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ModivCare Reports Third Quarter 2021 Financial Results

11.05.2021

ModivCare Inc. (the “Company” or “ModivCare”) (Nasdaq: MODV), a technology-enabled healthcare services company that provides a suite of integrated supportive care solutions focused on improving patient outcomes, today reported financial results for the three and nine months ended September 30, 2021.

Third Quarter 2021 Highlights:

  • Revenue of $493.1 million, a 53.8% increase as compared to $320.6 million in the third quarter of 2020
  • Loss from continuing operations, net of tax, of $7.5 million or a loss of $0.53 per diluted common share
  • Adjusted EBITDA of $44.3 million, Adjusted Net Income of $23.0 million and Adjusted EPS of $1.63
  • Net cash provided by operating activities during the quarter of $174.7 million
  • Cash and cash equivalents of $126.5 million at September 30, 2021, with $500.0 million debt outstanding related to the Senior Unsecured Notes due November 15, 2025 and an additional $500.0 million debt outstanding related to the Senior Unsecured Notes due October 1, 2029
  • Matrix, on a standalone basis, had a net loss of $15.6 million and Adjusted EBITDA of $2.6 million

“We continue to make progress executing on our strategy to transform ModivCare into a one-of-a-kind, integrated supportive care company, with solutions focused on addressing the social determinants of health and enhancing the patient experience,” said Daniel E. Greenleaf, President and Chief Executive Officer of ModivCare. “In September, we closed on the acquisitions of VRI and CareFinders, adding two highly complementary businesses to our growing footprint. We are excited about our expanded ability to address patient needs holistically, fueled by our technology, while also driving meaningful shareholder value. We are encouraged by the favorable responses from our customers to our transformation. Lastly, I am extremely grateful for our ModivCare team members, transportation providers and caregivers, who continue to play an integral role in driving access to care and improved outcomes for the 30 million patients we serve.”

Heath Sampson, Chief Financial Officer added, “ModivCare reported a strong third quarter, and we deployed meaningful capital for the strategic and value-enhancing acquisitions of VRI and CareFinders. We were pleased with the successful issuance of $500 million of 5.00% Senior Notes due 2029, of which we used the net proceeds to finance the acquisition of VRI and for general corporate purposes. We ended the third quarter in a strong financial position with $126.5 million of cash and cash equivalents and an undrawn $225.0 million revolving credit facility.”

Third Quarter 2021 Results

For the third quarter of 2021, the Company reported revenue of $493.1 million, an increase of 53.8% from $320.6 million in the third quarter of 2020.

Operating income was $13.1 million, or 2.7% of revenue, in the third quarter of 2021, compared to operating income of $43.3 million, or 13.5% of revenue, in the third quarter of 2020. Loss from continuing operations, net of tax, in the third quarter of 2021 was $7.5 million, or a loss of $0.53 per diluted common share, compared to income from continuing operations, net of tax, of $38.9 million, or $2.51 per diluted common share, in the third quarter of 2020.

Adjusted EBITDA was $44.3 million, or 9.0% of revenue, in the third quarter of 2021, compared to $59.3 million, or 18.5% of revenue, in the third quarter of 2020.

Adjusted Net Income in the third quarter of 2021 was $23.0 million, or $1.63 per diluted common share, compared to $42.0 million, or $2.97 per diluted common share, in the third quarter of 2020.

Comparable Adjusted EBITDA and Adjusted Net Income for Q3 2020 were recast to show the impact of stock-based compensation and cash settled equity, which the Company is now including for the purpose of these calculations.

The quarter-over-quarter increase in revenue was primarily due to incremental revenue of $109.6 million associated with the acquisition of Simplura. Revenue further increased as a result of higher trip volume in our NEMT business, as the third quarter of the prior year was more heavily impacted by the COVID-19 pandemic.

Adjusted EBITDA decreased in the third quarter of 2021 as compared to the third quarter of 2020 due to higher service expense costs associated with higher utilization and contact center activity. Adjusted EBITDA also decreased as a result of higher corporate general and administrative cost as the Company continued to make investments in its employees and technology.

Matrix Medical Network

For the third quarter of 2021, Matrix’s revenue was $78.5 million, a decrease of 44.2% from $140.7 million in the third quarter of 2020. Matrix had an operating loss of $16.8 million for the third quarter of 2021, compared to an operating income of $35.5 million for the third quarter of 2020.

ModivCare recorded a loss of $6.7 million related to its Matrix equity investment compared to an income of $10.3 million for the third quarter of 2020.

For the third quarter of 2021, Matrix recorded Adjusted EBITDA of $2.6 million or 3.3% of revenue, compared to $54.3 million, or 38.6% of revenue, for the third quarter of 2020.

Matrix’s Clinical Solutions business line primarily contributed to the decrease in Adjusted EBITDA. The decrease was due to a significant reduction in COVID-related vaccination and testing revenue. Additionally, Clinical Solutions made significant investments in staffing in anticipation of new business wins within the decentralized clinical trials market. The Clinical Care business line was relatively flat to prior year Adjusted EBITDA, as higher operating costs offset continued double-digit growth in health assessment volumes.

