Q4 2021 ModivCare Inc Earnings Call
Thank you for joining us for todays teleconference. Your conference will begin shortly.
Thank you again for joining us today and your conference will begin shortly thank you.
[music].
Greetings and welcome to the motives cares.
Fourth quarter 2021 financial results conference call.
This time, all participants are in a listen only mode.
<unk> and answer session will follow the formal presentation.
If anyone should require operator assistance during todays conference. Please press star zero from your telephone keypad. Please.
Please note this conference is being recorded.
At this time I'll turn the conference over to Jonathan Bush Senior Vice President and General Counsel, Jonathan you May now begin.
Thank you operator.
And thank you for joining motor carriers fourth quarter 2021 conference call and webcast with me today from the company are Dan Greenleaf, President and Chief Executive Officer.
Anderson President of our home Division and Heath Sampson Chief Financial Officer.
Before we get started I would like to remind everyone that during todays call. The Companys management will make forward looking statements under the private Securities Litigation Reform Act those.
Those statements involve risks uncertainties and other factors that may cause actual results or events to differ materially from expectations.
Information regarding these factors is contained in today's press release and the company's filings with the SEC.
We will also discuss non-GAAP financial measures to provide additional information to investors. Our definition of these non-GAAP financial measures and reconciliation to their most directly comparable GAAP measures.
Included in our press release and form 8-K.
We have arranged for a replay of this call will be available approximately one hour after today's call on our website modus care Dot com.
This morning, Dan Greenleaf, our Chief Executive Officer will begin with opening remarks, and provide an update on our <unk> segment afterwards, Jason Anderson, who will provide an update on our home division followed by Heath Sampson, who will provide an update on the details of our financial results. Then we will open the call for questions with that I will turn the call over to Dan Greenleaf.
Dan.
Thank you John good morning, everyone.
On a consolidated basis motive peer reported strong financial results in the fourth quarter of 2021, delivering 44% revenue growth driven by contributions from our recent acquisitions and 17% growth front or any empty segment. Adjusted EBITDA was $58 million in the fourth quarter, an increase of <unk> <unk>.
11% compared to the prior year, we ended 2021 with a full year adjusted EBITDA of $205 million, which is a meaningful improvement compared to the $51 million of adjusted EBITDA that the company achieved in 2019, when I joined as CEO I'm very pleased.
With the significant transformation at loaded payroll over these past two years, we embarked on this journey with a vision to address the inequities and access to care for the country's most vulnerable and underserved patient population leveraging long term customer relationships and our existing patient base, which today.
A C 30 million patients roughly 9% of the U S population today, we have built a one of our clients supportive care platform with a comprehensive suite of solutions that address the social determinants of health, we have evolved significantly invested in our technology platform.
Which fuels our purpose the decisions we have made over the last two years have put us in a position to further impact health inequities theyre, making care accessible to all whether on the go or in the hole, we meet our patients wherever they are now we remain focused on executing to.
Make our vision a reality.
I'd like to spend a little bit of time talking about our <unk> segment, which continues to be a key component of our vision to connect patients to care.
Recently, we were pleased to see medical transportation access coalitions, New study validating any empties role in assisting ultimately embargo populations to navigate the health care system more successfully we fundamentally believe any empty and we will continue to be a very necessary.
Component and broadening access to care for patients regardless of demographics location, our economic well being.
As it relates to any empty business. We are focused on force key strategic priorities in 2022.
Centered around enhancing the patient experience and which I will cover with you today.
Our first strategic priority is to continue to build our sales pipeline and execute on an aggressive sales growth plan as we believe we have meaningful opportunities both in new and existing markets, we expect to capture $500 million of new sales wins over the next three years.
The any empty market is currently a $5 $8 billion market, including Medicaid and Medicare advantage and we see the potential for this market to grow at a 10% rate over the next three years driven by continued growth in Medicaid and accelerated growth in Medicare advantage, we are confident.
And our position to maintain and expand market share due to our scale low cost value based care offering and high touch high Tech approach, which meets the member where they are coupled with consistent.
Best in class performance and customer relationships.
Our second strategic priority for any empty is to create a consistent patient experience one of the ways. We intend to do this is by evolving our relationships with our transportation providers or T piece, creating a greater sense of partnership between us our national scale, coupled with our regional state and local presence.
<unk> allows us to develop and support community based small business transportation owners.
We believe a more stable and partnership like model will foster win win relationships with us and our best performing Tvs.
Our initial focus has been to increase engagement through initiatives such as motor care Academy, which provides technology insights best practice sharing and training as well as the advocacy programs like our T. P Advisory Council focus groups and a new customer experience management platform.
That enables us to capture the voice of our transportation provider partners.
During the fourth quarter of 2021, we amplified our network development efforts in certain markets to address driver shortages and increased capacity by adding several thousand providers and respective vehicles to our network. We are pleased with the results of these efforts as evidenced by incremental.
Improvement in our network health Kpis.
Our third strategic priority for any empty is deliver a standardized experience for patients through a multi modal solution.
Our goals is for patients who received the appropriate multimodal mobility solution either a high touch experience through an experienced care coordinator in our contact centers or a high tech experience through our member App portal. The substantial enhancements, we have made in our contact centers and investments and enhancements.
<unk>, our technology platform over the past year, primarily through our execution of projects storm.
<unk> us well to provide a consistent and best in class patient experience of note. We have meaningfully increased our service levels improved quality and strategically managed our contact center workforce in the midst of unprecedented labor shortages.
