ModivCare (MODV) 23 Feb 242023 Q4 Earnings call transcript

Good morning, and welcome to ModivCare's Fourth Quarter and Full Year 2023 Financial Results Conference Call. [Operator Instructions] Please note this conference call is being recorded. I will now like to turn the call over to Kevin Ellich, Head of Investor Relations. Mr. Ellich, you may begin.

Good morning, and thank you for joining ModivCare's fourth quarter and full year 2023 earnings conference call and webcast.

Heath Gutierrez, President ModivCare's is Officer; Chief today Barbara and Chief me Sampson, and ModivCare's Executive Joining Financial Officer.

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

today's We included additional their the to will these will our Form and in hour I'll Heath extent This and A approximately open Gutierrez of also Barbara turn begin non-GAAP discuss to of is reconciliation after be available a for most over non-GAAP Heath. will press and conference financial release results the the modivcare.com. directly measures to definition call Sampson call replay to be will applicable, website, call X-K. A information on comparable provide to that, morning, financial GAAP Then this and measures, questions. With guidance. measures posted investors. financial review financial concludes we'll our remarks. our opening call X will with

our financial morning, call on elaborate results. further the earnings transformation and for Barb, handing journey, call. outlook our Good and share XXXX XXXX joining to XXXX before reflect you and quarter full who Today, our on year thank our fourth results, I'll for over discuss will our

with EBITDA our revenue adjusted by revenue to of EBITDA line Let $XXX expectations. have with adjusted saying XX% million. me delivered and pleased XXXX are year grew Full quarter begin in we fourth

following transformation like we've pandemic. some we've the progress the period from stemming to the challenges address the I'd recovery addressing Before encountered primarily of made,

Florida. contract cash client below fourth payment a primarily specific an $XX our was MCO from Firstly, flow within which delay expectations, quarter to for in the negative million, was due in free

several renegotiate Looking utilization $XXX the is build and to the our primarily and second increased healthcare our year as Consistent to will been This we in cost in months. a doing flow our redetermination X ahead, redetermination we to contract last half contracts. the payables normalize working ongoing the for will and terms constrained managing contract million cash first pandemic. of risk the on securing anticipate that capital months, post X more quarter. It's settlement and we cash environment, with expected of asset to us several to free the balance to shared important realigns upfront. large that we collect unfolds note payments eventually receivables reconcile the in have an in and the aim months receivables of be number we higher, the are proactively what utilization This prepayment the improve working our by

half redetermination saving free take and our XXXX XXXX, normalize will For $XXX sales onboarded cash flow the measures second of our the of hold. ends. to The new are cost to million continue wins begin as

guidance, EBITDA guidance to XXXX be of range a we to and in which quarter a to Next, I million of first million million. will EBITDA million, adjust adjusted range want our share $XX XXXX $XX our in $XXX expect $XXX

year. EBITDA the quarter the We are of the half guiding first to explain ramp in second help

to to diversify their transition normalization couple the healthcare competitor, a front first volume further a loaded ongoing health contract addressing contracts. quarter. losses During an decision and state XXXX due the full second include client's quarter, wins department's by starting the incumbent of are challenges legacy clients the causes impacted and and few Medicaid of of these to state decision implementation us root favoring broker prior contract issues. utilization contracts MCO we losses a to membership redetermination. The securing a These to model away are A in from headwinds not from

that note have that. through my to issues important it's of these for been and legacy However, team addressed doing I'm our proud transformation,

fact, provider on million initiatives. for in strategic the our to largest NEMT a we've extended. In client, several delayed achieved on though Medicaid XXXX, annual guidance, new Even been will onboarded extended X XXXX XXXX remote to actively contracts we we and noteworthy we our collaborating partner be in late and to RFPs monitoring state $XX expected RFPs throughout and have remain Also contract million value in continue key anticipated other from delayed, contracts, state the XXXX will won starting did ramp while we patient be In early segment new MCO securing $XXX XXXX. quarter state early the explaining success and in RFPs this that a bid expanded state or contract in in year. and second secure and

generate to the million In to with improved hadn't retention to made savings. which to implemented $XX will and which strides our we cost addition, past, in your $XX clients, we've significant our contract digitally structure, cost integrating leading in expected attrition. of relationships, done our initiatives enhance We've reduced move million is a optimize client

To to talent. Additionally, million our more we've capabilities These significant recently quarter at team these go-to-market more sales over We're throughout secure our contributed win year additional capabilities second leveraging and capitalize will will with enhanced XX% in on rate this the new from progresses. a MCO augmented enhanced started today. pipeline, losses negative our in to XXXX. bids $XXX as the from valued become mitigate impact wins legacy momentum, initiatives the

and cover our to capital structure. Now, I'd sheet balance like

We notes our have in XXXX refinancing and months. deliberate unsecured coming anticipate the plan a

aligned with investment equity Matrix monetize our to unconsolidated minority in are Medical. partners we our Additionally,

achieving this this the very maximizing focus within the management performing return the are team the as our optimistic asset. supporting from we about is on remains While company year, valuable primary well, and

to requirements, backing our successfully facility liquidity enhancing also covenants, banking have revolving of addressing thanks We the our and flexibility partners. financial our renegotiated credit our

