ModivCare Reports Fourth Quarter and Full Year 2020 Financial Results

ATLANTA--(BUSINESS WIRE)-- ModivCare Inc., formerly The Providence Service Corporation, (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 and full year ended December 31, 2020.

Fourth Quarter 2020 Highlights:

  • Revenue of $398.5 million
  • Loss from continuing operations, net of tax, was $2.9 million, or $0.21 per common share, primarily a result of non-recurring bond financing and acquisition-related costs
  • Adjusted EBITDA of $41.6 million, Adjusted Net Income of $13.9 million and Adjusted EPS of $0.98 per diluted common share
  • Completed $500 million offering of Senior Unsecured Notes
  • Closed acquisition of Simplura Health Group ("Simplura"), creating personal care segment
  • Net cash provided by operating activities during the quarter of $61.2 million, finishing the year with cash and cash equivalents of $183.3 million
  • The company paid down its $75 million revolver balance, originally related to the acquisition of Simplura

Full Year 2020 Highlights:

  • Revenue of $1,368.7 million
  • Income from continuing operations, net of tax, was $89.6 million, or $2.43 per diluted common share
  • Adjusted EBITDA of $169.3 million, Adjusted Net Income of $95.0 million and Adjusted EPS of $6.95 per diluted common share
  • Net cash provided by operating activities in 2020 of $348.4 million
  • Matrix, on a standalone basis, achieved net income of $15.1 million and Adjusted EBITDA of $113.3 million; launching new telehealth and clinical solutions offerings and acquired Biocerna Labs

Daniel E. Greenleaf, President and Chief Executive Officer, said, "ModivCare's fourth quarter Adjusted EBITDA of $41.6 million exceeded the prior year comparable figure primarily due to operational improvements driven by our six-pillar strategy, a full quarter contribution from National MedTrans, contribution from Simplura Health Group, which we acquired in November 2020, and lower utilization under our capitated contracts. The fourth quarter capped off a year of significant transformation for our organization. In 2020, we upgraded our senior leadership team and supporting talent, sharpened our focus on elevating the patient experience, advanced key technology and centers of excellence optimization initiatives, completed two value-creating acquisitions, simplified the Company's capital structure by eliminating the convertible preferred shares, and laid the groundwork for our successful rebranding to ModivCare in January 2021."

Mr. Greenleaf continued, "Looking ahead, we expect to reap a return on the operational and technology investments we are making in our non-emergency medical transportation business (NEMT). As the industry's market leader, we are well positioned for longer term organic growth supported by favorable industry tailwinds, such as Medicaid and Medicare Advantage expansion, the codification of the NEMT benefit which compels states to offer the benefit, and adjacent market opportunities, notably our food delivery initiatives. In personal care, Simplura is an excellent growth platform that we intend to build upon through a combination of strategic acquisitions and organic initiatives. Together, our growing businesses share a common mission of addressing the social determinants of health to enhance the patient experience, enable greater access to care, reduce costs and improve health outcomes. We look forward to advancing this mission while building significant value for our shareholders in the years to come. Additionally, Matrix made significant progress in 2020, and we are excited about the continuing momentum and interest in their Clinical Solutions and Health Assessments business. As companies focus on healthcare access, wellness, and improving outcomes post-pandemic, we expect this momentum and growth to continue in 2021."

"Despite the unprecedented challenges of the COVID-19 pandemic, 2020 represented a year of exceptional growth for Matrix," added Keith Henthorne, Chairman & CEO of Matrix Medical Networks. "Our core assets of an expansive community-based clinical network, nationwide fleet of mobile health clinics and advanced technology platform allowed us to effectively serve our long-standing health plan clients and support their members with needed clinical services both in-home and via telehealth. Additionally, we were able to accelerate our product roadmap to launch several sustainable business lines including worksite-based clinical solutions, decentralized clinical trials, and clinical lab services. We were proud to serve a variety of new clients with these high-growth business lines, including some of the nation's largest and most respected retail, food, entertainment and pharmaceutical companies."

Fourth Quarter 2020 Results

For the fourth quarter of 2020, the Company reported revenue of $398.5 million, an increase of 3.6% from $384.8 million in the fourth quarter of 2019.

