ModivCare (US:MODV)2021-05-07 12:55Financial Performance - Service revenue, net for Q1 2021 increased by $86.3 million, or 24%, compared to Q1 2020, with $110.2 million attributed to the acquisition of Simplura[141] - Operating income for Q1 2021 was $28.8 million, representing 6.4% of revenue, compared to $10.0 million, or 2.7% of revenue in Q1 2020[140] - Total operating expenses for Q1 2021 were $427.4 million, or 94.2% of revenue, compared to $357.2 million, or 97.3% of revenue in Q1 2020[140] - General and administrative expenses increased by $34.1 million, or 164%, in Q1 2021 compared to Q1 2020, primarily due to costs related to the Personal Care segment and Simplura integration[144] - Cash flow from operating activities for the three months ended March 31, 2021 was $134.6 million, up from $38.8 million in the same period of 2020[156] - Net income for Q1 2021 was $18.8 million, or 4.2% of revenue, compared to $16.1 million, or 4.4% of revenue in Q1 2020[140] COVID-19 Impact - In Q1 2021, ModivCare received approximately $2.6 million in grant income from the CARES Act Provider Relief Fund to offset lost revenue due to the COVID-19 pandemic[121] - The company deferred approximately $20.7 million in employer payroll taxes under the CARES Act, with 50% due in December 2021 and 50% due in December 2022[122] - The NEMT segment experienced a decrease in trip volumes starting March 2020, but revenues remained stable due to capitated contracts, positively impacting gross margins[123] - The Personal Care segment has seen a material reduction in service hours and visits, with recovery expected only after widespread vaccine distribution[125] Acquisitions and Investments - ModivCare's acquisition of Simplura Health Group on November 18, 2020, established its Personal Care segment, enhancing its service offerings[116] - The company holds a 43.6% minority interest in Matrix Medical Network, which provides in-home and on-site services, contributing to improved health outcomes and financial performance for health plans[117] Market Trends and Growth Opportunities - The aging population is expected to increase demand for healthcare services, including in-home personal care, which may drive future growth[123] - Medicaid and Medicare Advantage plans are increasingly covering NEMT services, which may be accelerated by recent legislative changes[123] Operational Strategy - ModivCare's technology-enabled operating model includes competencies in risk underwriting, claims management, and non-emergency medical transport management[113] - The company is focused on addressing social determinants of health (SDoH) to improve access to care and reduce costs[114] Financial Position and Compliance - The company had $299.6 million in cash and cash equivalents as of March 31, 2021, compared to $183.4 million at December 31, 2020[154] - Interest expense for Q1 2021 was $8.4 million, significantly higher than $0.2 million in Q1 2020, due to the issuance of $500.0 million in Senior Unsecured Notes[146] - Depreciation and amortization increased by $8.4 million, or 223%, in Q1 2021 compared to Q1 2020, primarily due to the Simplura acquisition[145] - The effective tax rate for continuing operations in Q1 2021 was 24.2%, compared to a benefit of 124.7% in Q1 2020[148] - As of March 31, 2021, the Company had no borrowings outstanding on the Credit Facility[165] - The applicable margin for LIBOR loans ranges from 2.25% to 3.50%, and for base rate loans, it ranges from 1.25% to 2.50%[164] - The consolidated net leverage ratio may not exceed 3.00:1.00 as of the end of any fiscal quarter, increasing to 4.50:1.00 for four quarters following the Simplura Acquisition[166] - The Company was in compliance with all covenants under the credit agreement as of March 31, 2021[167] - There have been no material changes to the Off-Balance Sheet Arrangements since the last disclosure[168] - The Company has exposure to interest rate risk related to its Credit Facility, which has variable interest rates[169]