debt current excellence, anchored in levels we core on which people, achieved our challenges target, role priority. Since significant pillars: Although and higher to navigated year, the and a innovation. Reflecting be growth transformation, the milestones. our our a undergone have XXXX, assuming operational by we leverage continues is past November has reducing than comprehensive been

the executive team. people our was realigning for our pillar, strengthening leadership As notably organization crucial,

our realized post-pandemic We of a addressing determinants new service and pillar, been development an health wins, needs. clients' improved important X% growth new and We restructuring savings on and efforts engagement driven our approximately part aligning in in have million $XX product go-to-market through decentralized reinvesting also to transition cross leading and and improved annually our satisfaction, and model of in NEMT we to with resulted with the leadership our environment structure. improved initiatives. million as away million closely while service our shift technology, $XX focused product, CMS' enterprise technology, excellence. business quality, NEMT in our business our by has such RPM the selling $XX and meet areas our clinical annual journey. on-time our $XXX expanding our million efficient expertise. Operational NEMT our and proactively our social from legacy over pillars, digital key also increasing solidifying position. In conversions These manual processes to proposal to in contract by saving This more functional performance We improved notably offerings adjusted through services, of position the advanced strategic model. Innovation leading process

adjusted project be million. outlook. revenue XXXX $X.X of our We to $X.X billion billion. in Turning million $XXX will our And to range between EBITDA the and $XXX

cost initiatives our we structure and considers in confidence continue to model. the headwinds transform our guidance Our as previously mentioned with revenue

million expect $XXX run and to XXXX $XXX million. rate a between We exit adjusted EBITDA with for

Additionally, million generated the cash between expect in generate second to million to of in $XX half we XXXX. $XX flow, free materially

our high normalized continue cash expectations XX% flow XXXX, benefits deleveraging cash XX% generation. EBITDA from towards conversion Looking of conversion with asset-light see will to to we to business,

remote patient we revenue work care as focused prepare exiting XX% XXXX X% growth positioning XX% for growth, mid fortify long-term with We with project X% with of the to personal platform at X.X%. In previous and for for to business XX% approximately on XX%, we each monitoring for our at XXXX, to profitable modest care for to while to continuing are NEMT margins XX% rates beyond. important RPM. lines and our XX% revenue to personal XXXX consistent and be We for margins expect growth respectively, years and

care, As supportive and we living at for look forward, engagement we empower to partner combining remain committed integrated digital being the to trusted personal home.

$XX year. Building to aiming now regarding frontline on to bolstered strategic leverage should for achievements growth Here's XX/XX The is this across efficiency million year our concise our regulatory additional enable pipeline. of from upon market. capture care of revenue key the with spring. inherent priorities drive further and centralization, comprehensive to CMS's million and transformation is tailwinds $XX These leveraging will enhancing outpace as are This anticipated transportation segments. In omnichannel is our is The overview be market cost million our the here clarity our our comprehensive free $XXX platforms all and from million-plus at targeting improve focus solutions known savings, this stakeholders. XXXX on XXXX, expected the efforts the digital members. XXXX, NEMT, caregiver engagement. momentum personal automation our technology to the this to by and initiatives execution. tools growth in Building engagement, up in multimodal expanding member These XXXX, achieving focused transformation the us role, largely integration with on and $XX within significant in continued to digital key to standardization focused

expand services capabilities base our enabled through RPM with in and This in includes door multifaceted our to capabilities. strategy surpassed center and remote care grow enhanced is patient innovative front forward-looking. engagement product and member fostering device Our devices. Integrating our digitally NEMT personal has and virtual expectations. and our emergency monitoring services clinical revenue Continue

managed costs. reduce integrated notably our reduced space, our addressed for services clients, crucial costs our care in has become customers have us gaps We market. address sales, especially This and which as strategy NEMT and in for aiming health to Medicaid care the the determinants distinguishes boosted

challenges journey cultural the our marked of the progress this of first operational, organizational in comprehensive half year, XXXX And half by especially a Our conversion and in was will restructuring. some cash margins despite the and through flow year. the of ahead, back

dedication members our sets of to for highest and market Our expanding apart. I'd advantages, thank their services the competitive members. home-centric providing hard in quality healthcare clients their with position to us the team and coupled unique work all our for our like

Barb? share details about hand financial and the who over call Barb, I'll additional XXXX. Now results outlook to will for our

to year quarter Thank to in year our Fourth PCS gross sequentially by adjusted RPM you, EBITDA X% higher healthcare increased Heath, and EBITDA expense segment. The XX% transformation attributable due by full and early basis NEMT adjusted to to year-over-year Fourth $XX growth, and was share. to in to G&A XXXX lower growth XX% initiatives. capabilities. services $XXX points higher net NEMT was $X a improved driven adjusted was driven margin G&A decline year year-over-year our to quarter our decline, environment. million EBITDA efficiencies Full costs. Full XX.X%, X.X%, adjusted points XXX morning, modest million, revenue basis fourth was while normalizing in expenses primarily margin X.X%, or income billion, offset related point and loss $X.XX diluted XXXX quarter basis EBITDA to to higher primarily margin margin the service operational and Fourth a while by and to growth was decreased XXXX a utilization data X.X% $X.XX higher gross $XX adjusted approximately utilization $XXX million digital attributable investments yielding cost related good to everyone. expense primarily XX% was quarter partially per XXX revenue increased net purchase NEMT sequential saving to enhance XX.X%, our reduce XXX initiatives due million million