The quarter-over-quarter increase in revenue was primarily driven by an additional $54.0 million of revenue in our personal care segment resulting from the acquisition of Simplura in November 2020 and $41.0 million of revenue related to our acquisition of National MedTrans in May 2020, offset by a decrease related to lower trip volume due to the COVID-19 pandemic and the associated adjustments to profit corridor and reconciliation contracts.

Operating income was $20.9 million, or 5.3% of revenue, in the fourth quarter of 2020, compared to $7.6 million, or 2.0% of revenue, in the fourth quarter of 2019. Loss from continuing operations, net of tax, was $2.9 million, or $0.21 per common share in the fourth quarter of 2020, compared to $11.4 million, or $0.97 per common share, in the fourth quarter of 2019. The fourth quarter loss was primarily attributable to a $9.0 million unused commitment fee for backstop funding related to our Senior Unsecured Notes offering that is included in interest expense and $8.0 million of costs related to the acquisition of Simplura.

Adjusted EBITDA was $41.6 million or 10.4% of revenue, in the fourth quarter of 2020, compared to $10.2 million, or 2.7% of revenue, in the fourth quarter of 2019.

Adjusted Net Income in the fourth quarter of 2020 was $13.9 million or $0.98 per diluted common share, compared to $5.9 million, or $0.45 per diluted common share, in the fourth quarter of 2019.

Adjusted EBITDA and Adjusted Net Income increased in the fourth quarter of 2020 due to cost savings and productivity initiatives associated with the Company's six-pillar growth strategy in addition to incremental margin from both the Simplura and National MedTrans acquisitions and lower utilization and activity in our centers of excellence due to COVID-19. This was partially offset by higher corporate general and administrative cost as the Company made investments in its employees and technology.

Full Year 2020 Results

For the full year 2020, the Company reported revenue of $1,368.7 million, a decrease of 9.4% from $1,509.9 million in 2019.

Operating income was $123.2 million, or 9.0% of revenue, for 2020, compared to $24.7 million, or 1.6% of revenue, for 2019. Income from continuing operations, net of tax, in 2020 was $89.6 million, or $2.43 per diluted common share, compared to loss from continuing operations, net of tax, of $5.0 million, or $0.72 per common share, in the fourth quarter of 2019.

Adjusted EBITDA for 2020 was $169.3 million or 12.4% of revenue, compared to $51.2 million, or 3.4% of revenue, in 2019.

Adjusted Net Income for 2020 was $95.0 million or $6.95 per diluted common share, compared to $21.5 million, or $1.65 per diluted common share, for 2019.

Matrix - Equity Investment

For the fourth quarter of 2020, Matrix's revenue was $121.9 million, an increase of 88.8% from $64.6 million in the fourth quarter of 2019. Matrix had an operating loss of $9.7 million for the fourth quarter of 2020, compared to $60.5 million for the fourth quarter of 2019.

ModivCare recorded a fourth quarter 2020 loss of $3.3 million related to its Matrix equity investment compared to a loss of $23.5 million for the fourth quarter of 2019. For the fourth quarter of 2020, Matrix recorded Adjusted EBITDA of $16.3 million, or 13.4% of revenue, compared to $6.3 million, or 9.8% of revenue, for the fourth quarter of 2019.

For the full year 2020, Matrix's revenue was $414.6 million, an increase of 50.6% from full year 2019. Adjusted EBITDA for 2020 was $113.3 million, or 27.3% of revenue, compared to $44.0 million, or 16.0% of revenue, in 2019.

Matrix's Adjusted EBITDA for the comparable quarter and full year was positively impacted by its launch of a new Employee Health and Wellness product as well as Clinical Solutions offerings developed for companies maintaining critical operations. Matrix's payor customers paused in-home visits for a period during the year that adversely affected Risk Assessment volumes, but the company has seen rising in-home visits exiting the year and headed in to 2021.

