ModivCare (MODV) 4 May 232023 Q1 Earnings call transcript

Good morning and welcome to ModivCare's First Quarter 2023 Financial Results Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] Please note, this conference is being recorded.

I will now turn the call over to Kevin Ellich, Head of Investor Relations. Mr. begin. now may you Ellich,

Good morning XXXX ModivCare's quarter for thank conference call you earnings joining and first and webcast.

of and Joining me Officer, Shepard, Officer; Executive President, ModivCare's Head Ken today is and Heath Chief Sampson, Finance. Chief Financial

materially Before events we remind during Litigation expectations. under contained call, that from today's and Reform statements cause want to Act. will results forward-looking involve Private may company's everyone other release these risks, make uncertainties, filings that regarding management the factors started, SEC. today's get the in I differ and to Securities or These the actual in Information statements with factors is press

to most in our discuss also financial to definition non-GAAP will included the investors. directly We measures a is A and these extent to reconciliation X-K. comparable financial additional applicable, measures Form GAAP the to provide of press information measures non-GAAP and release financial

be be will conference open A our for will financial hour will call and Heath Shepard opening morning, will replay begin then and results; after our this questions. the concludes Sampson with available remarks, of posted modivcare.com. approximately This Ken call one review call website, we’ll on today's

turn the to With that, over I'll Heath. call

Today, solid were division, which with driven to EBITDA million. care XX% growth personal for home in-line by welcome first Thanks quarter a in Strong our XX% includes first results line at our was our mobility business, and XX% $XX million. Kevin, from top revenue and monitoring. warm year-over-year a the first remote and services expectations patient Adjusted results grew growth quarter we've earnings as our XXXX call. reported quarter to $XXX

the solutions. in services access create and healthcare growth landscape based to by care care ability and to which to shift is This We care pronounced that characterized delivering innovative comprehensive remain confident provide to commitment supportive care optimism drive cater shareholder home services, towards and evolving our value. supportive our in grounded better

visible platform our are are cut rooted our day. and are execute scalable our initiatives, growth. to expectations XXXX amplifying company, the across entire These focus initiatives and providing and diversifying in Achieving every to our teams a which clarity for strategic and Building entire organization, two-fold. two

enable innate lowest a and multifaceted, cost and operating are growth aim to initiatives sustained platform. revenue Our stable

efficiencies build technologies centered operations through Our to centralizing initiative scalable enhancing realigning platform throughout can effectively our to shared leverage optimizing and and technology is driving company. that efficiently. and our ensure for fit a infrastructure and operating and entire and are purpose around investing customers' and standardizing scale reallocating in includes resources services, This operations our we needs, the

historically through focus initiative have offerings, Our our current been amplify that customer partnerships, importantly our and offerings to customer base more of service new and and diversify customers geographic growth ours. expansion strategic expand and to within aims base a new not

Additionally, I'd Medicaid provide to on services recent and to for the access redetermination. like updates ensuring CMS Medicaid proposal

and of endorse. the and demand. enhance to care the Medicaid acknowledges ensuring increased industry Medicare to services Recently, to CMS commendable Medicaid It for to appreciate wholeheartedly titled role significance is personal a proposal rule Medicaid considering of the the we which services released of is to services intention services. The access centers beneficiaries, and this access that more caregivers the attract necessity

Medicaid Several a There that payments requirement have of provisions compensation. important least to consider. are allocated in rule at notable the the caregiver in particularly attention couple to garnered proposed factors be of XX%

This to is the CMS is this is receive comment First, proposal process. the this period. that a XX-day part will of remember feedback essential standard ample and during rulemaking

is indicates the after issued. four It's also effective final sophistication, necessary change the services until noting worth years oversight, heightened rule proposed on and become care personal this The role attention that leads wouldn't regulation. to

should are to approximately enhance this G&A Second, leverage costs hire accelerating to care of growth resulted XX% if in caregivers, as personal higher reimbursement our variable. revenue operating our rate ability caregivers, channeled and is

and CMS verification care home others. and believe like should training, Including we electronics community systems personal and is costs consider However, attention compliance among services all care The associated growing with visit again commendable. support recruiters, coordinators, providing for based services.

strategic access, of focuses CMS' One pillars is vital our expanding members. on for which

Care. Our order customers the underscores importance an the supportive This and affordable helping of delivering aimed crucial for outcomes. role quality, our at announced in supportive costs health care Also, their home. care boosting services executive others and to administration in play a Biden reduce funding enhance Personal services seniors move

Medicaid redetermination. to like Next, discuss I'd

As eligibility states on Medicaid April system [ph] to the early is of program's stages will re-enrolling X. healthcare The members we were which to many quarters. the able you begin the [redeterminating] think members, up of X last know, of Medicaid in

