ModivCare Inc., (the “Company” or “ModivCare”) (Nasdaq: MODV), a
technology-enabled healthcare services company that provides a
suite of integrated supportive care solutions focused on improving
patient outcomes, today reported financial results for the three
months ended March 31, 2021.
First Quarter 2021
Highlights:
- Revenue of $453.6 million, a 23.5% increase as compared to
$367.3 million in Q1 2020
- Income from continuing operations, net of tax, of $18.9 million
or $1.31 per diluted common share
- Adjusted EBITDA of $48.0 million, Adjusted Net Income of $27.5
million and Adjusted EPS of $1.92
- Net cash provided by operating activities during the quarter of
$134.6 million
- Cash and cash equivalents of $299.6 million at March 31, with
$500.0 million debt outstanding related to the Senior Unsecured
Notes
- Matrix, on a standalone basis, achieved net income of $8.6
million and Adjusted EBITDA of $32.2 million
Daniel E. Greenleaf, President and Chief Executive Officer,
said, “ModivCare’s first quarter Adjusted EBITDA of $48.0 million
exceeded the prior year comparable figure, reflecting higher
Adjusted EBITDA in both our NEMT and Personal Care segments. In
NEMT, we benefited from lower operating costs under our six-pillar
strategy, expanded membership, a full quarter contribution from
National MedTrans, and lower utilization under capitated contracts.
Our Personal Care segment benefited from a full quarter
contribution from Simplura Health Group, which we acquired in
November 2020.”
Mr. Greenleaf continued, “Looking ahead, we will continue to
deploy technological and operational initiatives designed to
elevate the patient experience and further our market leading
position in the non-emergency medical transportation industry.
Yesterday we announced the acquisition of WellRyde, a leading
technology provider of Advanced Transportation Management Systems
(ATMS) software enabling optimized routing, automated trip
assignments and billing, and real-time network monitoring.
WellRyde’s technology will seamlessly integrate into our
Circulation and LCAD platforms, fast-tracking our “Go Digital”
initiative and accelerating our efforts to build the largest
digital non-emergency medical transportation network in the nation.
We will also continue to evaluate external growth opportunities in
the highly fragmented $55 billion personal care sector. Simplura’s
distinguished service model and stellar technology platform provide
us an excellent foundation to build upon. By addressing the social
determinants of health through a suite of supportive care
solutions, we aim to deepen customer relationships, dismantle
barriers to care, and build substantial value for
shareholders.”
Mr. Greenleaf concluded, “Finally, Matrix commenced 2021 on a
very positive note, with first quarter revenue more than doubling
to $124 million and adjusted EBITDA more than tripling to $32.2
million compared to the respective figures for the prior year
period, reflecting continued expansion of its clinical solutions
business and a rebound in on-site visits in its risk assessment
business.”
First Quarter 2021 Results
For the first quarter of 2021, the Company reported revenue of
$453.6 million, an increase of 23.5% from $367.3 million in the
first quarter of 2020.
Operating income was $28.8 million, or 6.4% of revenue, in the
first quarter of 2021, compared to operating income of $10.0
million, or 2.7% of revenue, in the first quarter of 2020. Income
from continuing operations, net of tax, in the first quarter of
2021 was $18.9 million, or $1.31 per diluted common share, compared
to income from continuing operations, net of tax, of $16.3 million,
or $1.02 per diluted common share, in the first quarter of
2020.
Adjusted EBITDA was $48.0 million, or 10.6% of revenue, in the
first quarter of 2021, compared to $17.0 million, or 4.6% of
revenue, in the first quarter of 2020.
Adjusted Net Income in the first quarter of 2021 was $27.5
million, or $1.92 per diluted common share, compared to $8.6
million, or $0.66 per diluted common share, in the first quarter of
2020.
Comparable adjusted EBITDA and Adjusted Net Income for Q1 2020
was recast to show the impact of stock-based compensation, which
the Company is now excluding for purposes of these
calculations.
The quarter-over-quarter increase in revenue was primarily due
to incremental revenue of $110.2 million and $43.8 million
associated with the acquisitions of Simplura and National MedTrans,
respectively. This was partially offset by lower trip volume in our
NEMT business caused by the continued impact of COVID-19. This
lower volume resulted in a reduction of revenue in the current
quarter in line with margin limitations that govern some of our
profit corridor and reconciliation payor contracts.