As of December 31, 2020, Matrix had $245.7 million of 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, February 26, 2021 at 8:00 a.m. ET. An investor presentation has been prepared to accompany the conference call and can be found on the Company's website (investors.modivcare.com). 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 results 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) certain litigation related expenses, settlement income or other negotiated settlements relating to certain matters from prior periods, (4) certain transaction and related costs, and (5) COVID-19 related costs. 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) certain litigation related expenses, settlement income or other negotiated settlements relating to certain matters from prior periods, net (4) intangible asset amortization, (5) certain transaction and related costs, (6) COVID-19 related costs, (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.

--financial tables to follow--

ModivCare Inc.

Unaudited Condensed Consolidated Statements of Operations

(in thousands except share and per share data)

Three months ended
December 31,

Year ended December 31,

2020

2019

2020

2019

Service revenue, net

$

398,509

$

384,833

$

1,368,675

$

1,509,944

Operating expenses:

Service expense

314,485

358,436

1,078,795

1,401,152

General and administrative expense

54,104

15,003

140,539

67,244

Depreciation and amortization

8,984

3,840

26,183

16,816

Total operating expenses

377,573

377,279

1,245,517

1,485,212

Operating income

20,936

7,554

123,158

24,732

Other expenses (income):

Interest expense, net

15,481

57

17,599

850

Other income

(78)

(277)

Equity in net (income) loss of investee

3,340

23,526

(8,860)

29,685

Income (loss) from continuing operations before income taxes

2,115

(15,951)

114,419

(5,526)

Provision (benefit) for income taxes

5,020

(4,513)

24,805

(573)

(Loss) income from continuing operations, net of tax

(2,905)

(11,438)

89,614

(4,953)

(Loss) income from discontinued operations, net of tax

(160)

5,380

(778)

5,919

Net (loss) income

$

(3,065)

$

(6,058)

$

88,836

$

966

Net (loss) income attributable to common stockholders

$

(3,065)

$

(7,167)

$

32,471

$

(3,437)

Basic (loss) earnings per common share:

Continuing operations

$

(0.21)

$

(0.97)

$

2.45

$

(0.72)

Discontinued operations

(0.01)

0.42

(0.06)

0.46

Basic (loss) earnings per common share

$

(0.22)

$

(0.55)

$

2.39

$

(0.26)

Diluted (loss) earnings per common share:

Continuing operations

$

(0.21)

$

(0.97)

$

2.43

$

(0.72)

Discontinued operations

(0.01)

0.42

(0.06)

0.46

Diluted (loss) earnings per common share

$

(0.22)

$

(0.55)

$

2.37

$

(0.26)

Weighted-average number of common

shares outstanding:

Basic

14,159,965

12,982,731

13,567,323

12,958,713

Diluted

14,159,965

12,982,731

13,683,308

12,958,713

ModivCare Inc.

Unaudited Condensed Consolidated Balance Sheets

(in thousands)

December 31,

2020

2019

Assets

Current assets:

Cash and cash equivalents

$

183,281

$

61,365

Accounts receivable, net of allowance

197,943

180,416

Other current assets (1)

44,634

14,491

Current assets of discontinued operations (2)

758

155

Total current assets

426,616

256,427

Operating lease right-of-use assets

30,928

20,095

Property and equipment, net

27,544

23,243

Goodwill and intangible assets, net

790,579

155,127

Equity investment

137,466

130,869

Other long-term assets

12,780

11,620

Total assets

$

1,425,913

$

597,381

Liabilities, redeemable convertible preferred stock and stockholders' equity

Current liabilities:

Current portion of long-term obligations

$

45

$

308

Current portion of operating lease liabilities

8,277

6,730

Other current liabilities (3)

314,459

141,718

Current liabilities of discontinued operations (2)

1,971

1,430

Total current liabilities

324,752

150,186

Finance lease liabilities, less current portion

485,980

Operating lease liabilities, less current portion

23,437

14,502

Long-term contracts payable

72,183

Other long-term liabilities (4)

107,951

37,981

Total liabilities

1,014,303

202,669

Mezzanine and stockholders' equity

Convertible preferred stock, net

77,120

Stockholders' equity

411,610

317,592

Total liabilities, redeemable convertible preferred stock and stockholders' equity

$

1,425,913

$

597,381

(1)

Includes other receivables, prepaid expenses and short-term restricted cash.