We have also successfully transitioned over half of our call volume to our onshore and offshore PPO partners, which has helped US drive improved contact center kpis, while enhancing the patient experience.
Lastly, our fourth strategic priority for any empty is to further modernize and automate our platform to expand access to care.
Given the investments we've made over the last 18 months mode of care has the nations largest credential and digitally connected advanced notice network a multimodal any empty providers, we are working to transform and enable our network to be on demand.
We look forward to reporting our progress in these areas in subsequent quarters.
Very proud of the work our team has done given the pandemic and the uncertainty around shifts in the labor market to transform service levels that our contact centers improved quality establish a healthy network of transportation providers and ultimately enhance the member experience move.
Moving to our personal care and remote patient monitoring segments in January we announced a major milestone for motive peer reorganizing and aligning a home based offerings under our New Division motive care Hall, we were pleased to promote VR is CEO , Jason Anderson, the president of motive.
Your home we believes the alignment of our home based services onto Jason's leadership will unlock greater cross selling opportunities, which is a key component of additional organic growth as a referral source and the case manager are typically the same call point for personal care remote patient monitoring.
And meals.
Jason will cover motive care home in more detail, including his strategic priorities a bit later.
Consolidating our Homebase services under motive care home puts us in a position to accelerate our value based care initiatives, we are making significant advancements in our one stop shop capabilities are in multiple conversations with payers around partnering on an integrated value based pilot, which we expect.
To launch later this year further we believe there's a significant opportunity to leverage our collective channel of existing customer relationships and their respective patients and members in 2022 cross selling and organic revenue growth will be a focal point for our management team.
Maintaining our current book of business, we have implemented a win retain and expand sales strategy involving a highly coordinated approach between our account management and growth team.
This year, we will strive to meet or exceed 2020 one's retention rates of 98% for managed care organization contracts at 100% for state relationships.
We believe a few significant new state contracts will be awarded this year and remain steadfast in our position to capture these.
In summary, we have assembled a one of a kind suite of supported care offerings and transformed our platform to holistically meet the needs of our customers and their respective patients.
We remain committed to executing on our foundational six pillar strategy, which as a reminder includes the following placing the right people in the right seats listening to the voice of our customers driving transformational growth implementing a single repeatable model enhancing our technology platform and a.
Rebranding.
The strategic priorities of our business segments align with these pillars harmonizing focus and driving value across the entire organization I'd like to take a moment to recognize our team members transportation partners and customers, whose compassionate commitment to making a difference in our patients' lives have made our <unk>.
<unk> to date possible finally before turning it over to Jason I'd like to touch on an important update on the company's commitment to diversity equity and inclusion and environmental social and government initiatives.
As you May know our organization is proud to have a highly diverse team member population represents the communities and patients. We serve to that end. We are pleased to announce the appointment of nape von <unk> as our first chief diversity Officer, who will work closely with team members across the organization.
To ensure that motor care continues to advance diversity equity and inclusion and create an environment where everyone belongs in the near future. We will be issuing our inaugural ESG summary report these milestones reflect our desire to promote a highly supportive work environment and better.
World, both of which are important aspects to the success of our company.
With that I'd like to turn it over to Jason Anderson President of our home Division for some comments on the home Division Jason.
Thank you Dan as Dan mentioned, we recently announced the reorganization of our home based offerings into a new division motive care home, which encompasses our personal care and remote patient monitoring segments.
Health care accelerates into the home he believed that motive care is well positioned which is why this operational realignment is so important.
Today, I will be sharing our top strategic priorities for home in 2022.
Our first strategic priority is to augment our caregiver recruiting initiatives.
During the pandemic, we experienced a decrease in our caregiver workforce and are focused on increasing the number of caregivers to serve the high volume of referrals and demand for personal care.
We also recognize the need to modernize our caregiver recruiting strategies, particularly with the challenges of today's labor market. We have implemented a centralized talent acquisition function, which augments our local community based recruiting team.
Our second strategic priority for home is to increase our sales pipeline across our suite of services, we expect to accelerate sales growth through coordination and cross selling our home services are often referred to the same case managers for our patients.
By aligning our offerings under home and bundling our services together this reduces barriers and friction for our patients and case managers to access supportive care with a single provider.
Integrated supportive care pilot, which Dan mentioned will be a proof point for us to deliver a bundled and coordinated offerings.
We are also focused on expanding our remote monitoring sales pipeline for our patient engagement service offerings designed to address complex and at risk patients and further assist health plan with gap closure.
Lastly, we have a strong pipeline of payers who are interested in our meal delivery service. We are currently shipping meals to members through our national Foodservice partner and we are focused on scaling this business to service the strong demand that exist from our Medicaid and Medicare advantage customers.
Our third strategic priority for home is to integrate our businesses and offerings in order to deliver the full breadth of our platform and accelerate our vision to support value based care.
Additionally, bringing our businesses onto a common tech platform will enable us to serve up data insights to our team members customers and patients.
Our fourth strategic priority for home is our focus on organic growth and evaluating a robust pipeline that inorganic growth opportunities.
We see significant opportunity to drive organic growth in our personal care segment with our plans to open de novo branches in several key markets within our existing seven state footprint.
We expect that did novo growth and continued M&A will become a significant part of our strategy going forward.
In addition, we will continue to evaluate a robust pipeline of inorganic growth opportunities in order to further scale or enter new markets across our multiple service offerings.