Adjusted EBITDA increased in the first quarter of 2021 due to
cost savings and productivity initiatives associated with the
Company's six-pillar growth strategy in addition to incremental
margin from Simplura and National MedTrans and lower utilization
and contact center activity due to COVID-19. This was partially
offset by higher corporate general and administrative cost as the
Company continued to make investments in its employees and
technology.
Matrix - Balance Sheet and Cash Flows
For the first quarter of 2021, Matrix’s revenue was $124.0
million, an increase of 102% from $61.3 million in the first
quarter of 2020. Matrix had operating income of $16.1 million for
the first quarter of 2021, compared to an operating loss of $1.7
million for the first quarter of 2020.
ModivCare recorded income of $4.5 million related to its Matrix
equity investment compared to a loss of $2.6 million for the first
quarter of 2020. For the first quarter of 2021, Matrix recorded
Adjusted EBITDA of $32.2 million, or 26% of revenue, compared to
$9.9 million, or 16% of revenue, for the first quarter of 2020.
Matrix’s Adjusted EBITDA for the quarter was positively impacted
by its continued success with its Clinical Solutions business,
which they created in the second quarter of 2020 as a response to
employers’ needs for mobile health assessment resources during the
pandemic. This business has continued to thrive as employers begin
to transition more of their workforce back onsite. They are also
beginning to experience an increase in on-site visits in their risk
adjustment business to pre-pandemic levels.
As of March 31, 2021, Matrix had $262.3 million in net debt and
ModivCare's ownership interest was 43.6%.
Investor Presentation and Conference Call
ModivCare will hold a conference call to discuss its financial
results on Friday, May 7, 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, which 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, 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 related to our corporate
reorganization, (2) equity in net (gain) loss of investee, (3)
stock based compensation, (4) certain transaction and related
costs, and (5) COVID-19 related costs, net of grant income.
Adjusted Net Income is defined as income from continuing
operations, net of taxes, before certain items, including (1)
restructuring and related charges, (2) equity in net (gain) loss of
investee, (3) stock based compensation, (4) intangible asset
amortization, (5) certain transaction and related costs, (6)
COVID-19 related costs, net of grant income, (7) tax impacts from
the Coronavirus Aid, Relief, and Economic Security Act (the "CARES
Act"), and (8) 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 gain 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.
ModivCare Inc.
Unaudited Condensed
Consolidated Statements of Operations
(in thousands, except share and
per share data)
Three months ended March
31,
2021
2020
Service revenue, net
$
453,610
$
367,291
Grant income
2,648
—
Operating expenses:
Service expense
360,333
332,661
General and administrative expense
54,871
20,795
Depreciation and amortization
12,239
3,790
Total operating expenses
427,443
357,246
Operating income
28,815
10,045
Other expenses (income):
Interest expense, net
8,423
241
Equity in net loss (income) of
investee
(4,503)
2,550
Income from continuing operations before
income taxes
24,895
7,254
Provision (benefit) for income taxes
6,016
(9,046)
Income from continuing operations, net of
tax
18,879
16,300
Loss from discontinued operations, net of
tax
(39)
(202)
Net income
$
18,840
$
16,098
Net income available to common
stockholders
$
18,840
$
12,998
Basic earnings (loss) per common
share:
Continuing operations
$
1.33
$
1.02
Discontinued operations
—
(0.02)
Basic earnings per common share
$
1.33
$
1.00
Diluted earnings (loss) per common
share:
Continuing operations
$
1.31
$
1.02
Discontinued operations
—
(0.02)
Diluted earnings per common share
$
1.31
$
1.00
Weighted-average number of common shares
outstanding:
Basic
14,158,666
12,987,740
Diluted
14,362,226
13,012,991
ModivCare Inc.