trip, fourth expectations. Trip reducing our expense driven decreased lower year-over-year are a our utilization decreased in members is per NEMT a gross averaged primarily being and monthly X% X.X% quarter per of quarter, million which basis mix as while monthly to which basis expectations. redetermination, initiatives sequential the the monthly per decreased approximate segment X.X% X% with in trip revenue to points to decrease $XXX services membership increased we increased changes calls during in fourth drives Total due average in per The XXXX. X% XX.X to to due services other review purchased of the payroll Heath that million. other Turning basis XX XXX margin NEMT Sequentially, to to members in the per about million basis, On saving members, to cost increased quarter XX.X trip by X.X% in our financials. X% risk decreased contracts. X.X% increased in increased revenue our our $XX.XX. was year-over-year fourth XX% line while volume our decreased to and quarter, all trip purchase members revenue fourth payroll and while an expense per for Medicaid which due and shared points discussed, and trip reduction expense was points sequentially trip. Trip sequentially volume with average XX line $X.XX,

trip. a revenue, trip of improvement in to representing quarter. profit Gross NEMT XX% was from quarter result and initiatives, improvement point payroll primarily for XX fourth of $XX As basis million strategic EBITDA other adjusted per our approximately third due a per or sequentially, the X% sequential improved costs the

original Based the million. was members, expect quarter third expectations. quarter conclude process our adjusted redetermination EBITDA million, XX.X seen an by to in with The is April, revenue and adjusted in our line of and will our EBITDA Medicaid by December expect Medicaid Medicaid impact redetermination about $X our as of tracking $XX X% is to which fourth with revenue the XX, $XX.X XXXX membership, redetermination redetermination are approximately $XX guidance. bringing our in impact to XXX,XXX by that million updated was and In EBITDA on approximately reduction we XX% target in $XX for members. revenue complete, $XX impacted the which of XXXX. Redetermination to we adjusted estimate have most During approximately we XXXX, million million, of our our with adversely started and million expected embedded in Since line approximately fourth projections, our Medicaid last XXXX, XX% range original membership by line million which to by membership we XX%. that quarter, reduced

margins utilization reminder, protected redetermination from a our are on our increased As contracts. risk from shared

pass contracts under our in some Medicaid lose contracts. risk accounted higher for risk these though Medicaid we revenue of through XXXX. approximately XX% contracts, shared we'll shared Our Even members in NEMT expect revenue our

of the generated fee-for-service XX% is remainder from advantage NEMT Finally, and arrangements. revenue, Medicaid approximately

Despite X, New few lapping of a our to to reimbursement lower large our minimum X% XXXX, wage effect into accelerate increased growth $XXX minimum primarily to That hours due personal a care we year-over-year York received than tied the to related driven wage, Fourth in the reimbursement quarter division. XX% labor, expected temporarily softer of the quarter. Fourth first was direct $XX overtime particularly due cases. adjusted used X.X% gains personal revenue expect margins in higher in to to which operational which expected, new by million, than year-over-year lower the our care by reimbursement. In quarter and was care sales slower increased business to we million to referral wins. expense, primarily XXXX, still efficiency the EBITDA modest York rate per XXXX. that revenue in X% said, million, in rate PCS in should and than RPM went Home in increase to October driven staff growth revenue XX% X% on range was hour. increase decrease or Turning in be a growth and revenue, which is driven care and segment, by in last revenue a QX, quarters, favorable Personal increase personal hours new in margins the New growth $XX

we organic XX% in team successful has RPM expect business $X.X or Fourth been quarter RPM XX% margin. in was or million EBITDA new winning and of XXXX. more adjusted Our growth a

in adjusted EBITDA range. to expect XX% will continue RPM be the margins We long-term

of expect winning continue and will productive referrals, perform years for in well Our new XXXX we was monitoring most to and which XXXX. the business one business continues

cash sheet. to balance and flow Turning our

fourth During revolver with activities as $XX the drawn contract free flow $XX financing quarter, provided of million approximately used Net quarter-over-quarter million million approximately million. cash operating $XXX.X $XX amount contract as XX, negative in December the XXXX. and our $XX million, was net million was increased decreased from $XX payables on cash was cash activities of and receivables

to Our clients, under which we the of which payments reconciliations contracts was $XX end line contract and collect of in of flow less primarily MCO are the to than our quarter periods. to of our varying million risk balance time occurring payable $XX $XX at delayed large attributable the net from receivable we our originally our fourth cash with million. previously multiple XXXX the coming over anticipated, million, expect the with and quarter free primary for in clients, fourth capital range fluctuations with in months. The was working was stated The one by NEMT driven contracts quarterly payments shared

the forecasting along cash contract granularity and improved with and timely focus analytics our client our by on have teams. have of We our management account flow increased data our of payments,

contract significant a We in has expect and with our variability the more XXXX. Since business to payables continued utilization transformation, improvement we our of expect healthcare and quarterly into impact in with flow occurring second normalizing flow and our visibility free cash cash have a redetermination XXXX. backdrop, the of receivables in undergone coupled half

