EX-99.1 2 a-ex991xmodvq32022pressrel.htm EX-99.1 Document

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Modivcare Reports Third Quarter 2022
Financial Results and Updates 2022 Guidance

Denver, CO – November 3, 2022 – 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 patient outcomes, today reported financial results for the three and nine months ended September 30, 2022.

Third Quarter 2022 Highlights:
•Revenue of $647.8 million, a 31.4% increase as compared to $493.1 million in Q3 2021
•Net loss of $28.5 million or $2.03 per diluted common share was primarily attributable to a goodwill impairment for Matrix
•Adjusted EBITDA of $51.8 million, Adjusted Net Income of $22.7 million and Adjusted EPS of $1.61
•Net cash used in operating activities during the quarter of $5.7 million
•Cash and cash equivalents of $72.7 million as of September 30, 2022, with $1,000.0 million principal amount of debt outstanding related to the Senior Unsecured Notes due 2025 and 2029
•Undrawn $325.0 million revolving credit facility as of September 30, 2022

“We delivered another solid quarter highlighted by over 30 percent revenue growth as compared to the same quarter last year, driven by 23 percent membership growth from our non-emergency medical transportation business and 43 percent revenue growth from our personal care business,” said Heath Sampson, President and Chief Executive Officer. “Modivcare is a uniquely positioned supportive care platform company focused on addressing the social determinants of health for our country’s most vulnerable population. Our team is focused on executing our plan to provide high-quality care and the best experience to our members while we also progress on cross-selling, bundling, and value-based care initiatives. I am very excited about the opportunity to continue to improve outcomes for our members and reduce costs through our services while creating meaningful long-term shareholder value. I want to thank our team members at Modivcare for their hard work and dedication executing our purpose and vision this quarter.”

Third Quarter 2022 Results

For the third quarter of 2022, the Company reported revenue of $647.8 million, an increase of 31.4% from $493.1 million in the third quarter of 2021.

Operating income was $12.4 million, or 1.9% of revenue, in the third quarter of 2022, compared to operating income of $13.0 million, or 2.6% of revenue, in the third quarter of 2021. Net loss in the third quarter of 2022 was $28.5 million, or $2.03 per diluted common share, compared to net loss of $7.6 million, or $0.54 per diluted common share, in the third quarter of 2021. Our net loss in the third quarter of 2022 is attributable primarily to a loss from our equity investment in Matrix of $26.4 million, net of tax, due to a goodwill impairment taken by one of their segments.

Adjusted EBITDA was $51.8 million, or 8.0% of revenue, in the third quarter of 2022, compared to $44.3 million, or 9.0% of revenue, in the third quarter of 2021.

Adjusted Net Income in the third quarter of 2022 was $22.7 million, or $1.61 per diluted common share, compared to $23.1 million, or $1.63 per diluted common share, in the third quarter of 2021.

The year-over-year increase in revenue was primarily due to incremental revenue of $34.5 million and $12.5 million associated with the acquisitions of Care Finders and VRI, respectively. NEMT revenue also increased year-over-year due to higher trip volume, which drove higher revenue per member in the third quarter of 2022.

Adjusted EBITDA increased in the third quarter of 2022 due to incremental contribution from Care Finders and VRI. This was partially offset by higher corporate general and administrative cost as the Company continued to make investments in its employees and technology.



Updated 2022 Guidance

We are updating our 2022 guidance as follows ($ in millions):

UpdatedPrevious
LowHighLowHigh
Revenue$2,450 $2,475 $2,375 $2,400 
Adjusted EBITDA$210 $220 $210 $220 

Guidance excludes the effects of any future merger or acquisition activity and is based on the current operating environment.

Organizational Consolidation and Change in Segments

We operate four reportable business segments: NEMT, Personal Care, RPM, and Corporate and Other. Effective January 1, 2022, the Company completed its segment reorganization which resulted in the addition of a Corporate segment that includes the costs associated with the Company's corporate operations. The operating results of our Corporate segment include our activities related to executive, accounting, finance, internal audit, tax, legal and certain strategic and corporate development functions for each segment, as well as the results of our Matrix investment. The Company reclassified certain costs associated with this reorganization for the three and nine months ended September 30, 2021 to conform to this presentation.