As of September 30, 2021, Matrix had $244.3 million in net debt and ModivCare's ownership interest was 43.6%.

Conference Call

ModivCare will hold a conference call to discuss its financial results on Friday, November 5, 2021 at 8:00 a.m. ET. To access the call, please dial:

US toll-free: 1 (877) 423 9820
International: 1 (201) 493 6749

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

About ModivCare

ModivCare Inc. ("ModivCare") (Nasdaq: MODV) is a technology-enabled healthcare services company that provides a suite of integrated supportive care solutions for public and private payors and their patients. Our value-based solutions address the social determinants of health (SDoH), enable greater access to care, reduce costs, and improve outcomes. We are a leading provider of non-emergency medical transportation (NEMT), personal and home care, remote patient monitoring and nutritional meal delivery. ModivCare also holds a minority equity interest in CCHN Group Holdings, Inc. and its subsidiaries ("Matrix Medical Network"), which partners with leading health plans and providers nationally, delivering a broad array of assessment and care management services to individuals that improve health outcomes and health plan financial performance. For more information, please visit us at www.modivcare.com.

Non-GAAP Financial Measures and Adjustments

In addition to the financial measures prepared in accordance with generally accepted accounting principles in the United States ("GAAP"), this press release includes EBITDA and Adjusted EBITDA for the Company and its segments, as well as Adjusted Net Income and Adjusted EPS for the Company, which are performance measures that are not recognized under GAAP. EBITDA is defined as income (loss) from continuing operations, net of taxes, before: (1) interest expense, net, (2) provision (benefit) for income taxes and (3) depreciation and amortization. Adjusted EBITDA is calculated as EBITDA before certain items, including (as applicable): (1) restructuring and related charges, including severance and office closure and professional services costs, (2) certain transaction and related costs, (3) cash settled equity, (4) stock-based compensation, (5) COVID-19 related costs, net of grant income, and (6) equity in net (income) loss of investee. Adjusted Net Income is defined as income from continuing operations, net of taxes, before certain items, including (1) restructuring and related charges including severance and office closure and professional services costs, (2) certain transaction and related costs, (3) cash settled equity, (4) stock-based compensation, (5) equity in net (income) loss of investee, (6) intangible amortization expense, (7) COVID-19 related costs, net of grant income, (8) tax impacts from the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"), and (9) the income tax impact of such adjustments. Adjusted EPS is calculated as Adjusted Net Income less (as applicable): (1) dividends on convertible preferred stock and (2) income allocated to participating securities, divided by the diluted weighted-average number of common shares outstanding as calculated for Adjusted Net Income. Our non-GAAP performance measures exclude certain expenses and amounts that are not driven by our core operating results and may be one time in nature. Excluding these expenses makes comparisons with prior periods as well as to other companies in our industry more meaningful. We believe such measures allow investors to gain a better understanding of the factors and trends affecting the ongoing operations of our business. We consider our core operations to be the ongoing activities to provide services from which we earn revenue, including direct operating costs and indirect costs to support these activities. In addition, our net income or loss in equity investee is excluded from these measures, as we do not have the ability to manage the venture, allocate resources within the venture, or directly control its operations or performance.

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

Forward-Looking Statements

Certain statements contained in this press release constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are predictive in nature and are frequently identified by the use of terms such as “may,” “will,” “should,” “expect,” “believe,” “estimate,” “intend,” and similar words indicating possible future expectations, events or actions. Such forward-looking statements are based on current expectations, assumptions, estimates and projections about our business and our industry, and are not guarantees of our future performance. These statements are subject to a number of known and unknown risks, uncertainties and other factors, many of which are beyond our ability to control or predict, which may cause actual events to be materially different from those expressed or implied herein, including but not limited to: government or private insurance program funding reductions or limitations; alternative payment models or the transition of Medicaid and Medicare beneficiaries to Managed Care Organizations, or MCOs; our inability to control reimbursement rates received for our services; cost containment initiatives undertaken by private third-party payors; the effects of a public health emergency; inadequacies in, or security breaches of, our information technology systems, including the systems intended to protect our clients’ privacy and confidential information; any changes in the funding, financial viability or our relationships with our payors; pandemic infectious diseases, including the COVID-19 pandemic; disruptions to our contact center operations caused by health epidemics or pandemics like COVID-19; delays in collection, or non-collection, of our accounts receivable, particularly during any business integration; an impairment of our long-lived assets; any failure to maintain or to develop further reliable, efficient and secure information technology systems; an inability to attract and retain qualified employees; any acquisition or acquisition integration efforts; our contracts not surviving until the end of their stated terms, or not being renewed or extended; our failure to compete effectively in the marketplace; our not being awarded contracts through the government’s requests for proposals process, or our awarded contracts not being profitable; any failure to satisfy our contractual obligations or to maintain existing pledged performance and payment bonds; a failure to estimate accurately the cost of performing our contracts; any misclassification of the drivers we engage as independent contractors rather than as employees; significant interruptions in our communication and data services; not successfully executing on our strategies in the face of our competition; any inability to maintain relationships with existing patient referral sources; any failure to obtain the consent of the New York Department of Health to manage the day to day operations of our licensed in-home personal care services agency business that we acquired with our Personal Care Segment; acquired unknown liabilities in connection with the acquisition of our Personal Care Segment; changes in the case-mix of our personal care patients, or changes in payor mix or payment methodologies; our loss of existing favorable managed care contracts; our experiencing shortages in qualified employees and management; labor disputes or disruptions, in particular in New York; becoming subject to malpractice or other similar claims; and our reliance on our Matrix Investment segment's financial condition.