In summary, I am very excited about the important role our home services will play in motive cares broader supportive care platform and vision to deliver value based care for our customers and members.
As we drive forward, our strategic objectives, we will improve patients' lives reduce health care costs and become the service provider of choice in supportive care.
With that I'd like to turn the call over to Heath Sampson, our Chief Financial Officer, who will discuss our financial results Heath.
Thanks, Jason.
Starting with our consolidated fourth quarter of 2021 financial results, we recorded revenue of $576 million or 44% increase compared to the prior year period.
Net loss from continuing operations of $31 million were a loss of $2 25 per share adjusted.
Adjusted net income of $30 million or $2 and <unk> 11 per diluted share and adjusted EBITDA of $58 million.
For the full year 2021, we recorded revenue of $1 billion $997 million or 46% increase compared to 2020.
Our net loss from continuing operations of $6 million or a loss of 45 per share adjusted net income of $112 million or.
Our $7 89 per diluted share and adjusted EBITDA of $205 million turning to our <unk> segment financials for the fourth quarter of 2021.
And E&P revenue increased 17% year over year to $403 million, primarily driven by higher trip volumes, which increased nearly 10% compared to the fourth quarter of 2020.
Surface expense for any empty segment, which includes all the direct cost increased 16% year over year in the fourth quarter of 2000 $21 million to $317 million.
The increase was primarily driven by higher service costs associated with higher trip volume as well as higher cost per trip our unit costs.
As we highlighted on our last call, we experienced higher unit costs in 2021 due to driver shortages and our transportation providers.
On a sequential basis, our unit costs were flat in the fourth quarter compared to the third quarter driven by the initiatives in our transportation provider network discussed earlier.
Going forward, we expect that the strategic priorities discussed earlier by Dan along with disciplined operational execution will continue to drive unit cost lower.
And Ian Tea segment net income from continuing operations was $2 million in the fourth quarter of 2021 segment.
Segment, adjusted EBITDA was $38 million in the fourth quarter of 2021 compared to $47 million in the prior year period.
The decrease was primarily driven by higher trip volume unit cost and technology related general and administrative expenses, partially offset by the benefit from a favorable revenue true up for our capitation contracts.
Excluding the favorable revenue true up adjusted EBITDA would have been more in line with our <unk> segment adjusted EBITDA expectations that we shared on the third quarter earnings call.
Adjusted EBITDA margins for any empty segment were 9% in the fourth quarter of 2021, which is in line with our long term any empty adjusted EBITDA margin expectations of 7% to 10%.
Turning to the results of operations for our personal care segment revenue in the fourth quarter of 2020 , one was $157 million compared to $54 million in the prior year period.
The increase was driven by a full quarter contribution of revenue from the simpler acquisition, which closed in November 2020.
As well as $48 million of revenue from the <unk> acquisition, which closed in mid September 2021.
Our personal care hours on a combined basis declined low single digits sequentially due to seasonality around the holidays and inclement weather as well as continued caregiver shortages caused by the latest COVID-19 variant and recent vaccine mandates.
Personal care segment income for continuing operations was $2 million in the fourth quarter of 2021.
Segment, adjusted EBITDA was $13 million in the fourth quarter of 2021 compared to $5 million in the prior year period.
Adjusted EBITDA margins declined to 8% in the fourth quarter compared to 9% in the prior year period and remain below our target of 10% to 12% due to a longer than expected continuation of the pandemic, which was the primary cause of our shortage of caregivers, which drove a depressed hours of service and elevated levels of overtime.
We are focused on realizing synergies from our acquisitions of care finders, and simpler up and executing on the strategic and operational initiatives discussed earlier, which will enable us to reach our targeted EBITDA range.
As we head into 2022, we have received or expect to receive reimbursement rate increases in all of our major personal care markets.
These rate increases will help offset our elevated overtime costs also increased wages for our caregivers.
Remote patient monitoring our RPM revenue in the fourth quarter of 2021 with $16 million driven by a full quarter contribution from the acquisition of V. I.
Which closed in September 2021.
On a comparable basis fourth quarter revenue was up double digits compared to the fourth quarter of 2020 prior to our ownership driven by double digit growth inactive clients.
RPM segment net income from continuing operations was $1 million in the fourth quarter adjusted EBITDA was $6 million in the fourth quarter and adjusted EBITDA margins were 40%, which is above the company's normalized margin target of mid 30% range.
We still expect to return to our long term EBITDA margin target in the mid 30% range as we ramp investments in <unk> and other personnel expenses.
Consolidated cash flows from operations in the fourth quarter of 2021 was $12 million and full year 2021 cash flow from operations was $187 million during the fourth quarter of 2021 cash flow from operations was favorably impacted by cash generated from a reduction in accounts receive a.
About $56 million.
Partially offset by the negative impact of a reduction in contracts payable of $38 million.
While we continue to accrue additional contract payables each quarter, we expect to pay our seto roughly $100 million to $150 million of these contract payables over the next two to four corners.
With that said the actual timing of these payments could be delayed until later in the year.
We ended the fourth quarter of 2021 in a strong financial position with $133 million of cash and cash equivalents and zero borrowings on our revolver.
In February 2022, we refinanced our prior revolving credit facility with a new $325 million revolving credit facility, which remains undrawn.
The new revolver reflects competitive market terms, including lower interest rates incremental capacity of $100 million and increased flexibility for the companys future capital needs.
Our consolidated pro forma net leverage was three seven times at the end of the fourth quarter of 2021.