Third Quarter Earnings Conference Call

Modivcare will hold a conference call to discuss its financial results on Thursday, November 3, 2022 at 8:00 a.m. ET. To access the call, please dial:

US toll-free: 1 (888) 428-7458
International: 1 (862) 298-0702

You may also access the conference call via webcast at investors.modivcare.com, where the call will also be archived.

About Modivcare

Modivcare Inc. (Nasdaq: MODV) is a technology-enabled healthcare services company that provides a platform 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 care and remote patient monitoring. To learn more about Modivcare, please visit www.modivcare.com.

Non-GAAP Financial Measures and Adjustments

In addition to the financial measures prepared in accordance with generally accepted accounting principles in the United States ("GAAP"), this press release includes EBITDA, Adjusted EBITDA, Adjusted EBITDA margin and Adjusted G&A expense for the Company and its segments, and Adjusted Net Income and Adjusted EPS for the Company, which are performance measures that are not recognized under GAAP. EBITDA is defined as net income (loss) before: (1) interest expense, net, (2) provision (benefit) for income taxes and (3) depreciation and amortization. Adjusted EBITDA is calculated as EBITDA before (as applicable): (1) restructuring and related charges, including severance and organizational consolidation costs and professional services fees, (2) certain transaction and related costs, (3) cash settled equity, (4) stock-based compensation, (5) COVID-19 related costs, net of grant income, and (6) equity in net (income) loss of investee, net of tax. Adjusted EBITDA margin is calculated as Adjusted EBITDA, divided by service revenue, net. Adjusted Net Income is calculated as net income (loss) before: (1) restructuring and related charges, including severance and organizational consolidation costs and professional services fees (2) certain transaction and related costs, (3) cash settled equity, (4) stock-based compensation, (5) equity in net (income) loss of investee, net of tax (6) intangible amortization expense, (7) COVID-19 related costs, net of grant income, (8) transaction related financing expense, and (9) the income tax impact of such adjustments. Adjusted EPS is calculated as Adjusted Net Income divided by the diluted weighted-average number of common shares outstanding as calculated for Adjusted Net Income. Adjusted G&A expense is calculated as G&A expense before (as applicable): (1) restructuring and related charges, (2) transaction costs, (3) cash settled equity, and (4) stock-based compensation. We do not provide updated guidance for net income (loss) in this presentation on a basis consistent with GAAP or a reconciliation of forward-looking non-GAAP financial measures to their most directly comparable GAAP financial measures on a forward-looking basis because we are unable


to predict items contained in the GAAP financial measures without unreasonable efforts. Our non-GAAP performance measures exclude 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. As a result, our net income 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. The updated guidance discussed herein constitutes forward-looking statements. 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 others for the financial condition of our equity investment in Matrix.

The Company has provided additional information about the risks facing our business in our annual report on Form 10-K and subsequent periodic and current reports most recently filed 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.








Investor Relations Contact
Kevin Ellich,
Head of Investor Relations
(303) 728-7012
Kevin.Ellich@modivcare.com


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Modivcare Inc.
Unaudited Condensed Consolidated Statements of Operations
(in thousands, except share and per share data)
Three months ended September 30,Nine months ended September 30,
2022202120222021
Service revenue, net$647,782 $493,059 $1,850,472 $1,421,117 
Grant income789 — 4,587 3,500 
Operating expenses:    
    Service expense534,563 399,272 1,498,108 1,139,170 
    General and administrative expense75,889 68,205 232,108 179,595 
    Depreciation and amortization25,672 12,608 74,376 36,667 
Total operating expenses636,124 480,085 1,804,592 1,355,432 
Operating income12,447 12,974 50,467 69,185 
Other expenses:
    Interest expense, net15,557 17,702 46,429 34,412 
Income (loss) before income taxes and equity method investment
(3,110)(4,728)4,038 34,773 
Provision (benefit) for income taxes(1,053)(2,001)877 8,409 
Equity in net loss of investee, net of tax26,448 4,845 28,020 1,424 
Net income (loss)$(28,505)$(7,572)$(24,859)$24,940 
Earnings (loss) per common share:
Basic$(2.03)$(0.54)$(1.77)$1.77 
Diluted$(2.03)$(0.54)$(1.77)$1.75 
Weighted-average number of common shares outstanding:
    Basic14,051,794 13,993,438 14,041,224 14,102,371 
    Diluted14,051,794 13,993,438 14,041,224 14,278,331 