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

--financial tables to follow--

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,

 

 

2021

 

2020

 

2021

 

2020

 

 

 

 

 

 

 

 

 

Service revenue, net

 

$

493,059

 

 

 

$

320,619

 

 

 

$

1,421,117

 

 

 

$

970,166

 

 

Grant income

 

 

 

 

 

 

 

3,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

Service expense

 

399,272

 

 

 

235,543

 

 

 

1,139,170

 

 

 

764,310

 

 

General and administrative expense

 

68,054

 

 

 

34,441

 

 

 

179,271

 

 

 

86,435

 

 

Depreciation and amortization

 

12,608

 

 

 

7,301

 

 

 

36,667

 

 

 

17,199

 

 

Total operating expenses

 

479,934

 

 

 

277,285

 

 

 

1,355,108

 

 

 

867,944

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

13,125

 

 

 

43,334

 

 

 

69,509

 

 

 

102,222

 

 

 

 

 

 

 

 

 

 

 

Other expenses (income):

 

 

 

 

 

 

 

 

Interest expense, net

 

17,702

 

 

 

379

 

 

 

34,412

 

 

 

2,118

 

 

Equity in net loss (income) of investee

 

6,748

 

 

 

(10,325

)

 

 

1,978

 

 

 

(12,200

)

 

Income (loss) from continuing operations before
income taxes

 

(11,325

)

 

 

53,280

 

 

 

33,119

 

 

 

112,304

 

 

Provision (benefit) for income taxes

 

(3,863

)

 

 

14,360

 

 

 

7,944

 

 

 

19,785

 

 

Income (loss) from continuing operations, net of
tax

 

(7,462

)

 

 

38,920

 

 

 

25,175

 

 

 

92,519

 

 

Loss from discontinued operations, net of tax

 

(108

)

 

 

(115

)

 

 

(232

)

 

 

(618

)

 

Net income (loss)

 

$

(7,570

)

 

 

$

38,805

 

 

 

$

24,943

 

 

 

$

91,901

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) available to common
stockholders

 

$

(7,570

)

 

 

$

35,346

 

 

 

$

24,943

 

 

 

$

34,563

 

 

 

 

 

 

 

 

 

 

 

Basic earnings (loss) per common share:

 

 

 

 

 

 

 

 

Continuing operations

 

$

(0.53

)

 

 

$

2.53

 

 

 

$

1.79

 

 

 

$

2.63

 

 

Discontinued operations

 

(0.01

)

 

 

(0.01

)

 

 

(0.02

)

 

 

(0.05

)

 

Basic earnings (loss) per common share

 

$

(0.54

)

 

 

$

2.52

 

 

 

$

1.77

 

 

 

$

2.58

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings (loss) per common share:

 

 

 

 

 

 

 

 

Continuing operations

 

$

(0.53

)

 

 

$

2.51

 

 

 

$

1.76

 

 

 

$

2.62

 

 

Discontinued operations

 

(0.01

)

 

 

(0.01

)

 

 

(0.02

)

 

 

(0.05

)

 

Diluted earnings (loss) per common share

 

$

(0.54

)

 

 

$

2.50

 

 

 

$

1.74

 

 

 

$

2.57

 

 

 

 

 

 

 

 

 

 

 

Weighted-average number of common shares
outstanding:

 

 

 

 

 

 

 

 

Basic

 

13,993,438

 

 

 

14,026,039

 

 

 

14,102,371

 

 

 

13,367,605

 

 

Diluted

 

13,993,438

 

 

 

14,133,904

 

 

 

14,278,331

 

 

 

13,415,344

 

 

ModivCare Inc.