We remain committed to our net leverage target of three times and maintaining a strong balance sheet.
With regards to capital allocation, we continue to evaluate a robust pipeline of acquisition opportunities, particularly as we see significant opportunity to scale, our home division and new and existing markets. However, we remain disciplined in our approach to M&A with a focus on training meaningful value for sure.
Shareholders, while maintaining a strong balance sheet.
While we expect to continue to make acquisitions. We are also focused on successfully integrating the back office functions processes systems and controls of our recent acquisitions in the motives cares shared service organizations as well as standardizing policies and procedures.
Turning to our equity investment in matrix in which we own a 43, 6% interest matrix saw sequential quarter over quarter improvement in its operating performance.
However, our results continue to lag compared to prior year due to lower revenue from clinical solutions, which significantly benefited from COVID-19 related business.
Matrix to its clinical care.
Showed continued momentum during the fourth quarter of 2021 due to recent declines in the company's revenue matrix recorded a noncash impairment of goodwill of $111 million in the fourth quarter of 2021.
For full year 2021 matrix recorded revenue of $398 million and adjusted EBITDA of $67 million.
Well matrix its performance in the second half of 2020 , one was below expectations, we remain highly aligned with our private equity partner Frazier and engaged as a supportive board members as matrix transitions its business focus to a post COVID-19 environment and returning to its historical financial profile through various strategic initiatives.
We are also excited by the appointment of Kathryn tobacco as the interim CEO and Chief operating officer of matrix and we are encouraged by the steps <unk> taken to position matrix for future growth.
Lastly, I'd like to briefly share our thoughts on our expectations for the business going forward consistent with previous statements. We are reiterating our long term operating objectives as follows.
Any empty revenue growth in the mid single digit with adjusted EBITDA margins between seven and 10%.
Personal care revenue growth in the high single digits with adjusted EBITDA margins between 10 and 12%.
And remote patient monitoring and revenue growth in the mid teens with adjusted EBITDA margins in the mid 30% range.
Overall, we continue to be very excited about the long term outlook for our business as we execute on our strategy to be the leading integrated supportive care provider in the nation.
As we look into 2022 we are excited to have.
The foundation of a platform fully assembled and we look forward to providing the full breadth of services to our patient and payer partners.
This concludes our prepared remarks with that operator, please open the call for questions.
Thank you at this time will now be conducting a question and answer session. If you'd like to ask a question today. Please press star one from your telephone keypad, a confirmation tone will indicate your line is in the question queue you.
You May press star two if he would like to remove your question from the queue.
All participants using speaker equipment may be necessary to pick up your handset before pressing the star keys.
One moment, please when we pull for questions, what's Gonna Star one.
Thank you and our first question comes from the line of Bob <unk> with CJS Securities. Please proceed with your question.
Good morning, and congratulations on a strong Q4.
Thank you very much Bob.
Absolutely yeah. So I wanted to start I mean lots of talk about lots of good stuff there.
The update on the transportation provider network with Great. You. Obviously as you said, Phil then thousands of thousand couple of thousand.
New vehicles and whatnot I'm curious you know where you stand now in terms of the density of the provider network, you know versus where you want to be and then also utilization was up year over year gave us. The you know broadly speaking where is it now versus pre COVID-19 and how you think that trend will.
Continue.
So you know to recover to pre COVID-19 levels for how long.
Yes, so Bob a couple of things.
In terms of network health.
We have a pretty sophisticated algorithm that we use.
If you actually look all the way down to the county level, where we're evaluating the number of vehicles, we need based on on the needs of our member population.
And as I mentioned, we look at this every day and I think we feel pretty good where we are from a network house standpoint, I would say four or five months ago kind of on the tail end of the few world pandemic I guess, we could we can make the argument that the army Kron is.
Still around but but we were.
We're in a pretty good position right now and I think we know where the opportunities are is it a 100% solved for I would say no, but where our network is is much healthier than it's been in quite some time. So that's what I would I.
I would say about that one the other question was around utilization.
It's still growing incrementally Bob I don't we're not seeing any like big Bangs I would just you know from our forecast or our own internal forecast.
Our view it will incrementally increase over that over the next several quarters.
I think we do doubt that it will ever go back to the levels. It was pre COVID-19 .
And.
There's one really good reason for that is that we've done a much better job managing ineligible riders and and we would would you view that as a percent of our business stock coming back. So that's that's kind of where we are as it stands right now.
Yeah, Bob just a little bit more on the states that Dan talked about network out the states, where we know we have an opportunity we know what it is and we have strategies for how to implement for example, we do own our own TNC network and we know if we deploy them there that will improve there so.
With the tool and the insight that Dan talked about now we know we know where to target and we have strategies for all the states across the board. The other thing I would also say Bob.
We're getting much more sophisticated in terms of what's the right modality for the member so whether that'd be mass transit whether that be the members family member brings that person.
The appointment to to the use of of of Lyft.
The rumor or use of Rome.
<unk>, which is our own TNC, which we apply to different different networks.
So I think we're also getting much more sophisticated at all on that and we're using.
Our call Center representatives to engage the members and really evaluate what's the best modality for them. So I think that's something else that I think it will be pretty significantly different in terms of how we've historically run this business.
Okay. Great. That's helpful. Thank you and then just last one on any M. T. You alluded to a large pipeline of opportunities I think you said something about $500 million that you expect over the next few years I know, there's some <unk>.
