Though Modivcare Inc. (Nasdaq: MODV) achieved some wins last year, the company is still trying to navigate headwinds stemming from contract losses.
“The root causes of these contract losses include a few MCO clients not securing their state contracts, a state health department’s decision to transition to a full broker model – favoring an incumbent competitor – and a client’s decision to diversify volume away from us due to legacy issues,” L. Heath Sampson, president and CEO of Modivcare, said during the company’s fourth-quarter earnings call Friday. “However, it’s important to note that these legacy issues have been addressed through our transformation, and I’m proud of my team for doing that.”
The Denver-based Modivcare offers technology-enabled health care services and provides non-emergency medical transportation (NEMT). The company’s Modivcare Home division includes its personal care, remote patient monitoring (RPM) and nutritional meal delivery service offerings.
Barbara Gutierrez, Modivcare’s CFO, also touched on the impact Medicaid redetermination has been having on the company.
“During the fourth quarter, Medicaid redetermination reduced our Medicaid membership by approximately 450,000 members, bringing our Medicaid membership to 24.7 million members,” she said during the call. “Since redetermination started last April, we have seen an 8% reduction to our Medicaid membership, which is tracking in line with our original target of 10% to 15%.”
While dealing with these headwinds, Modivcare has also made its home division one of its key strategic priorities. On the personal care side, the company has set its sights on enhancing caregiver performance through automation.
“Building upon the centralization, standardization and technology platforms in 2023, our continued transformation in personal care is now focused on leveraging automation and digital tools to improve caregiver efficiency and engagement,” Sampson said. “The key here is to free up our frontline members. This will enable us to outpace the inherent growth within the market.”
Sampson noted that receiving clarity from the Centers for Medicare & Medicaid Services (CMS) regarding the 80/20 rule would also strengthen these tailwinds.
On the RPM side, Modivcare is focused on expanding its product capabilities.
“This includes fostering member engagement through our innovative care center and virtual front door services and devices,” Sampson said. “Integrating RPM and NEMT services has surpassed our expectations. We’ve addressed care gaps and reduced costs for our clients, which distinguishes us in the market.”
Modivcare expects revenue growth rates for personal care and RPM to check in at 8% to 10%, and 10% to 12%, respectively.
“Our unique competitive advantages, coupled with our position in the expanding home-centered health care market, set us apart,” Sampson said.
Overall, Modivcare brought in a service revenue of $702.8 million for Q4, a 7.5% increase compared to $653.9 million during the same period in 2022.
The company’s full year revenue for 2023 was $2.75 billion, a 10% increase from $2.5 billion in 2022. This was due to a 10% growth in NEMT, a 7% growth in personal care services and a 14% growth in the RPM segment.
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