(5,801)(3,110)(206,391)4,038 
Income tax (provision) benefit1,659 1,053 4,362 (877)
Equity in net income (loss) of investee, net of tax(160)(26,448)2,821 (28,020)
Net loss
$(4,302)$(28,505)$(199,208)$(24,859)
Loss per common share:
Basic$(0.30)$(2.03)$(14.06)$(1.77)
Diluted$(0.30)$(2.03)$(14.06)$(1.77)
Weighted-average number of common shares outstanding:
    Basic14,182,839 14,051,794 14,169,537 14,041,224 
    Diluted14,182,839 14,051,794 14,169,537 14,041,224 

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Modivcare Inc.
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Modivcare Inc.
Unaudited Condensed Consolidated Balance Sheets
(in thousands)
September 30, 2023December 31, 2022
Assets
Current assets:
    Cash and cash equivalents$8,070 $14,451 
    Accounts receivable, net202,701 223,210 
    Contract receivables129,275 71,131 
    Other current assets(1)
47,895 37,362 
Total current assets387,941 346,154 
Property and equipment, net81,419 69,138 
Goodwill785,554 968,654 
Intangible assets, net380,591 439,409 
Equity investment45,207 41,303 
Operating lease right-of-use assets39,744 39,405 
Other long-term assets42,630 40,209 
Total assets$1,763,086 $1,944,272 
Liabilities and stockholders' equity
Current liabilities:
Accounts payable41,834 54,959 
Accrued contract payables133,576 194,287 
Accrued expenses and other current liabilities 146,564 135,860 
Accrued transportation costs102,974 96,851 
Current portion of operating lease liabilities8,902 9,640 
Short-term borrowings83,000 — 
Total current liabilities516,850 491,597 
Long-term debt, net of deferred financing costs982,630 979,361 
Operating lease liabilities, less current portion33,397 32,088 
Other long-term liabilities(2)
71,348 86,670 
Total liabilities1,604,225 1,589,716 
Stockholders' equity
Stockholders' equity158,861 354,556 
Total liabilities and stockholders' equity
$1,763,086 $1,944,272 

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

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Modivcare Inc.
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Modivcare Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
(in thousands)
Three months ended September 30,
Nine months ended September 30,
2023202220232022
Operating activities
Net loss
$(4,302)$(28,505)$(199,208)$(24,859)
  Depreciation and amortization26,077 25,672 77,679 74,376 
  Stock-based compensation1,743 656 4,029 5,152 
  Equity in net (income) loss of investee222 36,525 (3,915)38,883 
Deferred income taxes(4,971)(16,739)(15,235)(31,232)
Impairment of goodwill— — 183,100 — 
Reduction of right-of-use asset2,924 2,923 9,875 8,680 
Other non-cash items(1)
1,594 1,925 1,486 (4,570)
Changes in operating assets and liabilities:
Contract receivables
(9,512)(13,562)(58,143)(35,580)
Contract payables
24,483 (37,938)(60,710)(37,786)
  Other working capital items(2)
15,289 23,363 3,715 52,462 
Net cash provided by (used in) operating activities53,547 (5,680)(57,327)45,526 
Investing activities
Purchase of property and equipment(8,878)(9,619)(31,143)(25,518)
Acquisitions, net of cash acquired— (11)— (78,872)
Net cash used in investing activities(8,878)(9,630)(31,143)(104,390)
Financing activities
Proceeds from short-term borrowings(43,500)— 83,000 — 
Debt issuance costs— — (376)(2,415)
Proceeds from common stock issued pursuant to stock option exercise
— 99 31 1,237 
Restricted stock surrendered for employee tax payment(21)(42)(861)(649)
Other financing activities— — 315 — 
Net cash provided by (used in) financing activities(43,521)57 82,109 (1,827)
Net change in cash, cash equivalents and restricted cash1,148 (15,253)(6,361)(60,691)
Cash, cash equivalents and restricted cash at beginning of period7,466 87,984 14,975 133,422 
Cash, cash equivalents and restricted cash at end of period$8,614 $72,731 $8,614 $72,731 

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


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Modivcare Inc.
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Modivcare Inc.
Unaudited Reconciliation of Non-GAAP Financial Measures
Segment Information and Adjusted EBITDA
(in thousands)