Large bids outstanding now any update on kind of the 2022 outlook for you know opportunities ahead of you in and when we might learn about you know any of the.
Current bids that are out there.
What I would say to you Bob is we feel very strong about our position is as we mentioned in my remarks, we are 100% retention and state contracts in 2021, and 98% retention in our Mcs contracts in 2021.
Very well positioned.
We've got 70% of our network now has been has been digitized.
Some of the issues related to our our service levels with our contact centers are we've taken a contact center that had kind of bumpy performance and one that I would say is unequivocally the best in class performance and now on its way to World class performance. So I think we're really really well positioned.
And I think some of the other opportunities that we saw was in network health and our ability to build networks very quickly as you know it's.
Kind of a superpower, if you will and we did it we bought.
Oh, you bought the United business, and we've done it again and.
At the end of if you will of Covid.
And so we feel very strongly about where we are and again I think we're very well positioned on these arrangements for the record. This this marketplace. We did a recent analysis is growing on a compound growth rate of seven 6%.
And I think I think that was not well understood previously.
And I think the size of the market is larger than what we had been indicating a previously because we updated our analysis very recently.
So we feel really good about where this is we also know that some of the data that came out of that that impact study.
Around.
Seniors, particularly Medicare advantage members was really powerful.
In terms of they're the ones who.
Have the most severe conditions, where most inclined to use the service and thats exactly what you'd want right because that ends up being preventative.
So that's.
That's where we are and.
Again, we look at our historical retention rates you look at what we've done over the last couple of years and we feel really good about how we're positioned.
Okay, Yeah that sounds terrific, particularly on the network and then.
Opportunities ahead, so I'll, just ask one more and I'll jump back in queue, but any kind of relationship you just rebuilt the transportation network again in and now you're kind of passed with the recruiting of caregivers for personal care and so maybe just I know part of the priorities are you know modernize and improve that that <unk>.
First as well, maybe dig a little bit more give us a sense of.
You know the ability to recruit and how long you think it takes to get your caregiver population.
Population or network for lack of better terms to where you want it to be.
So I think there is a light at the end of the tunnel here.
I I you know I would say that historically this company has handled things on a very much a regional basis and and operated.
Much like our hope more like a holding company to an operating company and that's something that Jason has made some.
Pretty dramatic changes to win and we've also promoted another person to Chief operating officer, who was an internal person in.
In the organization.
But we feel good about it we think the tide is changing we did get for those who.
Don't know, we did get a $3 reimbursement increase over the last seven months of the state of New Jersey.
That accounts for about a third of our revenue and AR and then New York, we have a strong concentration as well as Pennsylvania and those are all <unk>.
Think a very good states in terms of what we foresee from a reimbursement standpoint so.
You know I would share with you that I don't think we've been as sophisticated as as we could've been in this area and I also know that we were working in states where they.
They did have mandates, which probably slowed things down a little bit in terms of recruiting but we're very bullish on it.
No.
We feel like that.
The tightest changing in and.
We feel like.
That we're very well positioned to particularly given our density in New York, New Jersey, and Pennsylvania to BV.
The personal care company of choice and we've got 95 locations are disproportionately weighted.
And those states. So I think we have the right concentration of locations and the ZIP codes in.
I feel very good about.
Whats happening from a labor perspective, I don't know anything else you'd add a little more specific.
Local local people used to recruit theyre going to continue to do that and it was Dan said will have centralized recruiting there'll be marketing around that Dan also talked about the increased reimbursement rates, which will flow through too much of it will flow through to the <unk>.
Individual caregivers and then you have small things that matter around ease of use on tech.
Better timing of payment. So those are just a few specific actions, while we feel good about the transition to what Dan talked about and will all add up and they will all result in us getting caregivers back yes. The other beauty Barber. This business is that demand exceeds supply by 50% in many of our markets.
So as we bring in the caregivers the opportunities to provide care are significant and so we.
Again, I think we've got.
We're in a really good position here, Bob and feel very optimistic about what.
What the future looks like.
Okay. That's great. Thank you very much.
Thank you. Our next question comes from the line of Peter Chickering with Deutsche Bank. Please proceed with your question.
Hey, good morning, guys. Thanks for taking my questions the.
First one is on the long term guidance you know, it's nice to ease or reiterate that today, but as we think about 2022 I know that you aren't giving guidance at this time, but can you provide any thoughts on you know where consensus is today versus your own internal expectations.
Yeah, Good morning, Peter.
For US right now that you guys have done a good job if we feel really good about where consensus is across the board. So I think that's the right proxy to look at.
As a whole.
Okay got it and then sort of back to Bob's question on on the margins on the homes segment.
I understand sort of your fourth quarter seasonality due to weather and it just you know normal seasonality, but can you sort of help us quantify for the number of open positions that you guys have sort of at this point today.
And as you think about hiring for 'twenty 'twenty. Two you know do you guys think you can sort of higher to the demand that you thought you could lets say in the third quarter call and how and how we should model that from a both a revenue perspective, there's a feeling that demand and from a margin perspective in terms of the impact of sort of labor inflation on on the home segment.
Yeah.
Well, hey, listen.
He said I will double team this one.
I will say one of the things peto that from a margin perspective has been most impactful has been over you know historically the company had brought it about 10% overtime we during COVID-19 .
<unk> got as high as 21%.
We believe that is trending back down to 16, right now and ultimately.
We believe we'll be back at 10%. So I just I just want to point that out that that's the driver right now.
