ModivCare (MODV) Q4 2023 earnings summary

Executive summary

• FY2023 revenue rose 9.9% to $2,751.2M; Adjusted EBITDA declined 8% to $204.4M, and GAAP net loss was $204.5M, including $183.1M of goodwill impairment.

• Q4 revenue increased 7.5% to $702.8M, while Adjusted EBITDA fell to $50.5M from $59.7M amid NEMT service-cost pressure.

• FY2024 guidance: revenue of $2.7B–$2.9B, Adjusted EBITDA of $190M–$210M and free cash flow of $40M–$60M; revenue and EBITDA guidance exclude M&A.

Financial highlights

• FY2023 revenue was $2,751.2M versus $2,504.4M in FY2022; Adjusted EBITDA was $204.4M versus $221.9M.

• Q4 2023 revenue was $702.8M versus $653.9M in Q4 2022; Adjusted EBITDA was $50.5M versus $59.7M.

• FY2023 Adjusted net income was $79.9M and Adjusted EPS was $5.60, versus $103.4M and $7.32; Q4 Adjusted net income was $18.4M and Adjusted EPS was $1.29, versus $29.8M and $2.11.

• Q4 operating income was $15.7M versus $6.6M; FY2023 loss from operations was $139.9M versus income of $57.1M in FY2022.

Outlook and guidance

• FY2024 guidance: revenue of $2.7B–$2.9B and Adjusted EBITDA of $190M–$210M; Q1 guidance: revenue of $650M–$700M and Adjusted EBITDA of $28M–$33M.

• FY2024 Adjusted EBITDA bridge includes a $28M–$32M redetermination headwind, $20M–$24M net cost savings and a $12M–$16M business development contribution.

• FY2024 free cash flow target is $40M–$60M, after $20M–$30M of working-capital use and $10M–$20M of technology and restructuring investment.

• NEMT membership is projected at 29.7M in Q1 and 32.3M in Q4 2024; projected Q4 paid trips are 9.7M–9.9M, with gross profit per trip of $6.50–$7.50.

• Management cited ~$150M of ACV implementation from Q2 and $30M in cost savings to offset redetermination and normalized utilization pressures; run-rate benefits are expected to increase in 2025.