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Modivcare Inc.
Unaudited Condensed Consolidated Balance Sheets
(in thousands)
September 30, 2022December 31, 2021
Assets
Current assets:
    Cash and cash equivalents$72,703 $133,139 
    Accounts receivable, net266,177 233,121 
    Other current assets (1)
42,826 43,574 
Total current assets381,706 409,834 
Property and equipment, net67,413 53,549 
Goodwill and intangible assets, net1,428,210 1,415,000 
Equity investment43,477 83,069 
Operating lease right-of-use assets38,368 43,750 
Other long-term assets30,671 22,223 
Total assets$1,989,845 $2,027,425 
Liabilities and stockholders' equity
Current liabilities:
Accounts payable$44,242 $8,690 
Accrued contract payables243,800 281,586 
Accrued expenses and other current liabilities 145,217 123,791 
Accrued transportation costs90,114 103,294 
Current portion of operating lease liabilities10,134 9,873 
Total current liabilities533,507 527,234 
Long-term debt, net of deferred financing costs978,301 975,225 
Operating lease liabilities, less current portion30,595 34,524 
Other long-term liabilities (2)
93,294 117,175 
Total liabilities1,635,697 1,654,158 
Stockholders' equity
Stockholders' equity354,148 373,267 
Total liabilities and stockholders' equity
$1,989,845 $2,027,425 

(1)     Includes other receivables, prepaid expenses and other current assets and short-term restricted cash.
(2)     Includes other long-term liabilities and deferred tax liabilities.

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Modivcare Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
(in thousands)
Nine months ended September 30,
20222021
Operating activities
Net income (loss)$(24,859)$24,940 
  Depreciation and amortization74,376 36,667 
  Stock-based compensation5,152 4,225 
  Equity in net loss of investee38,883 1,978 
Deferred income taxes(31,232)(3,295)
Reduction of right-of-use asset8,680 8,681 
Other non-cash items (1)
1,208 463 
  Changes in working capital (2)
(26,682)101,035 
Net cash provided by operating activities45,526 174,694 
Investing activities
Purchase of property and equipment(25,518)(13,852)
Acquisition, net of cash acquired(78,872)(667,228)
Net cash used in investing activities(104,390)(681,080)
Financing activities
Proceeds from debt100,000 625,000 
Repayment of debt(100,000)(125,000)
Debt issuance costs(2,415)(13,486)
Repurchase of common stock, for treasury— (39,040)
Proceeds from common stock issued pursuant to stock option exercise
1,237 3,099 
Restricted stock surrendered for employee tax payment(649)(851)
Net cash provided by (used in) financing activities(1,827)449,722 
Net change in cash, cash equivalents and restricted cash(60,691)(56,664)
Cash, cash equivalents and restricted cash at beginning of period133,422 183,356 
Cash, cash equivalents and restricted cash at end of period$72,731 $126,692 

(1) Includes provision for doubtful accounts and amortization of deferred financing costs and debt discount.
(2) Includes accounts receivable and other receivables, prepaid expenses and other current assets, accrued contract payables, accounts payable and accrued expenses, accrued transportation costs and other long-term liabilities.

