modv-20210331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-34221

ModivCare Inc.

(Exact name of registrant as specified in its charter)


Delaware						86-0845127
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

4700 South Syracuse Street, 4th Floor, Denver, Colorado 80237

(Address of principal executive offices) (Zip Code)

(303) 720-7003

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of exchange on which registered
Common Stock, $0.001 par value per share	MODV	The NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

As of May 3, 2021, there were outstanding 14,019,075 shares (excluding treasury shares of 5,378,729) of the registrant’s Common Stock, $0.001 par value per share.

TABLE OF CONTENTS


		Page

PART I—FINANCIAL INFORMATION

Item 1.	Financial Statements	4

	Unaudited Condensed Consolidated Balance Sheets – March 31, 2021 and December 31, 2020	4

	Unaudited Condensed Consolidated Statements of Operations – Three months ended March 31, 2021 and 2020	5

	Unaudited Condensed Consolidated Statements of Cash Flows – Three months ended March 31, 2021 and 2020	6

	Unaudited Condensed Consolidated Statements of Stockholders’ Equity – Three months ended March 31, 2021 and 2020	8

	Notes to the Unaudited Condensed Consolidated Financial Statements – March 31, 2021	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31

Item 4.	Controls and Procedures	31

PART II—OTHER INFORMATION

Item 1.	Legal Proceedings	32

Item 1A.	Risk Factors	32

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32







Item 6.	Exhibits	33

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

ModivCare Inc.

Unaudited Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)


	March 31, 2021		December 31, 2020

Assets
Current assets:
Cash and cash equivalents	$	299,559	$	183,281
Accounts receivable, net of allowance of $2,376 and $2,403, respectively	211,340		197,943
Other receivables	12,219		12,674
Prepaid expenses and other current assets	13,927		31,885
Restricted cash	48		75
Current assets of discontinued operations	141		758
Total current assets	537,234		426,616
Operating lease right-of-use assets	29,398		30,928
Property and equipment, net	30,195		27,544
Goodwill	444,927		444,927
Intangible assets, net	336,150		345,652
Equity investment	141,220		137,466
Other assets	12,651		12,780


Total assets	$	1,531,775	$	1,425,913
Liabilities and stockholders' equity
Current liabilities:


Accounts payable	$	33,779	$	8,464
Accrued contract payables	245,386		101,705
Accrued expenses and other current liabilities	119,326		117,010
Accrued transportation costs	70,870		79,674
Current portion of operating lease liabilities	7,922		8,277
Self-funded insurance programs	4,453		4,727
Deferred revenue	2,820		2,923
Current liabilities of discontinued operations	1,527		1,971
Total current liabilities	486,083		324,751
Long-term debt, net of deferred financing costs of $13,295 and $14,020, respectively	486,705		485,980
Deferred tax liabilities	91,579		92,195
Operating lease liabilities, less current portion	22,214		23,437
Long-term contract payables	—		72,183
Other long-term liabilities	26,441		15,756

Total liabilities	1,113,022		1,014,302
Commitments and contingencies (Note 14)


Stockholders’ equity
Common stock: Authorized 40,000,000 shares; $0.001 par value; 19,623,017 and 19,570,598, respectively, issued and outstanding (including treasury shares)	20		20
Additional paid-in capital	424,791		421,318
Retained earnings	237,254		218,414

Treasury shares, at cost, 5,385,771 and 5,287,283 shares, respectively	(243,312)		(228,141)
Total stockholders’ equity	418,753		411,611
Total liabilities and stockholders’ equity	$	1,531,775	$	1,425,913

See accompanying notes to the unaudited condensed consolidated financial statements

ModivCare Inc.

Unaudited Condensed Consolidated Statements of Operations

(in thousands, except share and per share data)


	Three months ended March 31,
	2021		2020
Service revenue, net	$	453,610	$	367,291
Grant income (Note 2)	2,648		—

Operating expenses:
Service expense	360,333		332,661
General and administrative expense	54,871		20,795
Depreciation and amortization	12,239		3,790

Total operating expenses	427,443		357,246

Operating income	28,815		10,045

Other expenses (income):
Interest expense, net	8,423		241

Equity in net loss (income) of investee	(4,503)		2,550
Income from continuing operations before income taxes	24,895		7,254
Provision (benefit) for income taxes	6,016		(9,046)
Income from continuing operations, net of tax	18,879		16,300
Loss from discontinued operations, net of tax	(39)		(202)
Net income	$	18,840	$	16,098

Net income available to common stockholders (Note 12)	$	18,840	$	12,998

Basic earnings (loss) per common share:
Continuing operations	$	1.33	$	1.02
Discontinued operations	—		(0.02)
Basic earnings per common share	$	1.33	$	1.00

Diluted earnings (loss) per common share:
Continuing operations	$	1.31	$	1.02
Discontinued operations	—		(0.02)
Diluted earnings per common share	$	1.31	$	1.00

Weighted-average number of common shares outstanding:
Basic	14,158,666		12,987,740
Diluted	14,362,226		13,012,991

See accompanying notes to the unaudited condensed consolidated financial statements

ModivCare Inc.

Unaudited Condensed Consolidated Statements of Cash Flows

(in thousands)


	Three months ended March 31,
	2021		2020
Operating activities
Net income	$	18,840	$	16,098
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	2,737		2,231
Amortization	9,502		1,559
Provision for doubtful accounts	27		827
Stock-based compensation	1,187		1,045
Deferred income taxes	(616)		11,590
Amortization of deferred financing costs and debt discount	581		33
Equity in net loss (income) of investee	(4,503)		2,550
Reduction of right-of-use assets	2,745		2,248

Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable and other receivables	(12,219)		7,484
Prepaid expenses and other	18,230		(21,496)

Self-funded insurance programs	(273)		(388)
Accrued contract payables	71,498		4,352
Accounts payable and accrued expenses	27,844		31,965
Accrued transportation costs	(8,804)		(19,285)
Deferred revenue	(160)		338
Other long-term liabilities	7,948		(2,352)
Net cash provided by operating activities	134,564		38,799
Investing activities
Purchase of property and equipment	(5,388)		(1,574)


Net cash used in investing activities	(5,388)		(1,574)
Financing activities

SEC Form 10-Q filed by ModivCare Inc.