Unaudited Condensed Consolidated Balance Sheets

(in thousands)

 

 

 

 

 

 

 

September 30, 2021

 

December 31, 2020

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

126,506

 

 

$

183,281

 

Accounts receivable, net

 

289,230

 

 

197,943

 

Other current assets (1)

 

54,775

 

 

44,634

 

Current assets of discontinued operations (2)

 

141

 

 

758

 

Total current assets

 

470,652

 

 

426,616

 

Operating lease right-of-use assets

 

44,077

 

 

30,928

 

Property and equipment, net

 

52,538

 

 

27,544

 

Goodwill and intangible assets, net

 

1,421,983

 

 

790,579

 

Equity investment

 

134,353

 

 

137,466

 

Other assets

 

11,550

 

 

12,780

 

Total assets

 

$

2,135,153

 

 

$

1,425,913

 

 

 

 

 

 

Liabilities and stockholders' equity

Current liabilities:

 

 

 

 

Accounts payable

 

$

33,458

 

 

$

8,464

 

Accrued contract payables

 

320,045

 

 

101,705

 

Accrued expenses and other current liabilities

 

109,571

 

 

117,010

 

Accrued transportation costs

 

92,028

 

 

79,674

 

Current portion of operating lease liabilities

 

9,287

 

 

8,277

 

Other current liabilities (3)

 

10,051

 

 

7,650

 

Current liabilities of discontinued operations (2)

 

1,527

 

 

1,971

 

Total current liabilities

 

575,967

 

 

324,751

 

Long-term debt, net of deferred financing costs

 

974,669

 

 

485,980

 

Operating lease liabilities, less current portion

 

35,389

 

 

23,437

 

Long-term contracts payables

 

5,793

 

 

72,183

 

Other long-term liabilities (4)

 

139,348

 

 

107,951

 

Total liabilities

 

1,731,166

 

 

1,014,302

 

 

 

 

 

 

Stockholders' equity

 

403,987

 

 

411,611

 

Total liabilities and stockholders' equity

 

$

2,135,153

 

 

$

1,425,913

 

(1) Includes other receivables, prepaid expenses and other current assets, and short-term restricted cash.
(2) Includes assets or liabilities related to WD Services' former Saudi Arabian operation.
(3) Includes deferred revenue and self-funded insurance programs.
(4) Includes other long-term liabilities and deferred tax liabilities.

ModivCare Inc.

Unaudited Condensed Consolidated Statements of Cash Flows

(in thousands)

 

 

 

 

 

 

 

Nine months ended September 30,

 

 

2021

 

2020

Operating activities

 

 

 

 

Net income

 

$

24,943

 

 

 

$

91,901

 

 

Depreciation and amortization

 

36,666

 

 

 

17,199

 

 

Stock-based compensation

 

4,225

 

 

 

2,949

 

 

Equity in net loss (income) of investee

 

1,978

 

 

 

(12,200

)

 

Deferred income taxes

 

(3,295

)

 

 

12,612

 

 

Reduction of right-of-use assets

 

8,681

 

 

 

6,769

 

 

Other non-cash items (1)

 

463

 

 

 

(2,847

)

 

Changes in working capital (2)

 

101,033

 

 

 

170,843

 

 

Net cash provided by operating activities

 

174,694

 

 

 

287,226

 

 

 

 

 

 

 

Investing activities

 

 

 

 

Purchase of property and equipment

 

(13,852

)

 

 

(4,786

)

 

Acquisition, net of cash acquired

 

(667,228

)

 

 

(77,665

)

 

Net cash used in investing activities

 

(681,080

)

 

 

(82,451

)

 

 

 

 

 

 

Financing activities

 

 

 

 

Proceeds from debt

 

625,000

 

 

 

162,000

 

 

Repayment of debt

 

(125,000

)

 

 

(162,000

)

 

Repurchase of common stock, for treasury

 

(39,040

)

 

 

(10,186

)

 

Payment of debt issuance costs

 

(13,486

)

 

 

 

 

Proceeds from common stock issued pursuant to stock option exercise

 

3,099

 

 

 

21,581

 

 

Restricted stock surrendered for employee tax payment

 

(851

)

 

 

(92

)

 

Preferred stock redemption payment

 

 

 

 

(88,743

)

 

Preferred stock dividends

 

 

 

 

(1,988

)

 

Other financing activities

 

 

 

 

(204

)

 

Net cash provided by (used in) financing activities

 

449,722

 

 

 

(79,632

)

 

 

 

 

 

 

Net change in cash, cash equivalents and restricted cash

 

(56,664

)

 

 

125,143

 

 

Cash, cash equivalents and restricted cash at beginning of period

 

183,356

 

 

 

61,673

 

 

Cash, cash equivalents and restricted cash at end of period

 

$

126,692

 

 

 

$

186,816

 

 

(1) Includes provision for doubtful accounts and amortization of deferred financing costs and debt discount.
(2) Includes accounts receivable and other receivables, prepaid expenses and other assets, self-funded insurance programs, income tax refunds on sale of business, accrued contract payables, accounts payable and accrued expenses, accrued transportation costs, deferred revenue and other long-term liabilities.

ModivCare Inc.