(2)

Includes assets or liabilities primarily related to WD Services' former Saudi Arabian operation.

(3)

Includes accounts payable, accrued expenses, accrued transportation costs, 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)

Year ended December 31,

2020

2019

Operating activities

Net income

$

88,836

$

966

Depreciation and amortization

26,182

16,816

Stock-based compensation

3,930

5,414

Equity in net (income) loss of investee

(8,860)

29,685

Reduction of right of use asset

9,238

10,133

Other non-cash items

(2,609)

4,371

Deferred income taxes

11,919

71

Changes in working capital

219,799

(6,516)

Net cash provided by operating activities

348,435

60,940

Investing activities

Purchase of property and equipment

(12,150)

(10,858)

Acquisition, net of cash acquired

(622,862)

Net cash used in investing activities

(635,012)

(10,858)

Financing activities

Proceeds from debt

737,000

12,000

Repayment of debt

(237,000)

(12,000)

Preferred stock redemption payment

(88,771)

Preferred stock dividends

(1,987)

(4,403)

Repurchase of common stock, for treasury

(10,186)

(6,797)

Proceeds from common stock issued pursuant to stock option exercise

25,413

11,142

Other financing activities

(16,209)

(718)

Net cash provided by (used in) financing activities

408,260

(776)

Net change in cash and cash equivalents

121,683

49,306

Cash, cash equivalents and restricted cash at beginning of period

61,673

12,367

Cash, cash equivalents and restricted cash at end of period

$

183,356

$

61,673

ModivCare Inc.

Reconciliation of Non-GAAP Financial Measures

Segment Information and Adjusted EBITDA

(in thousands) (Unaudited)

Three Months Ended December 31, 2020

NEMT

Personal
Care

Matrix
Investment

Total
Continuing
Operations

Service revenue, net

$

344,539

$

53,970

$

$

398,509

Operating expenses:

Service expense

271,978

42,507

314,485

General and administrative expense

46,776

7,328

54,104

Depreciation and amortization

7,317

1,667

8,984

Total operating expenses

326,071

51,502

377,573

Operating income

18,468

2,468

20,936

Other expenses (income):

Interest expense, net

15,481

15,481

Equity in net loss of investee

(3,340)

(3,340)

Income (loss) from continuing

operations before income taxes

2,987

2,468

(3,340)

2,115

Provision for income taxes

3,942

1,078

5,020

(Loss) income from continuing
operations, net of taxes

(955)

1,390

(3,340)

(2,905)

Interest expense, net

15,481

15,481

Provision for income taxes

3,942

1,078

5,020

Depreciation and amortization

7,317

1,667

8,984

EBITDA

25,785

4,135

(3,340)

26,580

Restructuring and related charges (1)

2,901

2,901

Transaction costs (2)

7,919

7,919

COVID-19 related costs

200

655

855

Equity in net loss of investee

3,340

3,340

Adjusted EBITDA

$

36,805

$

4,790

$

$

41,595

(1)

Restructuring and related charges include professional fees for strategic initiatives of $2,009 and severance and office close costs of $892.

(2)

Transaction costs consist of fees incurred in the acquisition of Simplura

ModivCare Inc.

Reconciliation of Non-GAAP Financial Measures

Segment Information and Adjusted EBITDA

(in thousands) (Unaudited)

Three Months Ended December 31, 2019

NEMT

Matrix
Investment

Total
Continuing
Operations

Service revenue, net

$

384,833

$

$

384,833

Operating expenses:

Service expense

358,436

$

358,436

General and administrative expense

15,003

$

15,003

Depreciation and amortization

3,840

$

3,840

Total operating expenses

377,279

$

377,279

Operating income

7,554

$

7,554

Other expenses (income):

Interest expense, net

57

$

57

Other income

(78)

$

(78)

Equity in net loss of investee

$

23,526

23,526

Income (loss) from continuing

operations, before income tax

7,575

$

(23,526)

(15,951)

Provision (benefit) for income taxes

1,392

$

(5,905)

(4,513)