Unaudited Condensed
Consolidated Balance Sheets
(in thousands)
March 31, 2021
December 31, 2020
Assets
Current assets:
Cash and cash equivalents
$
299,559
$
183,281
Accounts receivable, net
211,340
197,943
Other current assets (1)
26,194
44,634
Current assets of discontinued operations
(2)
141
758
Total current assets
537,234
426,616
Operating lease right-of-use assets
29,398
30,928
Property and equipment, net
30,195
27,544
Goodwill and intangible assets, net
781,077
790,579
Equity investment
141,220
137,466
Other assets
12,651
12,780
Total assets
$
1,531,775
$
1,425,913
Liabilities and stockholders'
equity
Current liabilities:
Accounts payable
$
33,779
$
8,464
Accrued contract payables
245,386
101,705
Accrued expenses and other current
liabilities
119,326
117,010
Accrued transportation costs
70,870
79,674
Current portion of operating lease
liabilities
7,922
8,277
Other current liabilities (3)
7,273
7,650
Current liabilities of discontinued
operations (2)
1,527
1,971
Total current liabilities
486,083
324,751
Long-term debt, net of deferred financing
costs
486,705
485,980
Operating lease liabilities, less current
portion
22,214
23,437
Long-term contracts payables
—
72,183
Other long-term liabilities (4)
118,020
107,951
Total liabilities
1,113,022
1,014,302
Stockholders' equity
418,753
411,611
Total liabilities and stockholders'
equity
$
1,531,775
$
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)
Three months ended March
31,
2021
2020
Operating activities
Net income
$
18,840
$
16,098
Depreciation and amortization
12,239
3,790
Stock-based compensation
1,187
1,045
Equity in net loss (income) of
investee
(4,503)
2,550
Deferred income taxes
(616)
11,590
Reduction of right-of-use assets
2,745
2,248
Other non-cash items (1)
608
860
Changes in working capital (2)
104,064
618
Net cash provided by operating
activities
134,564
38,799
Investing activities
Purchase of property and equipment
(5,388)
(1,574)
Net cash used in investing activities
(5,388)
(1,574)
Financing activities
Proceeds from debt
—
162,000
Preferred stock dividends
—
(1,095)
Repurchase of common stock, for
treasury
(14,450)
(7,299)
Proceeds from common stock issued pursuant
to stock option exercise
2,286
2,054
Restricted stock surrendered for employee
tax payment
(721)
(37)
Other financing activities
(40)
(77)
Net cash provided by (used in) financing
activities
(12,925)
155,546
Net change in cash, cash equivalents and
restricted cash
116,251
192,771
Cash, cash equivalents and restricted cash
at beginning of period
183,356
61,673
Cash, cash equivalents and restricted cash
at end of period
$
299,607
$
254,444
(1)
Includes provision for doubtful accounts
and amortization of deferred financing costs and debt discount.
(2)
Includes accounts receivable and other
receivables, prepaid expenses and other current assets, self-funded
insurance programs, 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 March 31,
2021
NEMT
Personal Care
Matrix Investment
Total Continuing
Operations
Service revenue, net
$
343,416
$
110,194
$
—
$
453,610
Grant income
—
2,648
—
2,648
Operating expenses:
Service expense
272,416
87,917
—
360,333
General and administrative expense
39,967
14,904
—
54,871
Depreciation and amortization
7,312
4,927
—
12,239
Total operating expenses
319,695
107,748
—
427,443
Operating income
23,721
5,094
—
28,815
Other expenses (income):
Interest expense, net
8,423
—
—
8,423
Equity in net income of investee
—
—
(4,503)
(4,503)
Income from continuing
operations before income taxes
15,298
5,094
4,503
24,895
Provision for income taxes
3,328
1,426
1,262
6,016
Income from continuing operations, net
of taxes
11,970
3,668
3,241
18,879
Interest expense, net
8,423
—
—
8,423
Provision for income taxes
3,328
1,426
1,262
6,016
Depreciation and amortization
7,312
4,927
—
12,239
EBITDA
31,033
10,021
4,503
45,557
Restructuring and related charges (1)
3,645
—
—
3,645
Transaction costs (2)
2,633
1,045
—
3,678
Stock-based compensation
1,131
—
—
1,131
COVID-19 related costs, net of grant
income
339
(1,852)
—
(1,513)
Equity in net income of investee
—
—
(4,503)
(4,503)
Adjusted EBITDA
$
38,781
$
9,214
$
—
$
47,995
(1)
Restructuring and related charges include
professional services costs of $3.2 million and severance and
office closure costs of $0.4 million.
(2)
Transaction costs include Circulation
management incentive plan costs and acquisition costs related to
Simplura Health Group and National MedTrans.
ModivCare Inc.