Unaudited Reconciliation of Non-GAAP Financial Measures

Segment Information and Adjusted EBITDA

(in thousands)

 

 

 

Three months ended September 30, 2021

 

 

NEMT

 

Personal
Care

 

RPM

 

Matrix
Investment

 

Total
Continuing
Operations

 

 

 

 

 

 

 

 

 

 

 

Service revenue, net

$

372,992

 

 

 

$

118,503

 

 

$

1,564

 

 

$

 

 

 

$

493,059

 

 

Grant income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Service expense

304,398

 

 

 

94,107

 

 

767

 

 

 

 

 

399,272

 

 

General and administrative expense

52,118

 

 

 

15,720

 

 

216

 

 

 

 

 

68,054

 

 

Depreciation and amortization

7,496

 

 

 

4,912

 

 

200

 

 

 

 

 

12,608

 

 

Total operating expenses

364,012

 

 

 

114,739

 

 

1,183

 

 

 

 

 

479,934

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

8,980

 

 

 

3,764

 

 

381

 

 

 

 

 

13,125

 

 

 

 

 

 

 

 

 

 

 

 

 

Other expenses (income):

 

 

 

 

 

 

 

 

 

Interest expense, net

17,702

 

 

 

 

 

 

 

 

 

 

17,702

 

 

Equity in net loss of investee

 

 

 

 

 

 

 

6,748

 

 

 

6,748

 

 

Income (loss) from continuing operations

 

 

 

 

 

 

 

 

 

before income taxes

(8,722

)

 

 

3,764

 

 

381

 

 

(6,748

)

 

 

(11,325

)

 

Provision (benefit) for income taxes

(2,931

)

 

 

864

 

 

107

 

 

(1,903

)

 

 

(3,863

)

 

Income (loss) from continuing operations, net of
taxes

(5,791

)

 

 

2,900

 

 

274

 

 

(4,845

)

 

 

(7,462

)

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

17,702

 

 

 

 

 

 

 

 

 

 

17,702

 

 

Provision (benefit) for income taxes

(2,931

)

 

 

864

 

 

107

 

 

(1,903

)

 

 

(3,863

)

 

Depreciation and amortization

7,496

 

 

 

4,912

 

 

200

 

 

 

 

 

12,608

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA

16,476

 

 

 

8,676

 

 

581

 

 

(6,748

)

 

 

18,985

 

 

 

 

 

 

 

 

 

 

 

 

 

Restructuring and related charges (1)

3,087

 

 

 

 

 

 

 

 

 

 

3,087

 

 

Transaction costs (2)

10,115

 

 

 

1,177

 

 

 

 

 

 

 

11,292

 

 

Cash settled equity

2,599

 

 

 

 

 

 

 

 

 

 

2,599

 

 

Stock-based compensation

1,217

 

 

 

 

 

 

 

 

 

 

1,217

 

 

COVID-19 related costs, net of grant income

165

 

 

 

228

 

 

 

 

 

 

 

393

 

 

Equity in net loss of investee

 

 

 

 

 

 

 

6,748

 

 

 

6,748

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

$

33,659

 

 

 

$

10,081

 

 

$

581

 

 

$

 

 

 

$

44,321

 

 

(1) Restructuring and related charges include professional services costs.
(2) Transaction costs include Circulation management incentive plan ("MIP") costs and certain transaction-related expenses.

ModivCare Inc.

Unaudited Reconciliation of Non-GAAP Financial Measures

Segment Information and Adjusted EBITDA

(in thousands)

 

 

 

Three months ended September 30, 2020

 

 

NEMT

 

Matrix
Investment

 

Total
Continuing
Operations

 

 

 

 

 

 

 

Service revenue, net

$

320,619

 

 

$

 

 

 

$

320,619

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

Service expense

235,543

 

 

 

 

 

235,543

 

 

General and administrative expense

34,441

 

 

 

 

 

34,441

 

 

Depreciation and amortization

7,301

 

 

 

 

 

7,301

 

 

Total operating expenses

277,285

 

 

 

 

 

277,285

 

 

 

 

 

 

 

 

 

Operating income

43,334

 

 

 

 

 

43,334

 

 

 

 

 

 

 

 

 

Other expenses (income):

 

 

 

 

 

Interest expense, net

379

 

 

 

 

 

379

 

 

Equity in net income of investee

 

 

(10,325

)

 

 

(10,325

)

 

Income from continuing

 

 

 

 

 

operations before income taxes

42,955

 

 

10,325

 

 

 

53,280

 

 

Provision for income taxes

11,774

 

 

2,586

 

 

 

14,360

 

 

Income from continuing operations, net
of taxes

31,181

 

 

7,739

 

 

 

38,920

 

 

 

 

 

 

 

 

 

Interest expense, net

379

 

 

 

 

 

379

 

 

Provision for income taxes

11,774

 

 

2,586

 

 

 

14,360

 

 

Depreciation and amortization

7,301

 

 

 

 

 

7,301

 

 

 

 

 

 

 

 

 

EBITDA

50,635

 

 

10,325

 

 

 

60,960

 

 

 

 

 

 

 

 