We the our the of are XX% business expect most from impact of members will be beneficiaries. redetermination approximately on where NEMT Medicaid

redetermination into will the Redetermination few year. new be our As no our the talked the of and is NEMT half that our mentioned we by could on last said, projections XX% unfold quarter, latter from significant expansion, before standard wins we XX% about anticipate next quarters year last market Day. to our membership which as this and impact over contract affected Investor considering during just with in-line membership

would be total overall lead membership. the in volume, members majority of utilizing to a trip individuals, our these to to compared smaller decline the expect which We lower redetermine

shared last XXXX Additionally, a protecting efficiently that large and effort and months. risk or we've ourselves made customers. service for When conscious our effectively of fee exited we been redetermination portion arrangements, a preparing to and the full our XXXX, transition contracts to in we are pandemic for risk over previous several contracts the

trip can financial contractual setting profit contracts significantly as revenue many membership contracts primarily de-risk redetermination on as from from situations, the these risk based volumes reset rates, to impacts redetermination In shared fully by gross membership. the opposed impact offset These from monthly. lower we

XX% at remaining the start to only compared contracts XX% currently Our full capitated pandemic. revenue, for of of approximately risk the account NEMT

negotiations annual actuarial and year we contracts that throughout pricing have contracts, allow the environment. For resets a in pricing to these normalize will continue anticipated us repricing to post-redetermination

can to XX% to relates growth. through it just growth, contract membership, existing Advantage XX% and market redetermination new the As on grow the we Medicare based [indiscernible] our we Medicaid to underlying XXXX that expansion, our wins, market through believe continue

we the we believe redetermination XXXX impact our that as outlook. total, have in from as encapsulated In outlook, XXXX our well

longer-term would to XXXX discuss like I Now, our the guidance and consolidated outlook.

We have and maintained adjusted for our guidance EBITDA revenue XXXX.

our align quarter guidance first with expectations, recognize ramp Although a our the anticipates we year. that throughout internal EBITDA continuing our results

highlight this To provide to in several clarity, key trajectory. I'd that upward our confidence like reinforce factors

receipt annual these to a new with contributions NEMT revenue, ramp contract MCO. gained national new the large win contract, during to for the quarter third Combined, of with nearly contract, First, beginning our mid-single-digit a contract wins to traction have a to expected of year. are NEMT a award contribution intent this in This we've an managed state Medicaid significant new wins. includes and contract

Second, our favorably mobility specific actions throughout division in growth impact will EBITDA our the year.

the more ride needs. to provider cost continue of preferred our providers multi-modal trip drive we model trips throughout type with transportation matching lower as year partnership network narrow to to of the Our expected right we members' per shift our the is transportation and

led of our During our in cost decrease accounted for trip which our to during the compared trips, a last quarter, year, the per first providers sequential XX% quarter. XX% to preferred

and expense for member trip centers. per communication that effective efficient to communication calls initiative interactions our contact also other We drive provide lower our improved to more as we member cost reduced omnichannel expect

We first to made and sequentially, the this last trip compared year. on calls progress during per we reduced front XX%, as quarter X% by

ramp approximately XX% by trips missed throughout our expect reduced revenue in also the we division, sequentially. continued also to we see year. While our profitability home and In to

expected care for standardizing we to scale. functions office progress centralize This centralized Our management by to build critical functions be to the to personal aligned team team care XXX% centralizing functions in end has certain of year, back we year. and personal operational XX continue business made our the of good and as and plan is

With driven as and ongoing increased opening personal continuous caregiver as we by continued the de retention, growth improvement, recruiting several hours expect care of well novos. the also in

novos to quarter, more expect and two the than open XX we During year. this first de opened

Our with for to healthy team contracts of pipeline remote expansion has opportunities segment enterprise existing PERS patient a and EX. traction continues our sales customers referral and between gain cross-selling new monitoring and

addition efficiencies to initiatives as gain and initiatives, taken have cost to and G&A corporate strategy, we our and scale these gives our In ability reduce XXXX. ModivCare profitability Combined, structure home to in to we in the steps these our growth throughout ramp One mobility visibility centralize. align with strong confidence

these achieve EBITDA. ability some we targets. drivers $X XXXX, in of to X of and of addition that remain revenue help million will to and our which key targets I'd and is levers for achieve to like XXXX, X confident XXX In us billion share the adjusted our long-term

by In next wins expect new mobility, high-single-digits over to revenues couple the low-double-digits increase to related expansion we from contract of and membership years. and

of Medicaid strong state and a are contracts We have MCO and coming renewal up for rebid. pipeline that

expect well continued within the grow Advantage Medicare market. our to existing the Medicaid to as We in as market, growth see expand and opportunity

bottom grow confident care NEMT headwinds, benefit. XX% line plans are remains a as beyond. and this that we that to important the and Enhancing only highly The offer mobility near-term of is, are for lot access is administration and opportunity MA to tailwinds the some for business pillar strategic our of despite underpenetrated to current of there XX% XXXX

this the as will business model transportation driven reducing mobility in The earlier. and be second by our is discussed partnership trip cost per multimodal lever

today. Over NEMT reduce per XXs costs trip to expect services or the from unit years, purchase the our of next high couple trip to we $XX per

