ModivCare (MODV) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue was $698.3 million, flat year-over-year, with Adjusted EBITDA of $45.4 million, down from $52.4 million in Q2 2023 but up 41% sequentially; net loss was $128.9 million, mainly due to a $105.3 million non-cash goodwill impairment in the RPM segment.

• Adjusted net loss was $0.4 million, and Adjusted EPS improved to $(0.03) from $(0.09) in Q1 2024.

• Cost-saving and digital transformation initiatives in NEMT drove $7 million in net cost savings in Q2, with a 2024 target of $30–$50 million.

• Free cash flow for Q2 was negative $62 million, with cash used in operations of $55.3 million; liquidity remains sufficient, and positive free cash flow is expected for the full year.

• Debt refinancing was completed with a new $525 million Term Loan B, and deleveraging remains a top priority.

Financial highlights

• Q2 2024 revenue was $698.3 million, nearly unchanged from Q2 2023; YTD 2024 revenue was $1.38 billion, up 1.6% year-over-year.

• NEMT revenue was $490.7 million, down 1.3% year-over-year but up 2.4% sequentially; NEMT adjusted EBITDA was $35.3 million, up 22.6% year-over-year.

• PCS revenue was $186.6 million, up 3.5% year-over-year; adjusted EBITDA was $15.3 million, down 36.7% year-over-year but up 35.4% sequentially.

• RPM revenue was $19.0 million, down 1% year-over-year; adjusted EBITDA was $6.1 million, down 14.8% year-over-year.

• Q2 2024 net loss was $128.9 million; operating loss was $98.9 million, improved from $175.8 million in Q2 2023.

Outlook and guidance

• 2024 revenue guidance reaffirmed at $2.7–$2.9 billion; adjusted EBITDA guidance lowered to $185–$195 million due to PCS headwinds.

• Expect to exit 2024 with a seasonally adjusted run rate of $210–$220 million in Adjusted EBITDA.

• Adjusted EBITDA to free cash flow conversion rate expected to be ~30% exiting 2024.

• Management expects sufficient liquidity and compliance with covenants for the next twelve months, but notes risks if projections are not met.

• PCS and RPM expected to contribute $13–$15 million of adjusted EBITDA growth in H2 2024.