Three months ended September 30, 2023
NEMTPCSRPMCorporate and OtherTotal
Service revenue, net$485,951 $179,979 $19,779 $1,216 $686,925 
Grant income— 551 — — 551 
Operating expenses:
  Service expense428,021 143,078 6,934 1,181 579,214 
  General and administrative expense25,433 20,252 5,685 18,772 70,142 
  Depreciation and amortization6,814 12,850 6,174 239 26,077 
Total operating expenses460,268 176,180 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 investment25,683 4,350 986 (36,820)(5,801)
Income tax (provision) benefit(6,994)(1,208)(279)10,140 1,659 
Equity in net income (loss) of investee, net of tax142 — — (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 amortization6,814 12,850 6,174 239 26,077 
EBITDA32,639 17,200 7,160 (19,039)37,960 
Restructuring and related costs(1)
2,711 — — 6,205 8,916 
Transaction and integration costs101 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.


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Modivcare Inc.
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Modivcare Inc.
Unaudited Reconciliation of Non-GAAP Financial Measures
Segment Information and Adjusted EBITDA
(in thousands)

Three months ended September 30, 2022
NEMTPCSRPMCorporate and OtherTotal
Service revenue, net$459,796 $169,226 $18,760 $— $647,782 
Grant income— 789 — — 789 
Operating expenses:
  Service expense394,981 132,746 6,836 — 534,563 
  General and administrative expense31,815 22,057 5,816 16,201 75,889 
  Depreciation and amortization7,079 12,919 5,467 207 25,672 
Total operating expenses433,875 167,722 18,119 16,408 636,124 
Operating income (loss)25,921 2,293 641 (16,408)12,447 
Interest expense, net— — — 15,557 15,557 
Income (loss) before income taxes and equity method investment25,921 2,293 641 (31,965)(3,110)
Income tax (provision) benefit(6,978)(661)(179)8,871 1,053 
Equity in net income (loss) of investee, net of tax208 — — (26,656)(26,448)
Net income (loss)19,151 1,632 462 (49,750)(28,505)
Interest expense, net— — — 15,557 15,557 
Income tax provision (benefit)6,978 661 179 (8,871)(1,053)
Depreciation and amortization7,079 12,919 5,467 207 25,672 
EBITDA33,208 15,212 6,108 (42,857)11,671 
Restructuring and related costs(1)
902 582 39 565 2,088 
Transaction and integration costs(2)
6 2,231 471 2,191 4,899 
Settlement related costs5,500 — — 500 6,000 
Stock-based compensation(3)
— — — 83 83 
COVID-19 related costs, net of grant income(51)659 — — 608 
Equity in net (income) loss of investee, net of tax(208)— — 26,656 26,448 
Adjusted EBITDA$39,357 $18,684 $6,618 $(12,862)$51,797 

(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.
(3) Stock-based compensation includes cash settled equity balances.

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Modivcare Inc.
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Modivcare Inc.
Unaudited Reconciliation of Non-GAAP Financial Measures
Segment Information and Adjusted EBITDA
(in thousands)

Nine months ended September 30, 2023
NEMTPCSRPMCorporate and OtherTotal
Service revenue, net$1,452,389 $534,435 $57,702 $3,812 $2,048,338 
Grant income— 4,649 — — 4,649 
Operating expenses:
  Service expense1,277,604 417,636 20,129 3,366 1,718,735 
  General and administrative expense87,645 63,480 16,781 61,189 229,095 
  Depreciation and amortization20,319 38,590 18,087 683 77,679 
  Impairment of goodwill— 137,331 45,769 — 183,100 
Total operating expenses1,385,568 657,037 100,766 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 investment66,821 (117,953)(43,064)(112,195)(206,391)
Income tax (provision) benefit(18,014)(5,452)(765)28,593 4,362 
Equity in net income (loss) of investee, net of tax984 — — 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 amortization20,319 38,590 18,087 683 77,679 
EBITDA88,124 (79,363)(24,977)(58,906)(75,122)
Restructuring and related costs(1)
11,865 — — 21,606 33,471 
Transaction and integration costs101 881 70 1,834 2,886 
Settlement related costs250 — — 8,683 8,933 
Stock-based compensation— — — 3,485 3,485 
Impairment of goodwill— 137,331 45,769 — 183,100 
Equity in net (income) loss 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.