XXX multimodal performance during QX. Our member on-time as improved basis will over improve partnership model points also satisfaction year-over-year

We that XX% with and messaging to XX% eliminate XX% technologies as our IVA IVR, drive initiative, service from use calls. advanced omnichannel leverage will to we through as systems we technologies efficiency and overall which expense communicate other communication such text other member are can to and also and members operating range today confident reduce

will winning remain the we business, middle-single-digit new personal hours accelerating drivers recruiting by caregiver include reimbursement in and which driven retention long-term and increases, which personal for rate de low-single-digit In growth, care, confident expansion. be novo care,

led growth new other contracts MCO patient monitoring, innovation to which solutions solutions remote traction long-term In our gain continue value-based risk-bearing and arrangements, EX our like are other and our entities. payers by care with drivers

talked really and our differently solution incremental to long-term ability enhances be our paid engagement EX I earlier. that's Our targets that about to

as and in factors member commercial gain traction star engagement to payers satisfaction continue payer important are rating. with We

equity in I'd Although we currently being Matrix an is haven't on to valuation. which current provide not recently, recognized Medical, it update on like commented our investment

as in year-over-year have health operational including year. assessment performance XX% its a quarter, strong, We benefits The that improved first has coming too company's the the increase meaningfully said during it are completed volumes. restructuring last

remain aligned right confident only on million XX% are Matrix range million the a our appropriate the on While is able minority range. to support based Frazier we $XXX the Matrix normalized that of We we with quarter, eventual will adjusted one this at ownership monetize is which the EBITDA $XX to and time. monetization be in will trajectory, in

on compassion meets recent now are and Continuing My with XX culture processes, our the while of first days including accelerating people upgrading as accomplishments. CEO complete, profitability.

place, in enhancements on these our strategy. concentrate With on we can executing

Senior took Anne to caliber healthcare is Having substantial our have a a in of President and home onboard Anne our March, step XX industry President as In most organization. by Anne's a making over as We're ModivCare on a strengthening of highly team experienced welcoming with at Bailey Division. we Executive our served experience. already thrilled executive years Vice and DaVita. significant she's impact recently of leadership Group someone Home

leadership CFO contribute it's to the to only Regarding team. ongoing our not a the find roles, in who cannot overall of their high-performing compromise team, own cohesiveness I but on building individuals essential search. performance also and excel

CFO, a priority right finding the for committed remains new search are we Our person. to and top the

members. results, the call first providing over CFO leaders to to notch team. appreciation relentless our vital to I my the XX want commitment been organization the one to sincere care dedication, excellence Ken our our financial to to of has extend Their unwavering ModivCare I Before, hand hard within supportive work, entire discuss top million key to quarter and

culture have achieved to for team's grateful meets want the I past of accomplishments in substantial and I active compassion the proud also changes in building made am months few participation their profitability. over to operational acknowledge we together. unique I the am of our excellence we've commitment generally the

partners my like support key and also extend I'd heartfelt to thanks and unwavering customers collaboration. valued our for their to

and customers in have we are changes the how key are deliberate how our We continuously made and results we with in together. improving engage partners evident

I'll the who now call pass overview Ken, will financial an the of to provide quarter. performance first our for

morning good Heath everyone. you, and Thank

driven first million, $XX by year-over-year with XXXX was increased year-over-year growth quarter to division. XX% Net while First was in was expectations. our $X flat low-double-digit million, loss million, quarter adjusted XX% and which in approximately revenue growth in-line EBITDA $XXX mobility our and home

of our was decreased in $XXX XX% X% in first revenue a per trip by driven revenue which performance, satisfaction, in NEMT million unit increase per members partnership monthly improve better will focused We member quarter initiatives our per sequentially, efficiencies, to cost multimodal successes early to mobility increase member a remain and reduce drive to increase due outcomes. costs X% and month. and to on lead average continue Transportation model.

customers of X.X% normal initiatives monthly expect occurred sequentially, mentioned Trip from utilization we fourth-quarter, member We per from the first that last volume as to compared will attrition to for ramp utilizing these the while in X% year. the quarter. QX due lower the quarter contract throughout partially X.X%, impact increased to in benefits anticipated increased

from a for increased per NEMT year-over-year G&A first X% $XX service QX. the no EBITDA expense we during adjusted As while quarter reminder, million, was flat due sequentially. impact kept was redetermination adjusted expense down trip, there to

realize will drive help to sequential throughout EBITDA leverage operating mentioned, initiatives the expect Heath XXXX, We which from improvements. additional

due this per X% be X% personal home recruiting $XXX growth the to X% increased hours in in retention hour. Turning normal a revenue experiencing in year-over-year more care, X% reimbursement reimbursement to environment, first a as very strong to XXXX, as expect we After million, growth driven efforts, will year. range growth X% caregiver to division, well our our by and improvements quarter, in revenue in

focus personal service We per for be of million hour first quarter caregiver as expense as at the higher demand adjusted high. for was Personal remains we X.X% end EBITDA this the of could on XX services range growth expect care revenue. or very care

into to traction, margins continued XX% initiatives range. scale to to build will the our care grow gain for improve and expect the As personal build we XX% business gradually