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Modivcare Inc.
Unaudited Reconciliation of Non-GAAP Financial Measures
Segment Information and Adjusted EBITDA
(in thousands)

Three months ended September 30, 2022
NEMTPersonal CareRPM
Corporate (3)
Total
Service revenue, net$459,796 $169,226 $18,760 $— $647,782 
Grant income— 789 — — 789 
Operating expenses:
  Service expense394,981 132,746 6,836 — 534,563 
  General and administrative expense31,815 22,057 5,816 16,201 75,889 
  Depreciation and amortization7,079 12,919 5,467 207 25,672 
Total operating expenses433,875 167,722 18,119 16,408 636,124 
Operating income (loss)25,921 2,293 641 (16,408)12,447 
Other expenses:
Interest expense, net— — — 15,557 15,557 
Income (loss) before income taxes and equity method investment25,921 2,293 641 (31,965)(3,110)
Provision (benefit) for income taxes6,978 661 179 (8,871)(1,053)
Equity in net loss (income) of investee, net of tax(208)— — 26,656 26,448 
Net income (loss)19,151 1,632 462 (49,750)(28,505)
Interest expense, net— — — 15,557 15,557 
Provision (benefit) for income taxes6,978 661 179 (8,871)(1,053)
Depreciation and amortization7,079 12,919 5,467 207 25,672 
EBITDA33,208 15,212 6,108 (42,857)11,671 
Restructuring and related charges (1)
902 582 39 565 2,088 
Transaction costs (2)
5,506 2,231 471 2,691 10,899 
Cash settled equity— — — 82 82 
Stock-based compensation— — — 1 1 
COVID-19 related costs, net of grant income(51)659 — — 608 
Equity in net loss (income) of investee, net of tax(208)— — 26,656 26,448 
Adjusted EBITDA$39,357 $18,684 $6,618 $(12,862)$51,797 

(1) Restructuring and related charges include severance, organizational consolidation costs and professional fees.
(2) Transaction costs include integration efforts at recently acquired subsidiaries related to Sarbanes-Oxley Act of 2002 ("SOX") compliance and acquisition costs.
(3) Effective January 1, 2022, the Company completed its segment reorganization which resulted in the addition of a Corporate segment that includes the costs associated with the Company's corporate operations. Through this reorganization, it was also determined that the Matrix Investment is no longer a reportable segment, and is now reported within the Corporate segment. Prior period segment amounts have been reclassified to conform to the current presentation.
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Modivcare Inc.
Unaudited Reconciliation of Non-GAAP Financial Measures
Segment Information and Adjusted EBITDA
(in thousands)

Three months ended September 30, 2021
NEMTPersonal CareRPM
Corporate (3)
Total
Service revenue, net$372,992 $118,503 $1,564 $— $493,059 
Grant income— — — — — 
Operating expenses:
  Service expense304,398 94,107 767 — 399,272 
  General and administrative expense29,875 15,802 216 22,312 68,205 
  Depreciation and amortization7,496 4,912 200 — 12,608 
Total operating expenses341,769 114,821 1,183 22,312 480,085 
Operating income (loss)31,223 3,682 381 (22,312)12,974 
Interest expense, net— — — 17,702 17,702 
Income (loss) before income taxes and equity method investment31,223 3,682 381 (40,014)(4,728)
Provision (benefit) for income taxes6,956 838 106 (9,901)(2,001)
Equity in net loss of investee, net of tax— — — 4,845 4,845 
Net income (loss)24,267 2,844 275 (34,958)(7,572)
Interest expense, net— — — 17,702 17,702 
Provision (benefit) for income taxes6,956 838 106 (9,901)(2,001)
Depreciation and amortization7,496 4,912 200 — 12,608 
EBITDA38,719 8,594 581 (27,157)20,737 
Restructuring and related charges (1)
2,521 — — 717 3,238 
Transaction costs (2)
376 1,177 — 9,739 11,292 
Cash settled equity— — — 2,600 2,600 
Stock-based compensation— — — 1,218 1,218 
COVID-19 related costs, net of grant income165 229 — — 394 
Equity in net loss of investee, net of tax— — — 4,845 4,845 
Adjusted EBITDA$41,781 $10,000 $581 $(8,038)$44,324 

(1) Restructuring and related charges include severance, organizational consolidation costs and professional fees.
(2) Transaction costs include Circulation MIP costs and certain transaction-related expenses.
(3) Effective January 1, 2022, the Company completed its segment reorganization which resulted in the addition of a Corporate segment that includes the costs associated with the Company's corporate operations. Through this reorganization, it was also determined that the Matrix Investment is no longer a reportable segment, and is now reported within the Corporate segment. Prior period segment amounts have been reclassified to conform to the current presentation.