I think we've got a good handle on it.
We again as we recruit caregivers we.
Certainly believe that number will we.
We will continue to go down Heath.
The other item. This is good now that we have all the assets to this when we bought that there are synergies.
Because you have two offices two levels of people those have really accelerated and we feel good about that happening even earlier than we had in our business case. So that will also help with with margin and then to your first question around demand in dentistry. This earlier in some markets is up to 50% short on staffing relative to demand and that could ray.
Anywhere from 10% to 50%. So now we understand where it is and where our efforts need to be to implement the recruiting stuff that we talked about from Bob's question earlier. So we have the visibility we got the right leadership team in place.
So now it's about execution and with what we have we feel good about.
But given where we are from a margin perspective, and then meeting that demand in each of the markets that we're working on.
The other thing I also want to point out that well.
Why are we aligned around the home is.
As the case manager.
And that case manager is kind of your one stop shop for personal care for meals and from remote monitoring.
And so again I think as we continue to staff our business appropriately. There's we just think there's going to be enormous opportunity because of the cross selling opportunities as the case manager.
Okay, Great and then sort of last one here a follow up on Bob's question on capitate, any empty or you're seeing that overall fourth quarter.
Demand is generally the steady state that we should be modeling going forward and on the cost side that you said that that you'll drive unit costs lower the macro environment is going the other way just can you give us a little more details as how you guys can counter the overall macro environment. Thanks, so much.
Yeah, I would say a couple of things.
What are they.
We're about 44% or four recipe so and the reason I bring that up is that.
Some of the increases we see our passengers. So so even if you know unit cost for example are going up in some shape or form.
Hum.
I'd say, a disproportion amount of that is a pass and so.
It's not going to have what I would describe as the impact on <unk>.
On the bottom line as you might think so I just I wanted to point that out and then Heath do you want to take the other part of that yeah. So from a macro environment perspective.
Utilization has been relatively stable.
And we we expect that to incrementally increase but again not to the levels definitely not even close to the levels pre Covid and then also you know that buying behavior.
With our customers whether that state more MTO is the priority right now is the member experience.
And that member experience and then and then consistency in an operational and then price for share prices number three or four for our for our states. So with that in mind everything we're doing it's focused on the member experience and operations and then and in other cases, where maybe the contract it was a little thin.
Negotiating price.
We just renegotiated pricing with a large payer nationally so I think with where we are scale matters.
What we've done to ensure customer experience as most important.
What we're doing with the driver network to make sure where that behavior stabilizing unit cost and that's been the biggest challenge and then three.
Renegotiating, where we think we need to renegotiate.
Great. Thanks, so much guys, so I would say.
I mean, the quality of product that we provide our members.
And our our payer partners.
And our our state partners has just been massively improved and whether it would be the service levels in our contact centers, which had been running at about 95% historically the company had occasionally gotten above 80%.
To even things like.
Encountered dado, even things like.
Yeah. The reports that we provide them and the accuracy of those reports to digitizing, 70% of our network. It's just the relationship we have now with our customers is just massively different we still think there is.
Theres still substantive opportunities to improve but the improvements we've.
We've made at this point it's been material.
With the with the large well just give example around that there's a large pair on primarily on the on the Medicaid side that wants to grow with us where about half of their business now.
And they say they like it a lot more.
Actually all of them Yeah. The reason being is because they know we're there we know we're performing.
And in water growth us. So this is like every year. This is a big year for us with the stuff we put in place the stuff we're going to do that's why the initiative that Dan talked about when he was going through any M T.
Starting with growth because we can grow within our current.
Payer base, we know each opportunity that's out there getting to Bob's question, we know exactly where the competitor bids are coming up we know exactly where the opportunities are and because of where we are that's why that's why we think we can really start gaining market share.
This year.
Great. Thanks, so much.
Our next question is from the line of Brian <unk> with Jefferies. Please proceed with your question.
Hey, good morning, guys congrats on the quarter.
Thank you Brian .
Yeah, not too many questions for me, but I guess I'll start Dan.
Obviously, we're thinking about the the three different offers that you have with RPM or I guess for RPI food.
Transports NPC so.
Any details you can share with us on the traction you're getting or interest you are getting around contracting opportunities for multiple service lines in Ma.
I'm a penetration has looked like and that kind of like unique offerings that you have there.
So I think the interest level is really high and the.
The future of.
Our relationships with the states and payers is going to value based care, Brian There is no question.
The beauty of our business is that we've gone out.
And acquired the pieces that that one needs to do this from a support of care sample then obviously, we already had.
The transportation business, which was an incredible asset when you think about.
Had relationships with $30 million million members for 30 million patients. So.
Hi, Brian and I think there'll be a lot coming out of that over the next several months and we do have a pilot underway with a very large player.
In the Midwest and we certainly think thats going to be something that's going to be very attractive to others. As the results come out I will say look at you know when you asked me about M. A I would say look at two large payers unitedhealthcare and anthem. They both gone on record.
Say the way, we're going to handle MAA offerings in the future is going to include transportation.
It's going to include personal care and it's going to include meal delivery and they've both gone on record in the last five months reap most recently anthem in the last three weeks about what they believe the offerings should be and obviously, we think there's a lot of opportunity with them on the <unk>.
On the remote monitoring piece wrote monitoring for the record about 44% of our revenue and remote monitoring is is in Medicare. So so far we're really well positioned and what's fascinating I think because we were doing all this stuff before either United or anthem, one on record about what they felt the.