XX% by for XX% In patient year-over-year which our Medical to EBITDA our target. long-term XXXX million, RPM monitoring $XX.X in-line remote margin of Guardian or million from with acquisition driven revenue contribution adjusted RPM $X.X segment increased Monitoring. favorable margin, our was is

continues perform projected supporting business states, we growth monitoring into rates. as to well, our new expand Our

million first receivables. contract balance cash-flow reduction to in sheet, contract consolidated the of payables and Turning was due approximately to million, and from the XXXX cash-flow a our operations of in in use $X quarter million $XX increase $X

the operation have Excluding would these items, our by cash-flow quarter $XX from million. in been better first

than which under represent certain and first with The expectations contracts risk on in payments corridor increase quarter. receivables, in or contract receivables reconciliation our provisions was the higher

collecting which be XXXX. will receivables these in this of we to later However, second the half contribute on will year, cash-flow stronger

were Our and NEMT payables, relate QX primarily in-line certain in at which with a liabilities overpayments million $X contract contract to contracts on reduction. expectations

the will from in expected quarter. have spread in we as first second previously we cash-flow throughout year. a during operations large However, QX one similar This quarter range the settlement result will in being that the be likely

we XXXX, will expect impactful, less and compared year. much be to continue of receivables to payables last For all our contract

will second to $XX $XX timing half with and due more drawn these long-term was generation fixed billion our rates. unsecured $X on sequentially had approximately at ended be quarter We remains debt revolver, issues. the cash-flow our our million first of in million weighted debt However, all flat and cash

of leverage declined Our net pro-forma to as XX, XXXX. March sequentially X.Xx consolidated

which debt XXXX primary achieve our Xx, to of We reduction balanced target strategy to on balance in leverage we and committed the focus continued sheet. growth. a a through remain with allocation combination de-levering net capital disciplined of We expect EBITDA to and

we We fair our Heath guidance. $X.XXX current are $X EBITDA year of in on of consensus the $X.X made think for billion targets a cadence $XXX for revenue adjusted billion. our and of help guidance the full-year should $XXX affirmed to billion and revenue of million the estimates we XXXX. approximation and adjusted to bridge you comments the confident quarterly XXXX our of million guidance in million long-term The call morning our to This EBITDA $XXX remain

up, and results going efficiencies our drive see things quarter initiatives from and expectations first leverage strategic were will operating the with our sum we continue forward. in-line benefits that To to our

Our team grow new working hard is business. win contracts underlying the and to

organization we open them call and were able work provide experience to hard questions. their I our entire dedication. these produce our while This concludes that we want care for to helping remarks. the members. of It's high-quality Before thank solid because our to and best the results, for prepared

Operator, please open questions. the call for

Brian? Jefferies. question from ahead, [Operator from you. comes And Instructions] first Go Tanquilut our Thank Brian

good I given, guys. you, re-determination. I Congrats color the guess, especially Thank appreciate Heath, morning. in all you've

we that with getting up rebate or know maybe reset we're have refund picks contracts you broader like us of the So, about in and can you on we if your thinking utilization, and but to payer volumes question what so, – you ask on there payers, pick-up should if utilization that a obviously through clients, as maybe had of protect lot are I as how think of walk how your of, maybe downside I'll the the you Thanks. NEMT? to be and your place mechanisms utilization the beds some to PMPM opposite

Yeah.

in utilization the for a we've hold volume like been happen. we takes while, come increases and been to that So, of have normal steady increases continues as more trip out COVID saying

in that with talked general, and us win-win our primarily mix those us ensure this other utilization and down full-risk our and that versus we have being planned. pre-COVID grow see in allow to structural is now as to our XX%, customers of as contracts our so well XX% you talking renegotiated redetermination. we're about we for customer, The a thing contracts today, around the But it's to reset, as that changes

range that that one network match mobility have are ensure our it's the good for are ensuring the we where do want with we So, to two-fold. doing most that's that hold. that we initiatives sure the side to taking costs, we That's that member. have transportation at and margins been get higher those and narrowing perspective. to we thing specific can what in structural back make a our from It's The thing that partners and and again the – need a

cost the taking three there's and Well, come are hold then and initiatives item. items. down Those other that will

and to relate common – save to to right us calls still just so benefit going bringing has funds of what is that's majority allow item they're that we're that app today, text we down other to IVR, phone The seeing save is get with range members, messaging our IVA, whether do to technology a and normal to now.