Unaudited Reconciliation of
Non-GAAP Financial Measures
Segment Information and
Adjusted EBITDA
(in thousands)
Three months ended March 31,
2020
NEMT
Matrix Investment
Total Continuing
Operations
Service revenue, net
$
367,291
$
—
$
367,291
Operating expenses:
Service expense
332,661
—
332,661
General and administrative expense
20,795
—
20,795
Depreciation and amortization
3,790
—
3,790
Total operating expenses
357,246
—
357,246
Operating income
10,045
—
10,045
Other expenses (income):
Interest expense, net
241
—
241
Equity in net loss of investee
—
2,550
2,550
Income from continuing
operations before income taxes
9,804
(2,550)
7,254
Benefit for income taxes
(8,341)
(705)
(9,046)
Income from continuing operations, net
of taxes
18,145
(1,845)
16,300
Interest expense, net
241
—
241
Benefit for income taxes
(8,341)
(705)
(9,046)
Depreciation and amortization
3,790
—
3,790
EBITDA
13,835
(2,550)
11,285
Restructuring and related charges (1)
1,322
—
1,322
Transaction costs (2)
855
—
855
Stock-based compensation (3)
1,007
—
1,007
COVID-19 related costs
22
—
22
Equity in net loss of investee
—
2,550
2,550
Adjusted EBITDA
$
17,041
$
—
$
17,041
(1)
Restructuring and related charges include
severance costs of $0.7 million and professional services costs of
$0.6 million.
(2)
Transaction costs include Circulation
management incentive plan costs and other transaction-related
expenses.
(3)
Adjusted EBITDA for Q1 2020 was recast to
show the impact of stock-based compensation, which the Company is
now excluding for purposes of this calculation.
ModivCare Inc.
Unaudited Summary Financial
Information of Equity Investment in Matrix Medical Network
(1)
(in thousands)
Three months ended March
31,
2021
2020
Revenue
$
124,042
$
61,304
Operating expense
99,503
53,049
Depreciation and amortization
8,447
9,928
Operating income (loss)
16,092
(1,673)
Interest expense, net
4,081
5,730
Provision (benefit) for income taxes
3,398
(1,046)
Net income (loss)
8,613
(6,357)
Equity Interest
43.6
%
43.6
%
Net income (loss) - Equity
Investment
3,754
(2,771)
Management fee and other
749
221
Equity in net income (loss) of
investee
$
4,503
$
(2,550)
Net Debt (2)
$
262,302
$
290,742
(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 March
31,
2021
2020
Revenue
$
124,042
$
61,304
Operating expense
99,503
53,049
Depreciation and amortization
8,447
9,928
Operating income (loss)
16,092
(1,673)
Interest expense, net
4,081
5,730
Provision (benefit) for income taxes
3,398
(1,046)
Net income (loss)
8,613
(6,357)
Depreciation and amortization
8,447
9,928
Interest expense
4,081
5,730
Provision (benefit) for income taxes
3,398
(1,046)
EBITDA
24,539
8,255
Management fees
1,601
493
Integration costs
87
—
Severance costs
193
799
Restructuring expense
4,247
—
Transaction costs
1,525
385
Adjusted EBITDA
$
32,192
$
9,932
(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 March
31,
2021
2020
Income from continuing operations, net of
tax
$
18,879
$
16,300
Restructuring and related charges(1)
3,645
1,322
Transaction costs(2)
3,678
855
Stock-based compensation(3)
1,131
1,007
Equity in net (income) loss of
investee
(4,503)
2,550
Intangible amortization expense
9,502
1,559
COVID-19 related costs, net of grant
income
(1,513)
22
Tax impact of the CARES Act
—
(11,060)
Tax effected impact of adjustments
(3,302)
(1,664)
Adjusted Net Income
27,517
10,891
Dividends on convertible preferred
stock
—
(1,095)
Income allocated to participating
securities
—
(1,177)
Adjusted Net Income available to common
stockholders
$
27,517
$
8,619
Adjusted earnings per share
$
1.92
$
0.66
Diluted weighted-average number of common
shares outstanding
14,362,226
13,012,991
(1)
Restructuring and related charges include
severance, organizational consolidation costs and professional
fees.
(2)
Transaction costs include the MIP related
to the Circulation acquisition and certain other
transaction-related expenses.
(3)
Adjusted net income for Q1 2020 was recast
to show the impact of stock-based compensation, which the Company
is now excluding for purposes of this calculation.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210507005130/en/
Investor Relations Kalle Ahl, The Equity Group (212)
836-9614 kahl@equityny.com
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