While risk in working capital. increasing cash improve in into rate cash revenue $XX to redetermination flow going a we in negative creating a from million XXXX. The positive of XXXX temporary negative million expect is in the meaningfully exit utilization, to be XXXX $XXX XXXX, of a that range flow confluence and free free first challenge will expected of million $XX is with XXXX, Medicaid higher to half shared in

the contractual to build we with to receivables. As prepayments closely more continuing align we contract work to trends, clients are with reset utilization recent

contract partially be expect in repay quarter free from rates. The resetting the XXXX. on contract payables cash also and improvements of offset on We by second will certain receivables prepayment to collections flow tension

the also second benefit quarters fourth our second expect and items of minute the $XX the in to full to million. semiannual of variabilities, be to interest to specifically take payments remind want of some normal the half these year. I million you about we a weighted the quarterly of However, in cash $XX

Our weighted of balance senior a have unsecured rate $X average notes interest of a billion with X.X%. principal

financing a months. We and refinancing our options the goal with structure flexibility have been to plan evaluating a actively proposed maintaining expect coming in formalize in of capital

as extending period ratio X-K Our in to an filed our increased utilization. We as of redetermination cushion balance bank our support delivering. the amendment X.Xx our bank-defined manage of covenant facility, continues appreciate of flexibility primary XXXX, revolving paying December and relief leverage in The our X.Xx we cash through net compared of be normalization to the group. flow additional quarter. We credit third revolver to an XX, the announcing to and and covenants down our and providing sequentially of free use

the We revenue a EBITDA calls and adjusted midpoint contracts a for of range business of impact $X.X initiatives respective throughout adjusted in timing in losses primarily guidance. onboarding to year, billion relatively new our Medicaid midpoint changes healthcare million year. The the range and to our of the the by X% indicates the reflects normalizing EBITDA which of guidance growth, cost timing billion guidance guidance issued $XXX throughout the XXXX, due $XXX Turning to the our about in of to $X.X of million. in to XXXX NEMT The offset growth revenue redetermination, of XXXX. contract of savings compared range flat utilization

contract half, the to savings continued the XXXX primarily second the first impact Medicaid cost new contracts than to for and attrition, the from more of mismatch be normalized initiatives. expect impact the from versus half redetermination onboarding timing due We

range a million of also quarter adjusted with million EBITDA of guidance $XX first XXXX in to and $XXX to the million for a $XXX We million. range $XX revenue of issued

in couple another as and quarter fourth membership will of new implemented first loss losses and revenue ramp be expectations. the certain the our wins impacted That contract of Our contract be well the from MCO. line will with as our groups a EBITDA our adjusted said, throughout in quarter by results will year. In were summary, quarter second

of said, cash rate. reiterate adjusted for of materially clients. the with exit was a flow However, the and million, timing cash multiple our than under to EBITDA cash flow collections Heath run we free one XXXX $XXX million to of we improve expect from $XXX what due high expected flow To lower contracts free XXXX to conversion will between half with second in rate a MCO

utilization XXXX taking beyond. our with forward and actions traction redetermination lot new still XXXX. around wins a appropriate are achieving are to stabilizing, of the the conviction We in initiatives have know work be cost our We and and from deliver momentum XXXX the for plans business we done to and there's on saving and we

of while open call for the team be and like the questions, for services team our providing a Operator, questions. over dedication. couple our continues concludes to prepared meaningful years members remarks. to supportive undergone at transformation hard all ModivCare we our of their last please thank open I'd call work to and to highly Before exceptional We've the members. This care engaged our

Our Instructions] [Operator the first line of Brian questions come Jefferies. with Tanquilut from

question, the think even than about Maybe have I QX, as probably my expected. obviously, you guidance would first is lower

year a starts get happen How the guidance? the bridge can trying the and of that confident in and us sense that maybe the thoughts to there? you about losses of the do And you feel what at beginning anything or and starts second losses on with any year beginning share you're just just contract to obviously happened full quarter? So expecting

the COVID seeing about reason about the having talking guided and to recovery Well, the and in a first why to to we've and Thanks. that I the by you heavily start we're insight first half the really, that and half, quarter good performance utilization. we impacted right? like provide and talk what redetermination is Yes. The year in second of been the said,

bulk sales we Mobility about, QX. The in we didn't impacting you in QX. on wonderful and that's million in that contract coming million, XXXX, that that of losses. in happened, see in that because And $XXX item was of it the Home can talk just had starts the However, in of the $XX one us

with to, QX. but you lost in ramp. been we're and few we've the that then And main on the out, across that's QX. deals, wins, and new And winning the rest happen reason this So can again, cost a success this what gets the the Home That's in the the industry. in transformation and broader having downtick of in the sales see back lots just of doing growth in success contracts

So is the that the you're factual, decrease it's that's show, are. to those losses where But there driver and within it main bridge guys detail you so to talked for can specific about, we the is right, we contract in QX.