It those really both on starts this working and need is know of thing on of execute the probably in, we taking kind of just expectations second-half which but execution hold in-line plan, promising with we the most that. year, to it's because our

contract, those coupled with taking are plans way the think showing initiatives are that coupled restructured hold, we've all we together has with them, our So, hold. these and working, it's that utilization been, are the where taking

that So, feel business. we really good about

other around accelerate. important this item how conversation The continues to are The to trips is strategic. healthcare and more

able are said why before, margin. why your transportation making apologetic to need payers showing to back The XX% that EBITDA are that. this contracts. able I've or it the tie around we're a I'll sick change be really are usually we're is That's not to to the XX% and That's and people most the primarily obvious dialysis, conversations those ones important. our the across-the-board, but needy with transportation most

Brian. a there hopefully that I your answered, question, So, that answered lot but

my was looks we the having potential into maybe XXXX? landscape us with looks I RFP about a we've can guess separate of contract pipeline look just you're some like, appreciate share In the and discussions and topic. past, wins you as what is that really I for like the follow-up Yeah. and it. what talked

hires changed weren't that's and for that new how made, business, that new months the are proud ago. a so made hunters, we a we them again hires our and today. to even client Yes, the service the teammates few as well we focus call of major announcements we've us structure on new that the are as there A really those few talking I the we group, go-to-market, been made of

The So, value to MCO hold, real before, real national we is taking a proposition, that's is full, pipeline it's go-to-market where our approach large it's coupled the have have a full. contract. with never talked that pipeline now a we – we

individual more one on doing the so be excited enterprise couldn't at a the approach, I multi-pronged just top we're country, approach the relationships what traction way all and the proud it to a across team with expect the sales doing is is year. state-based it's the relationships with accelerate procurement really now So, beginning, the and about that down I level new and the and person throughout is well not to side

Awesome. Appreciate Heath. it. Thanks,

Bob from comes Securities. from Labick question CJS Go-ahead. next Our

just up taking you in morning, our thanks all to to so I'm follow you've thank information. answers wanted kind still information and but digest last us two trying of you for just little dig gave Good for questions. the given the I much on maybe a further, today, it,

So, and new some wins you've congratulations, mentioned awesome. that's

and have out? is like also and of years? over back something XX% the end think getting or six there members, You offsetting of to should new like XX% XX% timing is, And could said wins attrition growth you over quarters XX% on to grow two this how from a X give or sense said, period have time, membership on it we you'll plays about how to membership. this so by the you the is to member XX% absolute the you impact Meaning, and a growth to XX% Just next then a impact it flat? or us addition period redetermination

to Yes, of you it – year have quarters kind that down number per there. or break laid the of we've out so

new consistently about year, the talked are part it's our in wins that. latter offset the have going like if happens to the – it So, think for happen XXXX to going we redetermination way we of

XXXX. those flat. and throughout and flat, start it's is in really, see expect can having revenue now on to So the that new that year, we're the you coming But have wins

outgrow though with like those others even well. Coupled XXXX for continue will new as Medicare redetermination Advantage wins will So, that. into

– targets, – grow impacts. redetermination growth through redetermination and expected it So, talked too, is about, with will after XXXX, [indiscernible] thing the as amounts of course, and into well. our about we other talked we above the is XXXX that's There's it also

Medicaid do gross to kind we of So, in-line expect be the well. as

normal and MA new above, and growth above so in the those that's growing redetermination. targets feel-good growth, then Medicaid So our that's why – growing we just yes, about

super well. and structure gave you Okay, kind more contract as then little on, new today a us details of

think said step-back versus to I again everyone XX% take to to XX% involved full-risk half now you and be going-forward? the is the users, the going before contracts structure COVID. and you these And States now to new a better how the and obviously, maybe difference explain just and benefit the are and to

COVID in that, ago, got the the couple was we before really did customers so very and Even a in a years and well our misbalance it opposite. of way in that really these here XXXX by Yeah, contracts. the when We and XXXX highlighted XXXX. expense had I of XXXX, at

Our very and we well customers did didn't.

So, when here, it kind capitation six five anchored it's relationship doesn't lose win was on that of that years I to make Alright, that ago. sense. happened this got

really We now over win-win with happened has you business transportation relationship over not, this and couple Healthcare and of track but were that because touched to were last XX have these in The we an focus, caught up data. I in of kind accelerate. changed now to what NEMT question. on realizes the a in last years to years. and has able couple realized, continues or Brian's with important little it's COVID this bit

relationship we where utilization to actually contracts have to people eventually, the Transportation share we cost or as that. you enabled outcomes the downside been clinical that's with in whether matters, put it that and matters we have so win-win change a happen together, upside all fluctuations and

to So, to that today, I we are where the continue. change expect

on we're So, XX% utilization. which cost responsible full-risk again everything, as and a get for we pre-COVID of then full-risk, regardless of PMPM,

I when finish that cost that little when And the has to to we articulated or margin off that again is Now, profile. Again, in these a change. sharing I to utilization high-end, the expect there like get and a we change with where rigidness contract initiatives, continue the within earlier. our bit especially contributes worked

