ModivCare (US:MODV)2023-02-25 16:32Financial Data and Key Metrics Changes - Consolidated revenue for 2022 was $2.5 billion, a 25% increase year-over-year, with adjusted EBITDA of approximately $222 million, representing 8.9% of revenue [7][67] - The company issued 2023 revenue guidance of $2.575 to $2.6 billion and adjusted EBITDA guidance of $225 to $235 million, indicating confidence in continued growth [3][57] - Net loss from continuing operations for 2022 was approximately $32 million or $2.26 per share, while adjusted net income was approximately $103 million or $7.32 per diluted share [7][67] Business Line Data and Key Metrics Changes - Personal Care segment revenue in Q4 2022 was $176 million, a 12% increase year-over-year, with adjusted EBITDA of $16.6 million or 9.4% of revenue [8][107] - Mobility (NEMT) segment revenue increased 14% year-over-year to $459 million in Q4 2022, driven by a 16% increase in average monthly members [51][73] - Remote Patient Monitoring revenue increased 18% year-over-year to approximately $19 million in Q4 2022, with a total of $68 million for the full year [66][77] Market Data and Key Metrics Changes - Average monthly members increased approximately 3% sequentially, driven by consistent growth in referrals across the RPM business [9] - The company ended 2022 with approximately 35 million members, maintaining solid momentum heading into 2023 [3][73] - The reimbursement environment for personal care services is expected to remain favorable, supporting growth in this segment [6][107] Company Strategy and Development Direction - The company is focusing on developing standard tools and techniques to accelerate caregiver recruitment and retention, while expanding personal care locations [6][104] - The "One ModivCare" strategy aims to align supportive care services, share best practices, and drive efficiencies across divisions [63][102] - The company plans to enhance its value-based care arrangements and leverage data analytics to improve long-term value for stakeholders [4][72] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving long-term targets of $3 billion in revenue and $300 million in adjusted EBITDA by 2025 [109] - The company anticipates a more normalized cash flow environment in 2023, with expectations of generating solid free cash flow [10][11] - Management acknowledged potential headwinds from redeterminations and normal attrition but remains optimistic about contract wins and expansions [79][122] Other Important Information - The company reduced its net contract payables by $134 million in 2022, primarily related to overpayments and liability reserves on certain NEMT contracts [108] - The company is committed to delevering its balance sheet, targeting a net leverage ratio of 3x over time [57][109] - The company has made significant investments in caregiver satisfaction and recruitment, achieving an industry-leading retention rate of 65% [104][105] Q&A Session Summary Question: Insights on cash flow generation going forward - Management indicated that cash flow is expected to normalize in 2023, with a focus on generating free cash flow each quarter [12][13] Question: Update on labor conditions and staffing levels in Personal Care - Management reported stabilization in labor challenges and high retention rates, with expectations to improve hiring further [84] Question: Impact of redeterminations on margins and membership - Management acknowledged that redeterminations could impact membership in the latter half of the year but expects to offset this with new business wins [91][122] Question: Update on the operational turnaround of Matrix - Management expressed optimism about the operational improvements and performance of the Matrix segment, expecting continued acceleration [20][21] Question: Guidance on margins and expense factors for 2023 - Management indicated that margins for 2023 will be on the lower end of the range due to ongoing cost pressures but expects improvements in the latter half of the year [58][92]