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Modivcare Inc.
Page 11

Modivcare Inc.
Unaudited Reconciliation of Non-GAAP Financial Measures
Segment Information and Adjusted EBITDA
(in thousands)

Nine months ended September 30, 2022
NEMTPCSRPMCorporate and OtherTotal
Service revenue, net$1,309,449 $491,661 $49,362 $— $1,850,472 
Grant income— 4,587 — — 4,587 
Operating expenses:
  Service expense1,100,801 379,423 17,884 — 1,498,108 
  General and administrative expense102,736 68,536 17,520 43,316 232,108 
  Depreciation and amortization21,576 37,976 14,201 623 74,376 
Total operating expenses1,225,113 485,935 49,605 43,939 1,804,592 
Operating income (loss)84,336 10,313 (243)(43,939)50,467 
Interest expense, net— — — 46,429 46,429 
Income (loss) before income taxes and equity method investment84,336 10,313 (243)(90,368)4,038 
Income tax (provision) benefit(23,116)(2,902)68 25,073 (877)
Equity in net income (loss) of investee, net of tax143 — — (28,163)(28,020)
Net income (loss)61,363 7,411 (175)(93,458)(24,859)
Interest expense, net— — — 46,429 46,429 
Income tax provision (benefit)23,116 2,902 (68)(25,073)877 
Depreciation and amortization21,576 37,976 14,201 623 74,376 
EBITDA106,055 48,289 13,958 (71,479)96,823 
Restructuring and related costs(1)
11,359 763 63 950 13,135 
Transaction and integration costs(2)
6 6,334 2,753 7,219 16,312 
Settlement related costs5,500 — — 500 6,000 
Stock-based compensation(3)
— 190 86 3,950 4,226 
COVID-19 related costs, net of grant income105 (2,370)— — (2,265)
Equity in net (income) loss of investee, net of tax(143)— — 28,163 28,020 
Adjusted EBITDA$122,882 $53,206 $16,860 $(30,697)$162,251 

(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.
(3) Stock-based compensation includes cash settled equity balances.

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Modivcare Inc.
Page 12

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,
2023202220232022
Net income (loss)$(4,302)$(28,505)$(199,208)$(24,859)
Restructuring and related costs(1)
8,916 2,088 33,471 13,135 
Transaction and integration costs(2)
1,159 4,899 2,886 16,312 
Settlement related costs1,449 6,000 8,933 6,000 
Stock-based compensation(3)
1,690 83 3,485 4,226 
Impairment of goodwill— — 183,100 — 
Equity in net (income) loss of investee, net of tax160 26,448 (2,821)28,020 
Intangible asset amortization expense19,748 20,727 59,457 59,978 
COVID-19 related costs, net of grant income(4)
— 608 — (2,265)
Tax effected impact of adjustments(8,327)(9,649)(27,833)(26,964)
Adjusted net income$20,493 $22,699 $61,470 $73,583 
Adjusted EPS$1.44 $1.61 $4.33 $5.21 
Diluted weighted-average number of common shares outstanding14,218,141 14,110,928 14,209,787 14,119,598 

(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) Stock-based compensation includes cash settled equity balances.
(4) COVID-19 related costs were added back as one-time items through 2022. As the Public Health Emergency ended in 2023 and the effects of COVID-19 have become normal course of business, COVID-19 related items are no longer added back in 2023.

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Modivcare Inc.
Page 13

Modivcare Inc.
Unaudited Key Statistical and Financial Data
(in thousands, except for statistical data)