Yeah, if from up, to look moving a towards, that, procurement of can all shared contracts the risk I this pending that see new so we declines into going perspective. say, all let's Heath these our wins and at add coming are

that did we see profile contract continued of grow. our bucket So, to

That's and that's appreciate jump Thank as news great super. the Okay, I back-in explanation well. you. I'll queue.

thanks Bob. Yeah,

you. Thank

Our Fidel from Scott next head. question comes Stephens. Go from

margin? would on around margin went care personal the quarter just, did if I understand to Great. [ph] proposal] segment, X Yeah. still over just interested target but the getting first lot looks thanks. for XXXX longer-term, the would impact to Hi, on any and the to start that CMS, you your commentary final the [HCDS appreciate the Medicaid, XX% it wanted out, of in sort and wood into you years, there's definitely here just have X chop terms effect targets, know be in that a I like the thinking of that proposal, of four gross but to we and proposal XX% reaffirmed XX.X%

get margin target, secure, CMS, to guess for that this I proposal you from flexibility there that of go into your if just if to terms that effect? is imagine wanted XX% was Would ability, thinking but around, if offset XX% would on G&A, be I of I would gross the long-term XX% to to definitional, have mean, in margin a probably if clearly, margins? going there's cap sort I

set you well. up well, Yeah, it very

opportunity the caregiver. the and paying lot the back-office centralized, majority member, wonderful low-cost. this it's care, that us in-place actually put that, things to a of of relatively hiring about thing the gets personal the for shared So, it's – we servicing and as operations. caregivers goes to ensure free The that have of The simplicity

is in What's it Mom-and-Pop. through right to free-up of to we're these transition of happening away industry – within opportunity costs partway administration and front retain we're each the and those this sure lot of and same take those to for across and the journey. people offices. entire is service we're hire that still through and cost with There's a And us and

like on focused that their core one we to yes, to in invest So, we centralized have, one therefore have about talked companies centralized system, make platform, G&A back-office, these and that us be reduce cost long-term. that, that, really able are margins operations going

about really feel I So, it. good

about view am, can in going country of what does now on the am disconnect is with CMS You I here. sophistication sees out, talked Companies see X% thing, be very that's proposal This to care for that do is I scale going that there and personal difference, really as a coming little and to well bullish that. out. a, a are script you I our right though worked mostly; good kind

yes, feel-good what regulations, those next payout I'm number our but about is And how see and margin. of on I doing. industry again, excited this about positive. I we'll So, it's think long-term these all quarters years

a from of for expectation now? second then a [ph] just guys give you if how the to some your question. NEMT course terms of questions you as then side, on over modeling us guess modeling as our on be follow-up full-year insight can updates you into the the X.X% to view I hopefully some and cash-flow. trying cash-flow, operating gave impacts have we helpful. XXXX just Okay that the the I I’d] possible NEMT there the can And Thanks. might are, number the ramp, in operating two jumping-off, year quarter of [what on you the margin. us NEMT as on sort One, extent get know on would helpful, accurate be margin operation sort

specific consistent talked about QX, really the bit, around little and be there'll now QX and QX talked I – capital, and where the about that the QX. in and operating more that but is of Yeah, the so clarity think we kind I past happen fluctuations we in QX, QX cash-flow around more and big get a the normalized working be what I'll is, in

But really think that in and right to that's So that QX. of so of bottom-line interest fall is that. less XXX clearly more adjusted way the million-ish EBITDA less more kind happening run-rate flow starts QX will to kind the free-cash CapEx, about

it's right that our right and and expect getting From perspective And to that's is. it That accelerate that and of the per members that's I improved it's the has And that throughout kind that to expect year. mobility year members again, on that the on the two-fold, the a working. to margin the be, current right pay. pace the trip we cost at – throughout that's at modality cost side, ramping I

expense calls mentioned earlier. The which other of component our service Heath is

half second down So, see ramp benefit initiatives as that through as year, the we the well. in margin the we'll from of those

have XX majority you million-plus calls. call, Yeah, interactions we can see, of our are

So, you it we're pulling year. a are lever that can and the see seeing and accelerate traction, we is big that that lever that will through

consistent these to expect kind importantly accelerating hold, taking be hold. as probably actions take and and tangible So in that ramp, of I initiatives more a but QX, QX

X% where XX%. your to would that, of range that So, you margin, longer-term see is obviously sort

where margin sort that XQ thinking out, would playing NEMT see in you those of XQ? about let’s X.X initiatives versus the the be in exit-rate You on

of rates end we be on from lower still really but the So, could X range, our the accelerating. where are,

our where I on think exiting to for right of the we this are the as So, lower-end think being it year. approach are we about range is

all right, thank you. Okay,

our from question And Pito Go from Pito. next Bank. Chickering Deutsche comes ahead

two morning, part good guys. question. That's Yeah,

sequentially, is Scott's fourth up detail where payroll But does the purchased then and the specifically where of so use quarter? were at then taxes end specifically specifically so little kind two but fourth per does in So, quarter question, cost a other two the margins. the trip preferred the in end providers. of on payroll looking components, because services and [indiscernible] more more NEMT down of The purchased lines of the the services

just so volumes. the payroll going clear, benefits where be are you're going related Yeah, to and more reduced the is other services purchase coming from to to call primarily the see and cost the transportation be to