 

Restructuring and related charges (1)

969

 

 

 

 

 

969

 

 

Transaction costs (2)

3,579

 

 

 

 

 

3,579

 

 

Cash settled equity (3)

2,894

 

 

 

 

2,894

 

 

Stock-based compensation (3)

1,139

 

 

 

 

 

1,139

 

 

COVID-19 related costs

118

 

 

 

 

 

118

 

 

Equity in net income of investee

 

 

(10,325

)

 

 

(10,325

)

 

 

 

 

 

 

 

 

Adjusted EBITDA

$

59,334

 

 

$

 

 

 

$

59,334

 

 

(1) Restructuring and related charges include severance and office closure costs of $0.6 million and professional services costs of $0.4 million.
(2) Transaction costs include Circulation management incentive plan ("MIP") costs and certain transaction-related expenses.
(3) Adjusted EBITDA for Q3 of 2020 was recast to show the impact of stock-based compensation and cash settled equity, which the Company is now including for purposes of this calculation.

ModivCare Inc.

Unaudited Reconciliation of Non-GAAP Financial Measures

Segment Information and Adjusted EBITDA

(in thousands)

 

 

 

Nine months ended September 30, 2021

 

 

NEMT

 

Personal
Care

 

RPM

 

Matrix
Investment

 

Total
Continuing
Operations

 

 

 

 

 

 

 

 

 

 

 

Service revenue, net

$

1,081,168

 

 

$

338,385

 

 

 

$

1,564

 

 

$

 

 

 

$

1,421,117

 

 

Grant income

 

 

3,500

 

 

 

 

 

 

 

 

3,500

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Service expense

869,470

 

 

268,933

 

 

 

767

 

 

 

 

 

1,139,170

 

 

General and administrative expense

133,706

 

 

45,349

 

 

 

216

 

 

 

 

 

179,271

 

 

Depreciation and amortization

21,744

 

 

14,723

 

 

 

200

 

 

 

 

 

36,667

 

 

Total operating expenses

1,024,920

 

 

329,005

 

 

 

1,183

 

 

 

 

 

1,355,108

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

56,248

 

 

12,880

 

 

 

381

 

 

 

 

 

69,509

 

 

 

 

 

 

 

 

 

 

 

 

 

Other expenses (income):

 

 

 

 

 

 

 

 

 

Interest expense, net

34,412

 

 

 

 

 

 

 

 

 

 

34,412

 

 

Equity in net loss of investee

 

 

 

 

 

 

 

1,978

 

 

 

1,978

 

 

Income (loss) from continuing operations

 

 

 

 

 

 

 

 

 

before income taxes

21,836

 

 

12,880

 

 

 

381

 

 

(1,978

)

 

 

33,119

 

 

Provision (benefit) for income taxes

5,027

 

 

3,364

 

 

 

107

 

 

(554

)

 

 

7,944

 

 

Income (loss) from continuing operations,
net of taxes

16,809

 

 

9,516

 

 

 

274

 

 

(1,424

)

 

 

25,175

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

34,412

 

 

 

 

 

 

 

 

 

 

34,412

 

 

Provision for income taxes

5,027

 

 

3,364

 

 

 

107

 

 

(554

)

 

 

7,944

 

 

Depreciation and amortization

21,744

 

 

14,723

 

 

 

200

 

 

 

 

 

36,667

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA

77,992

 

 

27,603

 

 

 

581

 

 

(1,978

)

 

 

104,198

 

 

 

 

 

 

 

 

 

 

 

 

 

Restructuring and related charges (1)

11,215

 

 

 

 

 

 

 

 

 

 

11,215

 

 

Transaction costs (2)

14,969

 

 

3,467

 

 

 

 

 

 

 

 

18,436

 

 

Cash settled equity

9,145

 

 

 

 

 

 

 

 

 

 

9,145

 

 

Stock-based compensation

3,707

 

 

76

 

 

 

 

 

 

 

 

3,783

 

 

COVID-19 related costs, net of grant income

618

 

 

(1,871

)

 

 

 

 

 

 

 

(1,253

)

 

Equity in net income of investee

 

 

 

 

 

 

 

1,978

 

 

 

1,978

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

$

117,646

 

 

$

29,275

 

 

 

$

581

 

 

$

 

 

 

$

147,502

 

 

(1) Restructuring and related charges include professional services costs of $10.1 million and severance and office closure costs of $1.1 million.
(2) Transaction costs include Circulation management incentive plan ("MIP") costs and certain transaction-related expenses.

ModivCare Inc.