Income (loss) from continuing operations,
net of taxes

6,183

$

(17,621)

(11,438)

Interest expense, net

57

$

57

Provision (benefit) for income taxes

1,392

$

(5,905)

(4,513)

Depreciation and amortization

3,840

$

3,840

EBITDA

11,472

$

(23,526)

(12,054)

Restructuring and related charges (1)

1,321

$

1,321

Transaction costs (2)

(2,595)

$

(2,595)

Equity in net loss of investee

$

23,526

23,526

Adjusted EBITDA

$

10,198

$

$

10,198

(1)

Restructuring and related charges include professional services costs of $853, organizational consolidation costs of $312 and severance costs of $156.

(2)

Transaction cost benefits relate to a positive adjustment from the amendment of the Circulation management incentive plan ("MIP")

ModivCare Inc.

Reconciliation of Non-GAAP Financial Measures

Segment Information and Adjusted EBITDA

(in thousands) (Unaudited)

Twelve Months Ended December 31, 2020

NEMT

Personal
Care

Matrix
Investment

Total
Continuing
Operations

Service revenue, net

$

1,314,705

$

53,970

$

$

1,368,675

Operating expenses:

Service expense

1,036,288

42,507

1,078,795

General and administrative expense

133,212

7,327

140,539

Depreciation and amortization

24,516

1,667

26,183

Total operating expenses

1,194,016

51,501

1,245,517

Operating income

120,689

2,469

123,158

Other expenses (income):

Interest expense, net

17,599

17,599

Equity in net income of investee

(8,860)

(8,860)

Income from continuing

operations before income tax

103,090

2,469

8,860

114,419 

Provision for income taxes

23,728

1,077

24,805

Income from continuing operations, net
of taxes

79,362

1,392

8,860

89,614

Interest expense, net

17,599

17,599

Provision for income taxes

23,728

1,077

24,805 

Depreciation and amortization

24,516

1,667

26,183

EBITDA

145,205

4,136

8,860

158,207

Restructuring and related charges (1)

6,179

6,179

Transaction costs (2)

12,619

12,619

COVID-19 related costs

549

655

1,204

Equity in net income of investee

(8,860)

(8,860)

Adjusted EBITDA

$

164,552

$

4,791

$

$

169,343

(1)

Restructuring and related charges include professional fees for strategic initiatives of $3,249 and severance and office close costs of $2,930.

(2)

Transaction costs consist of fees incurred in the acquisitions of Simplura and National MedTrans

ModivCare Inc.

Reconciliation of Non-GAAP Financial Measures

Segment Information and Adjusted EBITDA

(in thousands) (Unaudited)

Twelve Months Ended December 31, 2019

NEMT

Matrix
Investment

Total
Continuing
Operations

Service revenue, net

$

1,509,944

$

$

1,509,944

Operating expenses:

Service expense

1,401,152

1,401,152

General and administrative expense

67,244

67,244

Depreciation and amortization

16,816

16,816

Total operating expenses

1,485,212

1,485,212

Operating income

24,732

24,732

Other expenses (income):

Interest expense, net

850

850

Other Income

(277)

(277)

Equity in net loss of investee

(29,685)

(29,865)

Loss from continuing

operations, before income tax

24,159

(29,865)

(5,706)

Benefit for income taxes

6,877

6,877

Income (loss) from continuing
operations, net of taxes

17,282

(29,865)

(12,583)

Interest expense, net

850

850

Benefit for income taxes

6,877

6,877

Depreciation and amortization

16,816

16,816

EBITDA

41,825

(29,865)

11,960

Restructuring and related charges (1)

6,691

6,691

Transaction costs (2)

2,693

2,693

Equity in net loss of investee

29,865

29,865

Litigation Expense

9

9

Adjusted EBITDA

$

51,218

$

$

51,218

(1)

Restructuring and related charges include organizational consolidation costs of $4,027, severance costs of $1,673, and professional services of $991.

(2)

Transaction costs include certain transaction-related expenses and Circulation MIP.

ModivCare Inc.