And little so, that. more can I commentary yeah, share let Heath a on

Well, again.

getting X% talked just I I increase margins the range of of, rate. with the of kind Scott. those EBITDA to improve side the I that lower with our to end on combined exit that to expect us XX% to continue about think it's that, the to same those

you increase think how have, the here, utilization about guys an we increase EBITDA follow-on on question structure then be should NEMT and enough, to contract the NEMT? clear is a to of Brian's new and utilization with EBITDA just Fair increases Alright, that relative as margin dollar

our And so. this, Well, know that's challenge as on you the contract, always Pito, right.

So, when lot mix. based margin about happen contract that we percentages of things current the talk we that about, within talked on a there's our that

line, going why, so when we but happen. affects we based contract cost-cutting we that actually – we that based cost percentage mix – a to the our percentages in consistent it the we're our have, margin way doesn't on but line, on in areas to revenue on the have the up, think based some the utilization hurts that so goes in that's mix improve So, that have,

the sure So, – I ask what again was your answered to it. make question

that I I mean, of guess driver question but more sort is, maybe [indiscernible] a very-very go dollars more pressure, contracts revenue have the we utilization EBITDA therefore, these no, is Yeah, increase see simplistically, just or, of changed, because an increases if as increase up? should margin EBITDA the now dollar a

Yeah, okay.

that's So up, revenue that line that share now. – line, if expense the when current of that's but and cost Yes, we our goes goes of you contract the right in to see up. going mix the a nature here with also what is lot

dollars percentage are down, the will be the good. So, but

back we utilization, with phenomenon that articulated. that wins, contract improve you expect we happen the being articulated, mix, to what's but going year. contract see we see But get just thinking talking, as that just strong, about you now, what's it through mix going be is have we of all and happen I percentagewise, move you're you're contract on we well. -- that, said to that could those based which you're and already dollar-wise compressed see So, margins more as offset those why in to right, this because right, are I we To that to our initiatives

mix-shift the I is protection. contract Yeah, think [ph] beneficial to us, [that] providing

So rest that as volume, other reduction call where line, that's do through payroll benefit. see margin that get you percent we and the of

Great, thanks so much.

Go comes ahead, question Bank. Miles. from from Highsmith next our And Deutsche Miles

my for guys, Hi, morning, good questions. thanks taking

quarter. in give I a some would you've anything given talked that you of and a full-year had cash-flow. directional that million? line Just expectation impact look us receivables know I roughly And XXXX, basis? together on was contract full-year comments, of for items having about for an to operating terms but related the you million is talked What like $XX the around XX wondering payables you can a about there the couple.

if member would kind it terms then the that to right And we like impact I of type talk with you'd an average my any Thanks. that we comments side. less comment think of then on revisit an guys were be, in, might that of a might the about follow-up acuity you is, of or be could made it model that of fall-off be the was your If to you terms be hit earlier trips as redetermination some you trip the in – than or average willing that's to great? lower that patient quantify these trips. patients if there's Heath are fewer going it I'm and look and anything right, hearing have in to these and could think at are number trips that way just I bit, why of little it is could per anything hoping was you

take on Hey, question payables. Miles. receivable part the I'll first Ken, is that contract the This of

we see in combination the the of in the protective side of contracts. our nature do receivable and QX, cost So, that and increase utilization of

in half and do the year the to as level-off as payables side normalize down half to of that the coming second that have of of second the expect well. collection normalizes We year we throughout the

see half level-off we should of second you year as in expected. the So, the that

then disclosure why the primarily also could people you is away, that's that around higher, reason because you And perspective, and utilization talked our a the shared. being see It why we that is the The Pito about reason take they being trips, aren't don't to the redetermination people contract redetermination but similar the that going utilizers. from mix, that explains disclose the our had. why see on – phenomenon question that of we

you're is way being the So, up, in even seeing are that contracts though structured. utilization shared our

So, model our it's showing COVID work. out of and you with redetermination the that contracts actually coming helping

a XXXX. lot organize So, COVID the increase in just receivables on in these we talk they out the, of back had with with how about noise – contracts is what paying of Ken even and right expenses in-line we

done. are now Those

happening have QX do but fluctuation by majority capital of the between evidenced the set-up. you are normal in still way that's little are stuff, as bit talked about, of Ken XXXX. here happening and just the fluctuations on and payables Now our see in that with has We working what receivables noise QX to a our COVID contracts

Got Thank very it. much. you

question And Petusky from ahead Mike. Go from comes Mike our next Barrington Research.

Good morning.