Unaudited Reconciliation of Non-GAAP Financial Measures

Segment Information and Adjusted EBITDA

(in thousands)

 

 

 

Nine months ended September 30, 2020

 

 

NEMT

 

Matrix
Investment

 

Total
Continuing
Operations

 

 

 

 

 

 

 

Service revenue, net

$

970,166

 

 

$

 

 

 

$

970,166

 

 

Grant income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

Service expense

764,310

 

 

 

 

 

764,310

 

 

General and administrative expense

86,435

 

 

 

 

 

86,435

 

 

Depreciation and amortization

17,199

 

 

 

 

 

17,199

 

 

Total operating expenses

867,944

 

 

 

 

 

867,944

 

 

 

 

 

 

 

 

 

Operating income

102,222

 

 

 

 

 

102,222

 

 

 

 

 

 

 

 

 

Other expenses (income):

 

 

 

 

 

Interest expense, net

2,118

 

 

 

 

 

2,118

 

 

Equity in net income of investee

 

 

(12,200

)

 

 

(12,200

)

 

Income from continuing

 

 

 

 

 

operations before income taxes

100,104

 

 

12,200

 

 

 

112,304

 

 

Provision for income taxes

16,730

 

 

3,055

 

 

 

19,785

 

 

Income from continuing operations, net of
taxes

83,374

 

 

9,145

 

 

 

92,519

 

 

 

 

 

 

 

 

 

Interest expense, net

2,118

 

 

 

 

 

2,118

 

 

Provision for income taxes

16,730

 

 

3,055

 

 

 

19,785

 

 

Depreciation and amortization

17,199

 

 

 

 

 

17,199

 

 

 

 

 

 

 

 

 

EBITDA

119,421

 

 

12,200

 

 

 

131,621

 

 

 

 

 

 

 

 

 

Restructuring and related charges (1)

3,277

 

 

 

 

 

3,277

 

 

Transaction costs (2)

4,700

 

 

 

 

 

4,700

 

 

Cash settled equity (3)

6,891

 

 

 

 

 

6,891

 

 

Stock-based compensation (3)

2,834

 

 

 

 

 

2,834

 

 

COVID-19 related costs, net of grant income

349

 

 

 

 

 

349

 

 

Equity in net (income) loss of investee

 

 

(12,200

)

 

 

(12,200

)

 

 

 

 

 

 

 

 

Adjusted EBITDA

$

137,472

 

 

$

 

 

 

$

137,472

 

 

(1) Restructuring and related charges include severance and office closure costs of $1.7 million and professional services of $1.6 million.
(2) Transaction costs include Circulation MIP and certain transaction-related expenses.
(3) Adjusted EBITDA for the nine months ended September 30, 2020 was recast to show the impact of stock-based compensation and cash settled equity, which the Company is now including for purposes of this calculation.

ModivCare Inc.

Unaudited Summary Financial Information of Equity Investment in Matrix Medical Network (1)

(in thousands)

 

 

Three months ended September 30,

 

Nine months ended September 30,

 

2021

 

2020

 

2021

 

2020

Revenue

$

78,458

 

 

 

$

140,728

 

 

$

316,830

 

 

 

$

292,699

 

Operating expense

87,324

 

 

 

94,509

 

 

288,883

 

 

 

213,219

 

Depreciation and amortization

7,921

 

 

 

10,730

 

 

24,497

 

 

 

30,406

 

Operating income (loss)

(16,787

)

 

 

35,489

 

 

3,450

 

 

 

49,074

 

 

 

 

 

 

 

 

 

Interest expense, net

4,337

 

 

 

4,545

 

 

12,502

 

 

 

15,264

 

Provision (benefit) for income taxes

(5,497

)

 

 

9,562

 

 

(1,909

)

 

 

9,893

 

Net income (loss)

(15,627

)

 

 

21,382

 

 

(7,143

)

 

 

23,917

 

 

 

 

 

 

 

 

 

Equity Interest

43.6

 

%

 

43.6

%

 

43.6

 

%

 

43.6

%

Net income (loss) - Equity Investment

(6,813

)

 

 

9,318

 

 

(3,114

)

 

 

10,423

 

Management fee and other

65

 

 

 

1,007

 

 

1,136

 

 

 

1,777

 

Equity in net income (loss) of
investee

$

(6,748

)

 

 

$

10,325

 

 

$

(1,978

)

 

 

$

12,200

 

 

 

 

 

 

 

 

 

Cash

$

74,958

 

 

 

$

67,560

 

 

 

 

 

Net Debt (2)

$

244,317

 

 

 

$

322,575

 

 

 

 

 

(1) The results of our equity method investment are excluded from the calculation of ModivCare's Adjusted EBITDA and Adjusted Net Income.
(2) Net debt represents long-term debt including the current portion, excluding deferred financing costs, less cash.

ModivCare Inc.