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Modivcare Inc.
Unaudited Reconciliation of Non-GAAP Financial Measures
Segment Information and Adjusted EBITDA
(in thousands)

Nine months ended September 30, 2022
NEMTPersonal CareRPM
Corporate (3)
Total
Service revenue, net$1,309,449 $491,661 $49,362 $— $1,850,472 
Grant income— 4,587 — — 4,587 
Operating expenses:
  Service expense1,100,801 379,423 17,884 — 1,498,108 
  General and administrative expense102,736 68,536 17,520 43,316 232,108 
  Depreciation and amortization21,576 37,976 14,201 623 74,376 
Total operating expenses1,225,113 485,935 49,605 43,939 1,804,592 
Operating income (loss)84,336 10,313 (243)(43,939)50,467 
Interest expense, net— — — 46,429 46,429 
Income (loss) before income taxes and equity method investment84,336 10,313 (243)(90,368)4,038 
Provision (benefit) for income taxes23,116 2,902 (68)(25,073)877 
Equity in net loss (income) of investee, net of tax(143)— — 28,163 28,020 
Net income (loss)61,363 7,411 (175)(93,458)(24,859)
Interest expense, net— — — 46,429 46,429 
Provision (benefit) for income taxes23,116 2,902 (68)(25,073)877 
Depreciation and amortization21,576 37,976 14,201 623 74,376 
EBITDA106,055 48,289 13,958 (71,479)96,823 
Restructuring and related charges (1)
11,359 763 63 950 13,135 
Transaction costs (2)
5,506 6,334 2,753 7,719 22,312 
Cash settled equity— — — 89 89 
Stock-based compensation— 190 86 3,861 4,137 
COVID-19 related costs, net of grant income105 (2,370)— — (2,265)
Equity in net loss (income) of investee, net of tax(143)— — 28,163 28,020 
Adjusted EBITDA$122,882 $53,206 $16,860 $(30,697)$162,251 

(1) Restructuring and related charges include severance, organizational consolidation costs and professional fees.
(2) Transaction costs include SOX integration efforts at recently acquired subsidiaries and acquisition costs.
(3) Effective January 1, 2022, the Company completed its segment reorganization which resulted in the addition of a Corporate segment that includes the costs associated with the Company's corporate operations. Through this reorganization, it was also determined that the Matrix Investment is no longer a reportable segment, and is now reported within the Corporate segment. Prior period segment amounts have been reclassified to conform to the current presentation.

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Modivcare Inc.
Unaudited Reconciliation of Non-GAAP Financial Measures
Segment Information and Adjusted EBITDA
(in thousands)

Nine months ended September 30, 2021
NEMTPersonal CareRPM
Corporate (3)
Total
Service revenue, net$1,081,168 $338,385 $1,564 $— $1,421,117 
Grant income— 3,500 — — 3,500 
Operating expenses:
  Service expense869,470 268,933 767 — 1,139,170 
  General and administrative expense85,961 45,606 216 47,812 179,595 
  Depreciation and amortization21,744 14,723 200 — 36,667 
Total operating expenses977,175 329,262 1,183 47,812 1,355,432 
Operating income (loss)103,993 12,623 381 (47,812)69,185 
Interest expense, net— — — 34,412 34,412 
Income (loss) before income taxes and equity method investment103,993 12,623 381 (82,224)34,773 
Provision (benefit) for income taxes26,379 3,194 106 (21,270)8,409 
Equity in net loss of investee, net of tax— — — 1,424 1,424 
Net income (loss)77,614 9,429 275 (62,378)24,940 
Interest expense, net— — — 34,412 34,412 
Provision (benefit) for income taxes26,379 3,194 106 (21,270)8,409 
Depreciation and amortization21,744 14,723 200 — 36,667 
EBITDA125,737 27,346 581 (49,236)104,428 
Restructuring and related charges (1)
10,059 — — 1,480 11,539 
Transaction costs (2)
586 3,467 — 14,383 18,436 
Cash settled equity— — — 9,145 9,145 
Stock-based compensation— 76 — 3,707 3,783 
COVID-19 related costs, net of grant income618 (1,871)— — (1,253)
Equity in net loss of investee, net of tax— — — 1,424 1,424 
Adjusted EBITDA$137,000 $29,018 $581 $(19,097)$147,502 

