ModivCare (US:MODV)2022-11-05 21:04Financial Data and Key Metrics Changes - Third quarter revenue increased 31% year-over-year to $648 million, driven by 23% growth in the mobility business and 43% growth in the personal care business [20][51] - Adjusted EBITDA for the third quarter was approximately $52 million, resulting in an 8% adjusted EBITDA margin [51] - Adjusted net income for the third quarter was $23 million, or $1.61 per diluted share [51] Business Segment Data and Key Metrics Changes - Mobility (NEMT) segment revenue increased 23% year-over-year to $460 million, with average monthly members growing by 23% [52] - Personal Care segment revenue rose to $169 million from approximately $119 million in the prior year, primarily due to the CareFinders acquisition and rate increases [58] - Remote Patient Monitoring (RPM) segment revenue was $19 million, including approximately $4.7 million from the Guardian Medical Monitoring acquisition [62] Market Data and Key Metrics Changes - Membership in the mobility business grew to approximately 36 million members, with a focus on increasing trip growth despite higher transportation costs [22][52] - The company reported a caregiver retention rate nearly twice the industry average, indicating strong performance in the personal care segment [31] Company Strategy and Development Direction - The company aims to unify and integrate its suite of supportive care solutions to drive incremental savings for payers and improve outcomes [12] - Focus on cross-selling and bundling services to managed care organizations (MCOs) as the total addressable market is expected to expand from $80 billion to $150 billion [37][38] - The strategy includes solidifying a high-performing executive leadership team and reallocating resources to drive efficiencies [14][15] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the long-term outlook, citing strong member growth and favorable reimbursement rates in the personal care business [21][68] - The macro environment remains challenging due to inflation and labor market issues, but the company has natural hedges in place [21] - Management expects to see improvements in margins and operational performance as the company continues to execute its growth strategy [133] Other Important Information - The company ended the third quarter with approximately $73 million in cash and cash equivalents and no amounts drawn on its revolving credit facility [66] - The principal debt balance remained flat at $1 billion, with a commitment to deleveraging over time [66] Q&A Session Summary Question: Strategy and Vision as CEO - Management emphasized that the focus is on execution and aligning people and processes to achieve the company's vision [78] Question: Progress on Payables - Management indicated that approximately $40 million to $60 million remains to be paid down in the fourth quarter, after which working capital will normalize [81][82] Question: Member Growth Drivers - Membership growth is attributed to operational improvements and adding business with current customers, exceeding normal market growth rates [92] Question: Inflationary Pressures - Management believes inflationary pressures will continue but expects to overcome them through operational changes and partnerships with transportation providers [132][100] Question: Reimbursement Rates - Favorable reimbursement rates in the personal care segment have increased by 10% to 15%, allowing for competitive wages and improved margins [105][106] Question: Labor Environment Outlook - The labor environment is expected to improve, with strategies in place to enhance recruitment and retention in personal care [114][115] Question: Value-Based Care Opportunities - Management sees significant opportunities in value-based care, particularly in personal care and monitoring services, focusing on vulnerable populations [120][121]