Got it. And avenues how you refinancing? to then, and about raise ability and the and wondering, are operations capital Barb, maybe thinking just fund refinance just what maturities to are the XXXX the the to

Yes, thanks. Yes.

the of So I the terms XXXX, pursuing some remarks, as we ability in refinance the avenues. in say actively are to

we've some that evaluating. got proposals we're So

there, have very good us. in So some options about front no the we concerns options of

down going right couple but front what's us. paths of we're some definitely to a different in proposals So the determine option us, have for

agreement that related just to know question, not as in have well, secondly, we so going our you all credit then as of revolver our forward. room kind we your amended So concerned. And breathing some

our to liquidity. So concerns really have about have don't any ability

right? then a to bit just guided the rate our this well. more we're said adjusted again, XX% too. why little EBITDA said specifically, Yes, also that We're generating, that, and And asset-light before conversion. a on cash XX% business to Brian, We as exit we

way a the this in to cost then flow. We're really now to and good cash business generates customer know all We from the operating structure. metrics we the done we've spot. sales transformation set So know that

about We with current to and time. feel have early. that about refinancing good the really the profile, talked that right headwinds refinance ability we we're our we But at

one makes for maybe last that I may. if me, Heath, question sense. Yes,

right, have and where you're strategically? together? these about the not, thinking are now how Or those maybe different X about X thinking opportunity lines. to just right? strategy, where coupling fit you assets putting How now obviously synergize this different still -- these So thinking are the business remaining we there about in you Just of curious segments

Yes.

really market to patient customers it's pressures having, fully. area, more what to that's Medicaid, what have our of access think patient are the Medicare is outside whether about want, and the the The doing required clinical to you in right? So or the they treat

care, whether services, that's our of personal are to critical All or RPM that. NEMT

then in have we of size and and And and centralized So the we've each modernized standardized. scale those.

we're So in each individual the solutions really as in of a standalone. good position a

point come together. how And say number this one. But X, script. think So actually they There's selling lot cross you in of opportunities. did point number a that's about specifically the

If they you integration same think the patient, are both those us of about the of the specifically It's that and in the seeing large and NEMT specifically it's there, RPM payers, is world. asking us need the of they services. and

they they So work can work can standing together. alone,

So my time, to continue that vision. same execute and we our at with ensure to job strategy is the the we look accordance At in assets individually.

of the value, So lots value also standalone a whole. some parts, but of as whether you're looking or at them

right you're do as standalone out but assets the to strategy, as well. the with individual sticking have we're point So value

of the Fidel Our next from come with questions Scott line Stephens.

you quarter. outlook to particularly First on summarize detail. the called And have know out that try that question, first in an headwind just just just to in and shortfall on NEMT there's wanted here the we clearly, revenue the

in that expected. the sounds your understand influencing like the around so up there's is that's the side in as first the cost relative whether to tracking want outlook coming sort you or utilization deck of on you you're or have end a side, not largely whether higher also out through at very Just savings on far issue cost do expected quickly, step much playing costs terms redeterminations XX thinking of may here expected sequentially. are before, you in see target as things looking point to cost than a about least of the in that the in basis as assumed It quarter to have in it where XXXX. I coming been do

of us expected? at tracking set Or sort -- expected worse it maybe this things of out side point? in here around level is are terms So than the just cost playing largely anything as of is

what of I $XX cost Yes. to Well, a out. been we that which in the $XX million what be proud we've in so cost million XXXX, script, my we're more side, doing. said is Starting couldn't

However, higher redetermination. that was utilization offset because of and

pressures those do those cost and basis. with there. have at I look The conviction margin redetermination you have the trip which lot really a is really per of So a can continuing. the decks in utilization. progress showing you been when see why have strong on efforts very to We're well, And around going

our cost So, the around the lot to as why a A and guidance in have which to of we're I the seeing gets gave continue. lot data, I exit. -- an conviction do it to with why and expect we has

summarize the the that of are do in losses the win. short-term to the contract Just to utilization, headwinds then redetermination mismatching and and onboarding those were to with of again the

So a cost with we're scale, put exit and the to we we're lose you structure clarity in year. this out, we that Do our spot really that that taking with you Scott? good as

did Scott, other have questions? you any

him. he We'll you. for queue. gets lost question, have back Scott. that Hopefully Must Thanks in the talk to

from of Markets. O'Neil Lake with Our next Capital come Street Brooks questions the line

of of and utilization expect Obviously, redetermination might you what the opposite falling attrition membership. involves is member increased exact in light

that and what driving about just us the in you talk utilization? what can little So exactly higher a you're marketplace bit there seeing out to is

that do to with membership will Yes. we to the what it will good to about point doing, of because there April, thing be also about coming you're redetermination. has and payers is of utilization redetermination. of The June. like redetermination the are XX% And happen in items, May the Well, just away big are and denominator most you're if listening so in crescendoing that, we're saying out right through then a some driver, X

then that conviction the driver a which and the is for there's utilization. number lot biggest timing around around So of redetermination,

with country part that normalization the the However, seen usage and of utilization across is of is of this other is seen the us healthcare.

can the or have about you So at up considering year, will all that expect tick million that utilization. also we see to million utilization we and of end of together this those [ XX.X continuing of exit actually healthcare ] at XX

that agree world, of end the healthcare you of it's XXXX, to X kind the I XXXX, probably to environment. back at And normalized at think we do this So of and the rest factors. be listen post-COVID end should of the if they

a lot of summary around both or XXXX So both factors. these have didn't why and just all but mid healthcare we around that have in And utilization, XXXX redetermination effect. which we in around of again, understanding normalization now conviction that, early is