(1) Restructuring and related charges include severance, organizational consolidation costs and professional fees.
(2) Transaction costs include Circulation management incentive plan ("MIP") costs and certain transaction-related expenses.
(3) Effective January 1, 2022, the Company completed its segment reorganization which resulted in the addition of a Corporate segment that includes the costs associated with the Company's corporate operations. Through this reorganization, it was also determined that the Matrix Investment is no longer a reportable segment, and is now reported within the Corporate segment. Prior period segment amounts have been reclassified to conform to the current presentation.

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Modivcare Inc.
Unaudited Reconciliation of Non-GAAP Financial Measures
Adjusted Net Income and Adjusted Net Income per Common Share
(in thousands, except share and per share data)

Three months ended September 30,Nine months ended September 30,
2022202120222021
Net income (loss)$(28,505)$(7,572)$(24,859)$24,940 
Restructuring and related charges(1)
2,088 3,238 13,135 11,539 
Transaction costs(2)
10,899 11,292 22,312 18,436 
Cash settled equity82 2,600 89 9,145 
Stock-based compensation1 1,218 4,137 3,783 
Equity in net loss of investee, net of tax26,448 4,845 28,020 1,424 
Intangible amortization expense20,727 9,177 59,978 27,827 
Transaction related financing expense— 6,630 — 6,630 
COVID-19 related costs, net of grant income608 394 (2,265)(1,253)
Tax effected impact of adjustments(9,649)(8,763)(26,964)(20,034)
Adjusted Net Income$22,699 $23,059 $73,583 $82,437 
Adjusted EPS$1.61 $1.63 $5.21 $5.77 
Diluted weighted-average number of common shares outstanding14,110,928 14,161,806 14,119,598 14,278,331 

(1) Restructuring and related charges include severance, organizational consolidation costs and professional fees.
(2) Transaction costs include certain transaction-related expenses and SOX integration efforts.

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Modivcare Inc.
Unaudited Key Statistical and Financial Data
(in thousands, except for statistical data)