Medicare advantage population needed.
I appreciate that and then I guess Heath I think about projects storm and lightning, how should we be thinking about kind of like the timing.
For those things and how you think those initiatives would trickle down to the margins for the different segments.
They touch.
Yeah, So first for storm and for lighting for storm you break it into two macro categories. The Opex side, and then what happens with our kind of unit cost side, you know the opex side, primarily within the contact center and that was the majority of the costs that we were able to.
Get out and those are out we have V. P O 50% offshore we've implemented technology that has allowed us to reduce our onshore head count.
By a factor of anywhere between around 30%.
So the costs on storm arrived from our contact center operations perspective, we're starting to see that now we had to get through the language challenges and finish that off.
And now as I can.
I know, what where we're reducing our head count right now on that side. Yeah. I you know one of the things I just thought I'd point out is I know Peter asked this.
Brian a little on the labor side, but if our call centers or any indication about what's happening on the labor side is pretty amazing I mean, we're seeing.
We've seen absenteeism get as low as 10%, which during COVID-19 the middle of Covid. It was highest 45% near the attrition rates at the call centers. This company historically kind of been at the 250% range and most of January was around 4% and so.
And the reason I'm, bringing this up is that you know we're looking at labor from a lot of different perspectives and a lot of things we've been doing and if you know if what we've done with the call centers is any indication of what we believe is happening in the labor market I think it's extremely favorable and again I think we're also was it's also very indicative.
From my perspective of just how much we've transformed our model that we're seeing these just dramatic changes in things like attrition and absenteeism.
I appreciate that and then my last question I guess for Jason.
As I think about your comments on geographic.
Yep.
The footprint for the home health business, how should we be thinking about your geographic expansion plans going forward.
<unk> Western Pennsylvania.
Other areas that you're thinking about.
Yeah. Thanks for the question. So we're looking at kind of density in the markets were in South Florida. The ZIP code by ZIP code approach looking at kind of demand competition in those markets.
So logically it makes sense to continue to penetrate the market for it.
From that perspective, if there's opportunities that present themselves beyond that we'll evaluate them with lyft.
But right now we're really going to focus on containing all of the markets that we currently applications.
And operations.
The other item just to add on what Jason He said this as well and this is relatively new to <unk>.
We're in the dense where in the market's Rainbow. We're also going to set up these de novo locations that are really close and that strategy on opening an office in community based locally based is also a strategy that will tag onto what Jason said and allow us to grow within that state, but maybe a little bit more further out from from the <unk>.
Community Spirit, so those two things together it is a priority priority for sure.
Only thing I would say about the home two guys just for cliffs is a zip code business.
Not necessarily a state business and this is why having these locations and the specific ZIP codes matters. So much and so and again I think Jason has a tremendous amount of clarity around that on on where we are in and where we also need to go but I just want to make everybody understand that this is truly a zip code.
Business not a state business.
All right got it thanks guys.
Thank you Brian .
Our next question comes from the line of Brooks O'neil with Lake Street Capital markets. Please proceed with your questions.
Thank you good morning, guys I have a couple of questions too I guess.
First I was hoping you might provide just a little more detail on the true up you mentioned.
Related to the capital city contract can you give us a sense for the.
The dollar amount of that true up and can you just help me to be sure I understand did that affect revenue as well as adjusted EBITDA or was that just the adjusted EBITDA impact yes.
Yeah, so the well one it's not uncommon for this with the contracts we have right.
T M on track when we.
Re redo them every whether that's every three years so the cycle of of redoing those you've kind of cleared the decks with whats currently on the balance sheet and in and take that to income. So that's what's happened and that's a common practice that happens every time so.
The amount that was there and this is why we said on the call are any M T.
Adjusted EBITDA was probably more in line with closer to Q3.
What we said in the script so.
A few million dollars there.
Okay.
Okay.
That's helpful and then.
Yes.
Colleagues sent me a article about over and Lyft coming into the N M P business and some of the challenges they face can.
Can you help us understand how you view the.
Competency and training of the driver in.
Network, you guys use relative to what sounds like you know the time, an Uber and Lyft driver, who knows how to drive this car, but not much more.
I mean, Brooks, we put our transportation providers through extensive training.
That extensive training could be what sexual and propriety look like it could be.
Awareness around.
Blood borne pathogens it could be around obviously around COVID-19 .
We partner with an organization to do this.
And.
And.
We deeply discounted.
And it's part of a requirement from our Credentialing standpoint, either youre going to go through the training you are now and it also is how to handle people and in terms of of you know if we have to.
Take somebody door to door I also want to point out listen we've got a whole support network too. So that there is an issue with the patient there is always somebody for the transportation provider to call and.
And we also have safety members in our in our locations who also can be.
Advisors to our TP. So it's not just the <unk>.
Much of the training, we put our transportation providers through which is expensive, but it's also the support network we put around that so in the event there is something that does.
Or could potentially happen, where they are right by their side. So that's a really unique aspect of our model and that's why you know why we still believe in these community based transportation providers a lot of the stuff I talked about related to motive care Academy or how we view our Pos.
Our ship going forward.
Is is very different than what I would describe as a what.
What of.
TNC with it and it's just the model is different they have their model. We have our model that all being said, we think in certain instances theyre going to be it has been a very good partner.
Heath.
Our specifics on a model you'll get this too so the TNC Uber Lyft, specifically those drivers or incentive to get the highest dollar amount at the quickest time.