Three months endedNine months endedThree months ended
September 30, 2023September 30, 2022% ChangeSeptember 30, 2023September 30, 2022% ChangeJune 30, 2023QoQ % Change
NEMT Segment
Service revenue, net$485,951 $459,796 5.7 %$1,452,389 $1,309,449 10.9 %$496,975 (2.2)%
Purchased services expense363,594 340,138 6.9 %1,085,206 935,298 16.0 %377,192 (3.6)%
Payroll and other expense64,427 54,843 17.5 %192,398 165,503 16.3 %64,705 (0.4)%
Service expense$428,021 $394,981 8.4 %$1,277,604 $1,100,801 16.1 %$441,897 (3.1)%
Gross profit$57,930 $64,815 (10.6)%$174,785 $208,648 (16.2)%$55,078 5.2 %
Gross margin11.9 %14.1 %12.0 %15.9 %11.1 %
G&A expense$25,433 $31,815 (20.1)%$87,645 $102,736 (14.7)%$28,337 (10.2)%
G&A expense adjustments:
Restructuring and related costs2,711 902 200.6 %11,865 11,359 4.5 %2,055 31.9 %
Transaction and integration costs101 6 N/M101 6 N/M— N/M
Settlement related costs(25)5,500 N/M250 5,500 N/M— N/M
Adjusted G&A expense$22,646 $25,407 (10.9)%$75,429 $85,871 (12.2)%$26,282 (13.8)%
Adjusted G&A expense % of revenue4.7 %5.5 %5.2 %6.6 %5.3 %
Net income$18,831 $19,151 (1.7)%$49,791 $61,363 (18.9)%$14,789 27.3 %
Net income margin3.9 %4.2 %3.4 %4.7 %3.0 %
Adjusted EBITDA$35,284 $39,357 (10.3)%$99,356 $122,882 (19.1)%$28,796 22.5 %
Adjusted EBITDA margin7.3 %8.6 %6.8 %9.4 %5.8 %
Total paid trips (thousands)8,824 8,045 9.7 %25,761 22,987 12.1 %8,735 1.0 %
Average monthly members (thousands)33,660 36,026 (6.6)%33,892 33,998 (0.3)%34,312 (1.9)%
Revenue per member per month$4.81 $4.25 13.2 %$4.76 $4.28 11.2 %$4.83 (0.4)%
Revenue per trip$55.07 $57.15 (3.6)%$56.38 $56.96 (1.0)%$56.89 (3.2)%
Monthly utilization8.7 %7.4 %8.4 %7.5 %8.5 %
Purchased services per trip$41.21 $42.28 (2.5)%$42.13 $40.69 3.5 %$43.18 (4.6)%
Payroll and other per trip$7.30 $6.82 7.0 %$7.47 $7.20 3.7 %$7.41 (1.5)%
Total service expense per trip$48.51 $49.10 (1.2)%$49.60 $47.89 3.6 %$50.59 (4.1)%

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


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Modivcare Inc.
Page 14

Modivcare Inc.
Unaudited Key Statistical and Financial Data
(in thousands, except for statistical data)

Three months endedNine months endedThree months ended
September 30, 2023September 30, 2022% ChangeSeptember 30, 2023September 30, 2022% ChangeJune 30, 2023QoQ % Change
PCS Segment
Service revenue, net$179,979 $169,226 6.4 %$534,435 $491,661 8.7 %$180,325 (0.2)%
Service expense 143,078 132,746 7.8 %417,636 379,423 10.1 %138,468 3.3 %
Gross profit$36,901 $36,480 1.2 %$116,799 $112,238 4.1 %$41,857 (11.8)%
Gross Margin20.5 %21.6 %21.9 %22.8 %23.2 %
G&A expense$20,252 $22,057 (8.2)%$63,480 $68,536 (7.4)%$20,565 (1.5)%
G&A expense adjustments
Restructuring and related costs— 582 (100.0)%— 763 (100.0)%— N/M
Transaction and integration costs431 2,231 (80.7)%881 6,334 (86.1)%173 149.1 %
Stock-based compensation— — N/M— 190 (100.0)%— N/M
Adjusted G&A expense$19,821 $19,244 3.0 %$62,599 $61,249 2.2 %$20,392 (2.8)%
Adjusted G&A expense % of revenue11.0 %11.4 %11.7 %12.5 %11.3 %
Net income$3,142 $1,632 92.5 %$(123,405)$7,411 (1765.2)%$(129,372)(102.4)%
Net income margin1.7 %1.0 %(23.1)%1.5 %(71.7)%
Adjusted EBITDA$17,631 $18,684 (5.6)%$58,849 $53,206 10.6 %$24,099 (26.8)%
Adjusted EBITDA margin9.8 %11.0 %11.0 %10.8 %13.4 %
Total hours (in thousands)6,995 6,836 2.3 %20,752 20,076 3.4 %6,933 0.9 %
Revenue per hour$25.73 $24.76 3.9 %$25.75 $24.49 5.1 %$26.01 (1.1)%
Service expense per hour$20.45 $19.42 5.3 %$20.13 $18.90 6.5 %$19.97 2.4 %

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


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Modivcare Inc.
Page 15

Modivcare Inc.
Unaudited Key Statistical and Financial Data
(in thousands, except for statistical data)