Three months endedNine months endedThree months ended
September 30, 2022September 30, 2021% ChangeSeptember 30, 2022September 30, 2021% ChangeJune 30, 2022QoQ % Change
NEMT Segment
Service revenue, net$459,796 $372,992 23.3 %$1,309,449 $1,081,168 21.1 %$448,733 2.5 %
Purchased services expense340,138 256,750 32.5 %935,298 725,059 29.0 %317,213 7.2 %
Payroll and other expense54,843 47,648 15.1 %165,503 144,411 14.6 %56,511 (3.0)%
Service expense$394,981 $304,398 29.8 %$1,100,801 $869,470 26.6 %$373,724 5.7 %
Gross profit$64,815 $68,594 (5.5)%$208,648 $211,698 (1.4)%$75,009 (13.6)%
Gross margin14.1 %18.4 %15.9 %19.6 %16.7 %
G&A expense$31,815 $29,875 6.5 %$102,736 $85,961 19.5 %$33,588 (5.3)%
G&A expense adjustments:
Restructuring and related charges902 2,521 (64.2)%11,359 10,059 12.9 %4,852 (81.4)%
Transaction costs5,506 376 1364.4 %5,506 586 —%— —%
Adjusted G&A expense$25,407 $26,978 (5.8)%$85,871 $75,316 14.0 %$28,736 (11.6)%
Adjusted G&A expense % of revenue5.5 %7.2 %6.6 %7.0 %6.4 %
Net income$19,151 $24,267 (21.1)%$61,363 $77,614 (20.9)%$24,466 (21.7)%
Net income margin4.2 %6.5 %4.7 %7.2 %5.5 %
Adjusted EBITDA$39,357 $41,781 (5.8)%$122,882 $137,000 (10.3)%$46,307 (15.0)%
Adjusted EBITDA margin8.6 %11.2 %9.4 %12.7 %10.3 %
Total paid trips (in thousands)8,045 6,928 16.1 %22,987 20,204 13.8 %7,831 2.7 %
Average monthly members (in thousands)36,026 29,387 22.6 %33,998 29,863 13.8 %33,792 6.6 %
Revenue per member per month$4.25 $4.23 0.5 %$4.28 $4.02 6.5 %$4.43 (4.1)%
Revenue per trip$57.15 $53.84 6.1 %$56.96 $53.51 6.4 %$57.30 (0.3)%
Monthly utilization7.4 %7.9 %7.5 %7.5 %7.7 %
Purchased services per trip$42.28 $37.06 14.1 %$40.69 $35.89 13.4 %$40.51 4.4 %
Payroll and other per trip$6.82 $6.88 (0.9)%$7.20 $7.15 0.7 %$7.22 (5.5)%
Total service expense per trip$49.10 $43.94 11.7 %$47.89 $43.04 11.3 %$47.73 2.9 %

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Modivcare Inc.
Unaudited Key Statistical and Financial Data
(in thousands, except for statistical data)

Three months endedNine months endedThree months ended
September 30, 2022September 30, 2021% ChangeSeptember 30, 2022September 30, 2021% ChangeJune 30, 2022QoQ % Change
Personal Care Segment
Service revenue, net$169,226 $118,503 42.8 %$491,661 $338,385 45.3 %$162,737 4.0 %
Service expense 132,746 94,107 41.1 %379,423 268,933 41.1 %124,445 6.7 %
Gross profit$36,480 $24,396 49.5 %$112,238 $69,452 61.6 %$38,292 (4.7)%
Gross Margin21.6 %20.6 %22.8 %20.5 %23.5 %
G&A expense$22,057 $15,802 39.6 %$68,536 $45,606 50.3 %$23,346 (5.5)%
G&A expense adjustments
Restructuring and related charges582 — — %763 — — %— — %
Transaction costs2,231 1,177 89.5 %6,334 3,467 82.7 %2,830 (21.2)%
Stock-based compensation— — — %190 76 150.0 %173 (100.0)%
Adjusted G&A expense$19,244 $14,625 31.6 %$61,249 $42,063 45.6 %$20,343 (5.4)%
Adjusted G&A expense % of revenue11.4 %12.3 %12.5 %12.4 %12.5 %
Net income$1,632 $2,844 (42.6)%$7,411 $9,429 (21.4)%$4,123 (60.4)%
Net income margin1.0 %2.4 %1.5 %2.8 %2.5 %
Adjusted EBITDA$18,684 $10,000 86.8 %$53,206 $29,018 83.4 %$17,901 4.4 %
Adjusted EBITDA margin11.0 %8.4 %10.8 %8.6 %11.0 %
Total hours (in thousands)6,836 5,075 34.7 %20,076 14,331 40.1 %6,705 2.0 %
Revenue per hour$24.76 $23.35 6.0 %$24.49 $23.61 3.7 %$24.27 2.0 %
Service expense per hour$19.42 $18.54 4.7 %$18.90 $18.77 0.7 %$18.56 4.6 %

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Modivcare Inc.
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Modivcare Inc.
Unaudited Key Statistical and Financial Data
(in thousands, except for statistical data)