Good morning, Mike.

gotten feel of the two-yard line. over this the and going one-yard Couple to line, about of to asked I'm this sort goal. get to I like Hey. try people they've

quarter, look understand like at CapEx happen. you're free-cash million, talked XXX and million heavy generation look, what we're XX but one-time are generation I receivables at free-cash year. the not payables about at XX one-time, – about does talking to talked one-time That this going You and about we've free million negative the it's cash of about

quarter feels Thanks. million, it million comment the [trying of free-cash [ph] be sketch probably more sort maybe me, maybe and year. flattish, to] free-cash on like generation close Can sort would somewhere there? to after To would, in XX you that then then and lead second of out on to of normalized this the sort just math XX which of

half receivables, a as about second year, to receivables going in year, the will walking the benefit I from these, second year. of first collecting the of through then these about the of we're think way the also decent of build-in half of of but we we half on you're some think thinking the reversal this be

of then the this half interest and a what in to CapEx capital typical, you'll that's second EBITDA working is of benefit. a that, going And terms I less just benefit think be you so also the of from – perspective, then have year. the normalization in Heath referring is to also And have

to And depending given the going that XX range really so, in capital out to to contracts Heath accelerating. alluded it's as and the they is cash-flow that like through like how think shakes the be on rest range, yeah, working are be of, be of XXX, feeling we're to going the I generation year. the you've that very or probably But, confident working that as should really

that's all stuff. good So

our add capital-related was Yeah, wipeout to $XX little could the biggest fluctuations bit and plus quarter. in a on see million in that quarter but and question CapEx right. our swing to higher. was that specific can a or working your just was payables – that Mike, The a you CapEx this receivables, drivers,

to will So, back million when $XXX that run-rate, look as we be at normalize all $XX million you whole. in that, you when it a

down Okay, that. I $XX to yeah. not million million $XX run-rate, for $XXX year? understand on the drill million million $XXX want just but I really to to

it rating think I amount, I be higher rationale about QX at sense. QX QX but is, think it. Yeah, right where think because of makes is your QX and run your model to than the way that's that's could that and and that,

was such to to of numbers it's generating was, I XX-ish be some are not be going but going cash $XX XX more or – $XX free million there. or the not going happening. half, generating you so you're because to each hearing million second quarter okay. like be like in Essentially, Right, something Yeah, that's what

capital, will be on dependent [Multiple Speakers]. And it working

Correct? as that’s you see now. but closer to guys Understood, reality right

correct. that's Yeah,

Okay, excellent. just, the And then sort overall. at looking at company of the

sort gain, assuming the that As first at, is the needle that the expense, – that sort to like the service service we at most you the ability of relative leverage of been, expense move look comes the expect G&A on not been assuming to guys on but to, leverage of quarter, of I'm that the working you've is fair? real you've sort on line, I'm

both. do I it's think

I changes on those side, made those continue. to expect the G&A have We

I So, there that as two-third. of is expense on call well, so a third and know, side lot leverage don't a it service

expense Third two-thirds to that on and side. leverage being service G&A more

So, it's both.

– terms just And last promise. of then I in question, just

health isn't payments so in that guys Thanks. asset of to the guess, to there it of say terms of assessment sort have though any, just that on that even risk-adjusted decide volumes out asset? around weigh QX. kind fair mean, do the forth, and sort Matrix and So, of isn't in to to talk I mean, uncertainty, the that when you monetize nicely going really is it grown valuation I say I fair

items need. important adjustment payers Yes, important items rules to years have part more the so less risk will adjustment, are other and be adjustment, now risk two-three even with are that being refreshed risk continue are happened, world services more and the changes were ago that an and important. needs of important what assessment becoming healthcare Risk the

the are The to almost The Matrix similar We hiring company. personal nurses. opportunity is second, risk second-largest adjustments factor really and the growth care. limiting is

rate, need happened bigger to item the going changes yes, overcome, that have companies that out that's volume an there within the will The overcome is the Matrix that happened that have and the in to continue there. out changes benefit are services, to is those. be So, the the be in and noise

is and that actually and and system in can of noise rate outweigh that Matrix Companies come scale can and around that's at doing, hire the have through. because process retain which to can technology and the expect the higher have a will through penetrate that come perform changes

opportunity challenges. the But outweighs far challenges. there's yes So, those

Thanks, very good. Thanks guys. Appreciate it.

back to like and to would At our remarks. Thank you. I this question. last That is time, closing turn Heath any for Kevin it

for our you this in company. and for call in interest your participating Yeah, morning thank our

Our deck presentation quarterly are Relations and website. our updated Investor posted investor supplemental on

follow-up to our call Head coming We day. the our and please a great in look-forward to Ellich, report our Thank days, second-quarter before results speaking to concludes Operator Relations. schedule again of Investor we over months early-August. you you of you and call have many Kevin a want If weeks, this call.

Thank you. We conference. you does thank for your participation. conclude This today's

time, this and day. a You wonderful may at disconnect your have lines