And you guys know if you if you don't have your lyft or Uber within you're not there for two minutes, they're going to leave.
For people that we serve that are sicker elderly they may take longer they may be confused on location.
That's not their model. So that's another item to point out that.
That is different between the structure is different.
Specific driver is competing for themselves every day to make sure. They put food on their tables, not really to think about should I wait for Mrs. Smith, where can I property Lyft Mrs. Smith in a way that's totally different model just a little more detail what Dan said.
Yes, no. That's very helpful. And then my last question I, just wanted to ask Jason or casually.
I would also pay Brooks on this model to us.
Sure.
The patient population, we serve live in broadband deserts. The patient population, we serve often don't have Wi Fi. The patient population. We serve have limited data plan. The patient population, we serve may have flip phones iphones.
So this is why these contact centers are not going anywhere and why I'm, having contact centers are so important to accessing transportation and so again, that's a very different part of the model is that we have.
We're going to meet the member where they are and this is why we believe so much in yes tax matters, but high touch matters too because the modalities. Our members use are very different than what most of us experience day to day.
Mhm.
Makes total sense I appreciate that color so Jason.
I am, particularly excited about the remote patient monitoring business.
Sleep score to your experience and background.
My sense is that reimbursement rates for physicians are particularly.
Particularly in Medicare advantage, I guess, but maybe more broadly are have been improved.
Nitpick It Lee.
Just talk a little bit about the opportunity you see.
Across the country.
In.
And the growth.
That you might be able to experience over the next couple of years. Thanks a lot.
Yeah Brook, Thanks for asking that question. So we we really focus on partnering with the health plan.
Today's business has been built around focusing on managed Medicare and managed Medicaid and state Medicaid there are certain reimbursement rates that have been improving for buyers. So physician networks I'm hospitals.
Et cetera.
Core business has been built around pardon me with the health plan.
And continuing to penetrate that market and there's consolidation in the industry quite frankly, which has benefited us because people choose from a service perspective on who they're going to use we have.
Experienced.
Grow with physician networks, and we became leading beginning to take advantage of some of those reimbursement rates, but today as far as penetration, we really believe that continuing to penetrate with an equal N and M. C. O is the route to kind of continue to build the business.
Or another market penetrate would be the physician network in the future.
All that makes sense I mean, my own sense is you know with the growth of value based care.
Then they plan to have a massive instead of two <unk>.
<unk> and support these patients.
Correctly diagnosed.
Short them over that that that would you see out there and are you seeing that appetite from the army plan providers.
Yes, and I would I'd build on that Brooke is that's really what it comes down to the remote patient monitoring is the trusted relationships, we have with those numbers are.
Yeah.
The number of times, you interact with them a month, we're engaging at the moment allows us to have real time information that is much better than lagging claims data as well as a survey that's done you know month prior or sometimes quarters. Prior so we're able to provide real time information back to the health plan, which allow them to act.
We create a plan of care impacts medical expenses period, and so that's really talked around our E. Three.
<unk> solution in the past that also resonates and that's for the future because of the business will go with the trusted relationships. We have with members we built throughout our different segments. So whether that's within personal care monitoring.
The meals business for transportation, it's going to allow us to add significant value back to the help.
And so that that is definitely where everything's going.
Yeah.
Thanks, a lot for your color.
Yeah.
Thank you. Our final question today is from the line of Mike <unk> with Barrington Research. Please proceed with your questions.
Good morning.
Couple of things Dan on the our meal delivery.
Assuming any revenue.
That's that's sort of gets booked in in and any M. T is that is that where that would would go or where or is that not right.
That's correct, Okay at what point might you sort of start talking about that in terms of quantifying in Miami or is there a point at which to do that is there a number at which to do that.
Yes, but it won't be this year.
Because we are building the business and we're in Brian several.
<unk> contracts with major payers so.
We're ramping up their let's say that Mike, Okay, Alright, and then sorry, I am jumping between sort of two reports this morning, and I may have missed commentary around this but the G&A expense Ah can you talk about what's going on there in terms of that AR increase and and just sort of maybe give some sense of what oh.
Huck normalized run rate for 'twenty two would be.
The bulk of the increases in our G&A expenses related technology.
The need to invest in technology to bear.
Build what we're building right now for the future and then even still a lot of the legacy you've heard this before legacy platforms in any business and especially in this business too we need to we need to.
Reduce that that that that that that tech debt. So that that's the primary driver for that we do expect with what we're doing in our plans and we just went over this.
Our board two weeks ago, when we get through that we are going to be reducing our R.
Our expense around technology as we finish this off so I think we've hit the peak.
Now, we're going to get synergies as a broader company and then reduce as we as we go into 'twenty three and 'twenty four.
Okay.
Can I ask I mean is this the run rate.
Just wanted to.
So for 2022, yeah from a from an from a from a yes. That's correct from a G&A perspective. This is a run rate for the rest of this year.
Yeah.
Alright, that's all I got thanks.
Okay.
Thank you Mike.
Thank you at this time, if each end of our question and answer session now I'll turn the call over to Dan Greenleaf for closing remarks.
Yeah.
First of all thank you all for participating on our call. This morning, if you're interested in scheduling a follow up call. Please reach out to our Investor relations firm. The equity group, we look forward to reporting back to you in may when we.
Release, our first quarter 2022 financial results. Thank you again and have a good day.
This concludes today's conference you may disconnect your lines at this time. Thank you for your participation.