Three months endedNine months endedThree months ended
September 30, 2022September 30, 2021% ChangeSeptember 30, 2022September 30, 2021% ChangeJune 30, 2022QoQ % Change
RPM Segment
Service revenue, net$18,760 $1,564 N/M$49,362 $1,564 N/M$16,745 12.0 %
Service expense6,836 767 N/M17,884 767 N/M6,061 12.8 %
Gross profit$11,924 $797 N/M$31,478 $797 N/M$10,684 11.6 %
Gross Margin63.6 %51.0 %63.8 %51.0 %63.8 %
G&A expense$5,816 $216 N/M$17,520 $216 N/M$6,742 (13.7)%
G&A expense adjustments
Restructuring and related charges39 — N/M63 — N/M— — %
Transaction costs471 — N/M2,753 — N/M1,635 (71.2)%
Stock-based compensation— — N/M86 — N/M57 (100.0)%
Adjusted G&A expense$5,306 $216 N/M$14,618 $216 N/M$5,050 5.1 %
Adjusted G&A expense % of revenue28.3 %13.8 %29.6 %13.8 %30.2 %
Net income (loss)$462 $275 N/M$(175)$275 N/M$(475)(197.3)%
Net income (loss) margin2.5 %17.6 %(0.4)%17.6 %(2.8)%
Adjusted EBITDA$6,618 $581 N/M$16,860 $581 N/M$5,634 17.5 %
Adjusted EBITDA margin35.3 %37.1 %34.2 %37.1 %33.6 %
Average monthly members (in thousands)230 N/MN/M201 N/MN/M203 13.3 %
Revenue per member per month$27.19 N/MN/M$27.29 N/MN/M$27.50 (1.1)%
Service expense per member per month$9.91 N/MN/M$9.89 N/MN/M$9.95 (0.4)%

N/M - Not Meaningful. The RPM Segment was established with the acquisition of VRI on September 22, 2021 and as such, these figures are not meaningful for comparative purposes.

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Modivcare Inc.
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Modivcare Inc.
Unaudited Key Statistical and Financial Data
(in thousands)

Three months endedNine months endedThree months ended
September 30, 2022September 30, 2021% ChangeSeptember 30, 2022September 30, 2021% ChangeJune 30, 2022QoQ % Change
Corporate and Other Segment
G&A expense$16,201 $22,312 (27.4)%$43,316 $47,812 (9.4)%$15,735 3.0 %
G&A expense adjustments
Restructuring and related charges565 717 (21.2)%950 1,480 (35.8)%354 59.6 %
Transaction costs2,691 9,739 (72.4)%7,719 14,383 (46.3)%3,237 (16.9)%
Cash settled equity82 2,600 (96.8)%89 9,145 (99.0)%20 310.0 %
Stock-based compensation1 1,218 (99.9)%3,861 3,707 4.2 %2,440 (100.0)%
Adjusted G&A expense $12,862 $8,038 60.0 %$30,697 $19,097 60.7 %$9,684 32.8 %
Adjusted G&A expense % of consolidated revenue2.0 %1.6 %1.7 %1.3 %1.5 %

Three months endedNine months endedThree months ended
September 30, 2022September 30, 2021% ChangeSeptember 30, 2022September 30, 2021% ChangeJune 30, 2022QoQ % Change
Consolidated Modivcare
G&A expense$75,889 $68,205 11.3 %$232,108 $179,595 29.2 %$79,411 (4.4)%
G&A expense adjustments
Restructuring and related charges2,088 3,238 (35.5)%13,135 11,539 13.8 %5,206 (59.9)%
Transaction costs10,899 11,292 (3.5)%22,312 18,436 21.0 %7,702 41.5 %
Cash settled equity82 2,600 (96.8)%89 9,145 (99.0)%20 310.0 %
Stock-based compensation1 1,218 (99.9)%4,137 3,783 9.4 %2,670 (100.0)%
Adjusted G&A expense $62,819 $49,857 26.0 %$192,435 $136,692 40.8 %$63,813 (1.6)%
Adjusted G&A expense % of revenue9.7 %10.1 %10.4 %9.6 %10.2 %

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