Unaudited Reconciliation of Non-GAAP Financial Measures

Adjusted EBITDA: Matrix Medical Network (1)

(in thousands)

 

 

Three months ended September 30,

 

Nine months ended September 30,

 

2021

 

2020

 

2021

 

2020

Revenue

$

78,458

 

 

 

$

140,728

 

 

$

316,830

 

 

 

$

292,699

 

Operating expense

87,324

 

 

 

94,509

 

 

288,883

 

 

 

213,219

 

Depreciation and amortization

7,921

 

 

 

10,730

 

 

24,497

 

 

 

30,406

 

Operating income (loss)

(16,787

)

 

 

35,489

 

 

3,450

 

 

 

49,074

 

 

 

 

 

 

 

 

 

Interest expense, net

4,337

 

 

 

4,545

 

 

12,502

 

 

 

15,264

 

Provision (benefit) for income taxes

(5,497

)

 

 

9,562

 

 

(1,909

)

 

 

9,893

 

Net income (loss)

(15,627

)

 

 

21,382

 

 

(7,143

)

 

 

23,917

 

 

 

 

 

 

 

 

 

Depreciation and amortization

7,921

 

 

 

10,730

 

 

24,497

 

 

 

30,406

 

Interest expense

4,337

 

 

 

4,545

 

 

12,502

 

 

 

15,264

 

Provision (benefit) for income taxes

(5,497

)

 

 

9,562

 

 

(1,909

)

 

 

9,893

 

EBITDA

(8,866

)

 

 

46,219

 

 

27,947

 

 

 

79,480

 

Management fees

132

 

 

 

2,169

 

 

2,424

 

 

 

3,838

 

Integration costs

14

 

 

 

 

 

169

 

 

 

 

Severance costs

1,136

 

 

 

286

 

 

1,368

 

 

 

1,223

 

Restructuring expense

7,476

 

 

 

3,781

 

 

17,691

 

 

 

3,781

 

COVID-19 related costs

216

 

 

 

1,507

 

 

1,163

 

 

 

6,599

 

Transaction costs

2,522

 

 

 

297

 

 

6,945

 

 

 

2,051

 

Adjusted EBITDA

$

2,630

 

 

 

$

54,259

 

 

$

57,707

 

 

 

$

96,972

 

(1) ModivCare accounts for its proportionate share of Matrix's results using the equity method. Matrix's Adjusted EBITDA is not included within ModivCare's Adjusted EBITDA in any period presented.

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,

 

 

2021

 

2020

 

2021

 

2020

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations, net of tax

$

(7,462

)

 

 

$

38,920

 

 

 

$

25,175

 

 

 

$

92,519

 

 

 

 

 

 

 

 

 

 

Restructuring and related charges(1)

3,087

 

 

 

969

 

 

 

11,215

 

 

 

3,277

 

 

Transaction costs(2)

11,292

 

 

 

3,579

 

 

 

18,436

 

 

 

4,700

 

 

Cash settled equity(3)

2,599

 

 

 

2,894

 

 

 

9,145

 

 

 

6,891

 

 

Stock-based compensation(3)

1,217

 

 

 

1,139

 

 

 

3,783

 

 

 

2,834

 

 

Equity in net loss (income) of investee

6,748

 

 

 

(10,325

)

 

 

1,978

 

 

 

(12,200

)

 

Intangible amortization expense

9,177

 

 

 

4,884

 

 

 

27,827

 

 

 

10,219

 

 

Transaction-related financing expense

6,630

 

 

 

 

 

 

6,630

 

 

 

 

 

COVID-19 related costs, net of grant income

393

 

 

 

118

 

 

 

(1,253

)

 

 

349

 

 

Tax impact of the CARES Act

 

 

 

 

 

 

 

 

 

(10,984

)

 

Tax effected impact of adjustments

(10,647

)

 

 

98

 

 

 

(20,577

)

 

 

(1,733

)

 

 

 

 

 

 

 

 

 

 

Adjusted Net Income

$

23,034

 

 

 

$

42,276

 

 

 

$

82,359

 

 

 

$

95,872

 

 

 

 

 

 

 

 

 

 

 

Dividends on convertible preferred stock

 

 

 

(27

)

 

 

 

 

 

(1,988

)

 

Income allocated to participating securities

 

 

 

(264

)

 

 

 

 

 

(7,052

)

 

 

 

 

 

 

 

 

 

 

Adjusted Net Income available to common stockholders

$

23,034

 

 

 

$

41,985

 

 

 

$

82,359

 

 

 

$

86,832

 

 

 

 

 

 

 

 

 

 

 

Adjusted earnings per share

$

1.63

 

 

 

$

2.97

 

 

 

$

5.77

 

 

 

$

6.47

 

 

 

 

 

 

 

 

 

 

 

Diluted weighted-average number of common shares
outstanding

14,161,806

 

 

 

14,133,904

 

 

 

14,278,331

 

 

 

13,415,344

 

 

(1) Restructuring and related charges include severance and office closure costs and professional services.
(2) Transaction costs include the MIP related to the Circulation acquisition and certain other transaction-related expenses.
(3) Adjusted net income for the three and nine months ended September 30, 2020 was recast to show the impact of stock-based compensation and cash settled equity, which the Company is now including for purposes of this calculation.

Investor Relations
Kalle Ahl, The Equity Group
(212) 836-9614
kahl@equityny.com

Source: ModivCare Inc.

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