ModivCare (MODV) Q3 2024 earnings summary

Executive summary

• Q3 2024 service revenue was $702 million, up 2.2% year-over-year, driven by growth in PCS and NEMT, while RPM declined; operational improvements and cost savings supported results.

• Adjusted EBITDA was $43.2 million (6.2% margin), down 15.9% year-over-year, mainly due to higher utilization, contract attrition, and increased service expenses.

• Net loss for Q3 2024 was $26.6 million (loss per share: $1.87), compared to $4.3 million in Q3 2023, primarily due to higher interest expense and an $11.8 million debt extinguishment loss.

• The company amended its credit agreement for temporary covenant relief and refinanced $500 million in Senior Notes with a $525 million Term Loan Facility.

• Substantial doubt exists about the company’s ability to meet obligations within one year due to extended receivables collection periods and covenant compliance risks.

Financial highlights

• Q3 2024 revenue was $702 million, up 2.2% year-over-year; NEMT revenue up 1.3%, PCS up 4.7%, RPM down 1.7%.

• Adjusted EBITDA was $43.2 million (6.2% of revenue), supported by strong PCS and RPM performance and NEMT cost savings.

• Free cash flow for the quarter was $1.5 million; cash provided by operations was $9.3 million.

• Q3 2024 operating income was $5.3 million (0.7% of revenue), down from $12 million in Q3 2023.

• Interest expense increased by $10.6 million year-over-year; $11.8 million loss on debt extinguishment was recorded.

Outlook and guidance

• 2024 revenue guidance affirmed at $2.7–$2.9 billion; adjusted EBITDA guidance at $170–$180 million.

• Adjusted EBITDA growth in excess of 10% is expected in 2025, driven by membership growth, new contracts, and cost savings.

• Guidance excludes effects of future M&A or disposition activity and is based on the current operating environment.

• More details on 2025 outlook to be provided with Q4 and full-year 2024 results.

• Management is pursuing further amendments to debt covenants and additional liquidity measures but cannot assure success.