Three months endedNine months endedThree months ended
September 30, 2023September 30, 2022% ChangeSeptember 30, 2023September 30, 2022% ChangeJune 30, 2023QoQ % Change
RPM Segment
Service revenue, net$19,779 $18,760 5.4 %$57,702 $49,362 16.9%$19,211 3.0 %
Service expense6,934 6,836 1.4 %20,129 17,884 12.6%6,705 3.4 %
Gross profit$12,845 $11,924 7.7 %$37,573 $31,478 19.4%$12,506 2.7 %
Gross Margin64.9 %63.6 %65.1 %63.8 %65.1 %
G&A expense$5,685 $5,816 (2.3)%$16,781 $17,520 (4.2)%$5,327 6.7 %
G&A expense adjustments
Restructuring and related costs— 39 (100.0)%— 63 (100.0)%— N/M
Transaction and integration costs22 471 (95.3)%70 2,753 (97.5)%16 37.5 %
Stock-based compensation— — N/M— 86 (100.0)%— N/M
Adjusted G&A expense$5,663 $5,306 6.7 %$16,711 $14,618 14.3%$5,311 6.6 %
Adjusted G&A expense % of revenue28.6 %28.3 %29.0 %29.6 %27.6 %
Net income (loss)$707 $462 53.0 %$(43,829)$(175)N/M$(44,965)(101.6)%
Net income (loss) margin3.6 %2.5 %(76.0)%(0.4)%(234.1)%
Adjusted EBITDA$7,182 $6,618 8.5 %$20,862 $16,860 23.7%$7,195 (0.2)%
Adjusted EBITDA margin36.3 %35.3 %36.2 %34.2 %37.5 %
Average monthly members (in thousands)247 230 7.4 %241 20119.9%240 2.9 %
Revenue per member per month$26.69 $27.19 (1.8)%$26.60 $27.29 (2.5)%$26.68 — %
Service expense per member per month$9.36 $9.91 (5.5)%$9.28 $9.89 (6.2)%$9.31 0.5 %

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



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Modivcare Inc.
Page 16

Modivcare Inc.
Unaudited Key Statistical and Financial Data
(in thousands)

Three months endedNine months endedThree months ended
September 30, 2023September 30, 2022% ChangeSeptember 30, 2023September 30, 2022% ChangeJune 30, 2023QoQ % Change
Corporate and Other Segment
G&A expense$18,772 $16,201 15.9 %$61,189 $43,316 41.3 %$25,011 (24.9)%
G&A expense adjustments
Restructuring and related costs6,205 565 N/M21,606 950 N/M8,055 (23.0)%
Transaction and integration costs605 2,191 (72.4)%1,834 7,219 (74.6)%665 (9.0)%
Settlement related costs1,474 500 194.8 %8,683 500 N/M7,209 (79.6)%
Stock-based compensation1,690 83 N/M3,485 3,950 (11.8)%947 78.5 %
Adjusted G&A expense $8,798 $12,862 (31.6)%$25,581 $30,697 (16.7)%$8,135 8.1 %
Adjusted G&A expense % of consolidated revenue1.3 %2.0 %1.2 %1.7 %1.2 %

Three months endedNine months endedThree months ended
September 30, 2023September 30, 2022% ChangeSeptember 30, 2023September 30, 2022% ChangeJune 30, 2023QoQ % Change
Consolidated Modivcare Inc.
G&A expense$70,142 $75,889 (7.6)%$229,095 $232,108 (1.3)%$79,240 (11.5)%
G&A expense adjustments
Restructuring and related costs8,916 2,088 327.0 %33,471 13,135 154.8 %10,110 (11.8)%
Transaction and integration costs1,159 4,899 (76.3)%2,886 16,312 (82.3)%854 35.7 %
Settlement related costs1,449 6,000 (75.9)%8,933 6,000 48.9 %7,209 (79.9)%
Stock-based compensation1,690 83 N/M3,485 4,226 (17.5)%947 78.5 %
Adjusted G&A expense $56,928 $62,819 (9.4)%$180,320 $192,435 (6.3)%$60,120 (5.3)%
Adjusted G&A expense % of revenue8.3 %9.7 %8.8 %10.4 %8.6 %

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


--end--

v3.23.3
Cover
Aug. 03, 2023
Cover [Abstract]  
Document Type 8-K
Document Period End Date Nov. 02, 2023
Entity Registrant Name ModivCare Inc.
Entity Incorporation, State or Country Code DE
Entity File Number 001-34221
Entity Tax Identification Number 86-0845127
Entity Address, Address Line One 6900 E Layton Avenue, 12th Floor,
Entity Address, City or Town Denver,
Entity Address, State or Province CO
Entity Address, Postal Zip Code 80237
City Area Code 303
Local Phone Number 728-7012
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of 12(b) Security Common Stock, $0.001 par value per share
Trading Symbol MODV
Security Exchange Name NASDAQ
Entity Emerging Growth Company false
Entity Central Index Key 0001220754
Amendment Flag false
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