Summary Financial Information of Equity Investment in Matrix Medical Network (1)

(in thousands)

(Unaudited)

Three Months Ended December 31,

Twelve Months Ended December 31,

2020

2019

2020

2019

Revenue

$

121,923

$

64,584

$

414,622

$

275,391

Operating expense

114,396

115,122

327,616

292,725

Depreciation and amortization

17,188

9,920

47,594

43,666

Operating income

(9,661)

(60,458)

39,412

(61,000)

Interest expense

4,526

5,889

19,790

24,902

Provision (benefit) for income taxes

(5,409)

(12,048)

4,484

(16,549)

Net income (loss)

(8,778)

(54,299)

15,138

(69,353)

Interest

43.6

%

43.6

%

43.6

%

43.6

%

Net income (loss) - Equity Investment

(3,823)

(23,665)

6,600

(30,226)

Management fee and other

483

139

2,260

541

Equity in net gain (loss) of investee

$

(3,340)

$

(23,526)

$

8,860

$

(29,685)

Cash

$

70,295

$

30,833

Total Debt (2)

$

245,718

$

317,882

(1)

The results of our equity method investment are excluded from the calculation of ModivCare's Adjusted EBITDA and Adjusted Net Income.

(2)

Represents long-term debt, excluding deferred financing costs.

ModivCare Inc.

Reconciliation of Non-GAAP Financial Measures

Adjusted EBITDA: Matrix Medical Network (1)

(in thousands) (Unaudited)

Three Months Ended December 31,

Twelve Months Ended December 31,

2020

2019

2020

2019

Revenue

$

121,923

$

64,584

$

414,622

$

275,391

Operating expense

114,396

115,122

327,616

292,725

Depreciation and amortization

17,188

9,920

47,594

43,666

Operating income

(9,661)

(60,458)

39,412

(61,000)

Interest expense

4,526

5,889

19,790

24,902

Provision (benefit) for income taxes

(5,409)

(12,048)

4,484

(16,549)

Net income (loss)

(8,778)

(54,299)

15,138

(69,353)

Depreciation and amortization

17,188

9,920

47,594

43,666

Interest expense

4,526

5,889

19,790

24,902

Provision (benefit) for income taxes

(5,409)

(12,048)

4,484

(16,549)

EBITDA

7,527

(50,538)

87,006

(17,334)

Management fees

1,055

398

4,893

2,196

Restructuring expense

4,759

8,540

Integration costs

67

67

1,488

Severance costs

22

1,122

1,255

1,893

COVID-19 related costs

1,865

8,464

Transaction costs

983

302

3,034

721

Adjusted EBITDA

$

16,278

$

6,340

$

113,259

$

44,020

(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.

Reconciliation of Non-GAAP Financial Measures

Adjusted Net Income and Adjusted Net Income per Common Share:

(in thousands, except share and per share data)

(Unaudited)

Three Months Ended December 31,

Twelve Months Ended December 31,

2020

2019

2020

2019

(Loss) income from continuing operations, net of tax

$

(2,905)

$

(11,438)

$

89,614

$

(4,953)

Restructuring and related charges (1)

2,901

1,321

6,178

7,007

Transaction costs (2)

7,919

(2,595)

12,619

2,693

Equity in net loss (income) of investee

3,340

23,526

(8,860)

29,685

Intangible amortization expense

6,475

1,558

16,694

6,234

Litigation expense, net

9

COVID-19 related costs

200

549

Tax impact of the CARES Act

(10,984)

Tax effected impact of adjustments

(4,050)

(4,459)

(1,733)

(11,448)

Adjusted Net Income

$

13,880

$

7,913

104,077

29,227

Dividends on convertible preferred stock

(1,108)

(1,988)

(4,403)

Income allocated to participating securities

(910)

(7,052)

(3,324)

Adjusted Net Income available to common stockholders

$

13,880

$

5,895

$

95,037

$

21,500

Adjusted EPS

$

0.98

$

0.45

$

6.95

$

1.65

Diluted weighted-average number of common shares outstanding

14,159,965

13,032,551

13,683,308

13,009,141

(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.

 

Investor Relations
Kalle Ahl, The Equity Group
(212) 836-9614
kahl@equityny.com

 

Source: ModivCare Inc.

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