That's helpful.

really, do highlight factors just are talk briefly but losses, NEMT, the nicely fix heard highlight from those then let's you quickly, are Obviously, the or could have about your unexpected. So contract that beyond you you losses? could if see some problems? the driving think in you control, on I just think customers particular do what to relatively are which factors And contract

whether course And since Medicaid more SDoH customers point Well, on so of on and managed past different or layer the Medicare, took they're over And within now customer that out do you expectation. are whether CMS I and that free that have shifted actually came on Medicaid of are specific that's to related what the November then of XXXX, of the customers. requirement the then with focus actually what because increased in was going members. My of our from our is our all within customers. RADV the MA a to different focus state that's bids, state needs. quickly innovation is even in to that And through, the they rules

manage they can properly part facility have trip a the items on ensure integrate than need those pick to with need even time, book up quality, right so lower have been the you member All sure, you need or start can integrating customer to on And people the For you that. but they to do of complaints, then transformation. have our to behalf. the that more with experience

had weren't back of -- X conviction Those around You years a is why ago, a and are around done. that, ago, lot of we some we done, even look it quality where has we -- issues to have gone. to gets because be. team I And what what that we that year we've of weren't needed this the

is with now. that so In that that happening they the customers Member trip they we're that, their fact, X experience dialysis we're so to understanding doing membership. of so an back we now. can member, you can communicate Having Integrating made whether best-in-class. our control times, know

before. didn't I'm that because reasons in. more can reason million-plus. That to are are with stuff the these going we have the of coupled competitors reason lost why The that that chosen again. we many get that And of this place in big we we we $XXX in that wins the So to Medicaid. now, a have, member. across different, primarily all were of And And we scattered the all it's driver able our for say is some we're items part of in for that that's a why one we had why before. But was do managed XXXX contract

trip, we or the manage also you our of story need have to gap, to improve And some satisfaction. have to short, can a we to individual think it give So all. Long pieces. insight give some customer can competitors change, but I

didn't now, them have We have them before. we but

we're everything, did than and more we I continue doing to but we'll when win lose. we So doing win expect win now, don't what we're to lose. and what

you're Great. a That's cost thing marketplace But One I on us what about heard one give seeing thing. and a issues, in is considering of helpful. labor And in more. and of update labor conversation haven't just then can labor? lot an good terms the the that that availability I'm of you just

Yes.

this quarters X So, and company. our entire ago, consistent is across pretty

that's through close over really XX,XXX that our caregivers. As it's to of those And always last you challenge, of drivers course, providers. have we normalized a transportation a quarters. but have And know, employees, lot the X we

or able and ago the because opportunity are centralization, and we we happened pay in last So even level continue we're retain. resources automation, feel environment, and to we year, the so have efforts doing to been What this now flat. ensure of and a recruit can again standardization The hire external now, of retain. we free to that ensure the right have to differentiator those of X headwinds we that quarters lot up

environment grow we're the stable. and able And retain story So done what side. outpace appropriately to labor we've short, the market is the on long standardization, around and this integration, centralization,

Our questions Chickering of come Pito with Bank. from next line the Deutsche

couple for here. A me

would? Florida's [ I guys them believe For ask you months. in this they in care it thought they quarter. have there the ] you recognized? you Is of collect any think in should why didn't the you the said collect issue you sort Can I on what revenues, next period you that time collect contract what managed guys didn't few you pay versus

we couple that wanted been lot a because said it's it relationships get the the issue across why and the specific paid will contract is months one area to next because contractually be have of has with country, I are of because that payer we we standing. one We which paid great was at Yes. time, specific not This in same it owed.

wanted the the in paid I I about of give wanted it and to cash owed next flow the QX. I get But explicit XX and to make it because change So because set contractually driver sure amount also was main for kind we'll days. the it's be within it it

have -- you the I from retaining I on guess guess, And that customer? sort feel of with your loss, sort guys about right. do that the large All business customer, then other contract you Great. how of

this, said largest customer, that NEMT and broker. Well, we're still the I

procurement countries. things them have all with the relationships across top from of that and We we strategic doing house forward-looking. the to down are are the And

But couple grow to number a be and are one do to think broker they with we'll we may continue diversified, them. So of appropriately years a ago I we them still NEMT that. the window gave

forward, going to feel course, to but grow relationship unfortunate others. in our good our of continue I with about ability them So and,

be million in half expense million get up $XX of of the guidance cash right? the that the free modeling year interest an Just From Okay. how after back should to tie to models expense trying to flow $XX just refi? interest perspective, we the with the

for Thanks questions. Yes. It's Yes. Barb. the

think see the naturally on can the rate. higher rate you disclosure the little bit see I new revolver, So the interest amendment, that the is you there than current and new can in a

interest a you in borrowings how than the complicated And so rate. it's go. current higher a there, on little it's bit look the formula But depending if

like but as the we we higher be to end on not the 'XX. the rate, higher of ], end said to feel refi it's have The XX% the to on -- if year, it's and the interest of good end that that we'll our line, update delevering more down closer, after it'll we then [ numbers, refinancing lower that's but the she And on higher you're be ] you And that's 'XX going going the in paying XX% start [ higher refi. as we're be modeling not a interest the for end, rate. the after get

that, to basis is release, on interest the can it's look revolver the at points you rate Just higher. the on clarify about XX --

