Modivcare Reports Third Quarter 2023 Financial Results; Maintains Guidance

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.”

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