So that's in the release.

as wins revenues we just costs Okay. me. through into onboarding And think EBITDA contract those it and us quick how flowing of and That's up about remind can you online, initial for last here, XQ should the the ramp one with months? in coming you new new customers process the

Yes.

to had that XXXX. these of on the explicitly the and we kind wanted out contracts So again, we sales and why coming separate closed the of in year QX versus rest are

up where and states of other already good platform we we So these If have concentrated That's lot there. those don't have specific a a didn't, But the and in national there we work of feel already to clients those ease that is. is timing those each we're get we states. issue because we network. a in why we of implementation stand of have to because about the won,

So, the we is feel and so And again, we've it timing just us. for execution the good implementation. really those, about sold already

Pito. that. about good Thanks, feel I So

questions come from of Fidel next Stephens. Scott the Our with line

back. I'm

get follow-up, those muted so to was my I for in. wanted Sorry

what the 'XX sort how XQ important And on that So for to all of exit NEMT Barb, my this us us is Can guide? inside did next metric for assumed follow-up X% margins of and us. of just NEMT tell then, just that rate of just of sort given you X.X%. give is margin

XQ just I'm sequencing of the X.X%. curious between on to to So getting towards of sort that that X%

Yes.

with that had it's happening. we and out, So utilization, of us cost XQ mismatch, the down we couple that hit of then the in redetermination, the also is already then recovery being our the that the loss ramp the and talked sales. items right? continued onboarding from you it's it's driven about, that's our QX, And that So

of Redetermination point we're be items, we're those They for them, margin already in and behind that. will coming expect, in perspective the reasons. But that QX Normalized right? again, sold utilization those So, the at we sales with us. are line low on.

a ] talked really as -- it which feel script. good down that's come to last And not about XXXX. savings. right? about cost So [ going this is component, XX we to probably total, in that's the the not gets those till But I

this is, really get to in year. expecting what it are we So

really and is is that execution. it getting $XX just million, about So

why is X.X%. exit we gave which to rate of X% So, that

that So in process controllable and item. really down one to

So, NEMT Heath, for do in in that XQ? you have a margin of computes number the terms what

For QX, no. Yes.

ramp in QX in it will higher And then at won't to in ramp the line be -- right? to with QX, So, margins X.X%. lower will start a come QX just and to at QX, then QX be and in and QX X% so down, that, be an the and exiting

ask other Okay. question the that about. model. then follow-up want in I through And a to We'll just work

of here. this sort Or just know Is that that script. ready 'XX? be was to not But that maybe stats of, partner. you hoping sort can sort us aligned just 'XX. little out hold guess, -- getting timing the what through walk of in exiting with out you sounds catalyst up in monetization would terms us be here? business just to think Is you of yet? we're in that the terms obviously, call maybe in a good. how more modernization detail want Matrix -- And mentioned the to of one I of get opportunity? has any did can performance here interested they of with I your You opportunity the like then there It Are still I performed share been all it of happen in sort you

Yes.

So And themselves from first right? CEO can even the you couple team side. years, what management that's the up. through across relatively done been the new of has a through transformation metrics, last off, in technology They've who's for And then the and you're done they've right. strategically gone new. course of What team the has all Catherine, it's go on the the financials, as tremendous, showing board and in

They that home, the a so they're So very has that machine in company around a there's X,XXX the which is capability. value risk do network talk well-oiled not a across but why can country only is of that. unique have nurses very the adjustment, much and

successful. happy couldn't more be the and with I So team what

we're to was $XXX quarters a $XX give going of you gave not we're million happened that So what of ago million. a long sticking with that so broad? Again, of number to why range and out the of XXXX. We broad an time Because that EBITDA was ago.

you evaluate So this. I'd right still the how use proxy to for want that as

the actually our the modernization, we this support to our with the to things. focus have to it right partners, aligned time and monetized focus, completely again, and allow team at team grow is, are getting and and to really do So their the management great of timing

performing aligns is and XX in it So what said that back the what in asset are. the again it very to marketplace. valuable But that months I within a is gets we next my script in with

helpful. that's hopefully So,

Yes.

Okay.

Our next line CJS questions come from the of Labick with Bob Securities.

you said called I targets your expect of Pete delayed It's that free for clarify you get? those for flow Does cash Lukas 'XX. wanted Bob. just and to assume to payment payments that out

Yes.

Peter. Yes,

has Great. a been And guess lot then I covered.

Matrix, monetizing over And is changed more of it 'XX? for current for on in likelihood asset has your the evolved what changed Matrix, how time? or one thoughts me. for it market -- the are has Frazier the how How Just

Yes.

what with best partners. management said similar The get highest to before, value. support the I is So our think the aligned to thing team and I we're

when it'll but months time monetize what estimate and the be is right wants the XX my is time So of I expect, when right. to Frazier it's also

ever happening risk to that be, of though, need been of in So is it with said right? what's pressures nursing it. The with than risk of adjustment. value around that's there what do is So healthcare. more a has Though is it before, network, specific Really Matrix what necessary patient. with I the some matches is consistent adjustment couldn't because

have demand So a And all little national giving can lot that's the the a nurses risk another vaccine remains. payers, more, in or we value home, adjustment platform a the you're across you closing is bit gap. and more since whether have do a those you then, to

time. So will at and the that's work monetize we're this and what management on build we to enabling right team

any have further It like else. Bob, to about something you sounded were you questions? say did

No.

Next question.

I'm No, good.

with the Barrington from come questions next Mike Research. of Petusky Our line

of the the on you Is commentary and disagreement possible timing. your the catch, appreciate actually though, of a there around in what's payment confidence owed? if in didn't between the it. the I parties terms commented collectability material delayed So

risk, Well, why this so, many reconcile our contracts it's they with shared -- that months. is of over all are

So we've they've structure And years. this this been with long-time a one, contract started But it's this Well, been under customer complicated. XXXX. of customer. contract many, many ours late in

and good contract. the collection in So we entire feel really of line about amount. the math the of It's with the the requirements

collect so. next within days or the it XX So we'll

guys the a of just sense essentially half? for at this. sort if And about for cadence of million then you may call -- but of first cash missed midpoint you X of terms of the this the half have and forgive give free cadence I target first sort second or and could versus the second off of between half? I is that half minutes, give $XX and see 'XX, talked about Did in was you I me, the

our Yes. In generating year. comment And first Thanks flow. half some will we prepared cash for have tensions the we'll remarks, be we Yes. back It's about the cash in question. half, the of Barb. the the on the

So...

Yes.

Okay.

but was get part quantification million have sort to to generate your wondering how or I of of at half in that if kind [ to some are actually that the might million within range of expecting range much ]. to $XX exactly caught, you guidance be So second there $XX least to

It's in Mike. the half, really all of second it

redetermination So but and working. tensions, Barb utilization, again, the the the it contracts and really half, says amounts is and are in first though, then,

of between receivables, the And in throw just that's bringing increase because it -- this within bulk the and capital, working delta redetermination down our it's is in that, membership. is balance our we So sheet receivables.

So of contracts the in we'll and why That's to utilize kind that year, first the account, that's main off of payable. quickly done half million. paying of so not till which predetermination arithmetic, reason both May. the But then is first April, why the in we it's the much in because of midpoint year. of AR $XX that the rest But the ramp also half ending

the important. it mean, I Right. -- a I first but it the that think a looking sort I sort ] mean, like, half in on should of half? be so then at, of [ negative up do $XX million in $XX are plus second million, sorry -- pressing making this, we and for quarter is it's and

Yes.

of we fluctuations have well, happen first So, a and that there'll line, be refinance within the couple quarters.

of we but a lot have guide rate flow, to actually happen cash to going and going not in in our we're QX what's So cash flow. around to confidence QX around exit

it Okay. terms on in 'XX. $XX And $XX then the first this also is refi half. cash, likely $XX the any to million the revolver include or million A in amendment you'll -- million And free in refi, does do either? the which of $XX the the it of topic not staying not that to include I included wanted just does to million target to

a amendment XXXX. doesn't did was it question there. give Yes, interest And going there. additional Pito's the the include that's on relatively -- to But it think right? to the in revolver And the is small, I range before. We

to also it's be going we down but flow, think I we'll higher down, So be to bringing interest, we'll cash that line. able be start generating as bring

that number. get annual So way refinance it more about a [ we the think when as XX specific now, right and end to to was do closer is in right total higher we'll which ], range,

then Okay. question. And last just

setting will half alluded of do who you in contract second success that You pushed beyond? for that you've these 'XX. of decisions Are wins you these the being in and Or made had you may up bunch a 'XX, and sort to contract awards in 'XX get hopeful hopeful, a this out. some obviously push great Are decisions, of 'XX? knows into and sort be of some sense of

referring was Mobility. business was what I state to So the with

and RFPs until in We -- XXXX. and up of 'XX, rate success 'XX won pushed in that volume and out. our that had state But contracts, then So, I even happen bids the especially a been when second and then those and expect have XXXX. recent extended those lot do in we But to those happen, half of come on about, won't one And the right? talked come one we've that renewed. did then in that awards

I lose. happen that we expect tell and will in new Therefore, let what's 'XX and you 'XX, know win going more that that in we'll volume happens you happens -- 'XX, when So than that on. we comes that then in but we'll to when appropriately

bid of Any on much there of be is for... out sort rough quantification business how to

Yes.

the that billion of $X.X is consistent with have about this, $X.X billion, of half we think, this, we to TAM and So I ourselves a said state about now. right ago quarters couple for

in after churn grow, meaningful above to going us even 'XX, that there'll 'XX or to half retain have well to be is we So other $X.X billion that. go entire the but That to for as not half. grow that to as ability opportunities

you. Thank

reached for back Heath remarks. end to have floor session. to I turn would over Sampson of question-and-answer now like our any closing the We the

ModivCare. for call you in our this Thank and morning in interest your participating for

our Our on posted updated Relations investor is Investor presentation website.

schedule Relations. follow-up Thanks contact want Head Ellich, and a call, our have you day. a please to great If of Kevin Investor

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