Despite Leadership Change, Modivcare Is Accelerating Forward As A Home-Focused Giant

Two days after Modivcare (Nasdaq: MODV) announced that its former CEO Dan Greenleaf has been replaced, Interim CEO L. Heath Sampson painted a rosy picture of the company’s future.

Greenleaf, while at the helm, helped the company execute on multiple massive deals, including its acquisitions of the personal care providers Simplura Health Group and CareFinders – for $575 million and $340 million, respectively – as well as the remote patient monitoring (RPM) companies VRI and Guardian Medical Monitoring, also for significant price tags.

“Dan Greenleaf is no longer Modivcare’s CEO or a member of the board,” L. Health Sampson said Thursday on Modivcare’s second-quarter earnings call. “Our board of directors has appointed me as interim CEO. I appreciate the opportunity the board has provided me and I look forward to serving and leading our team.”

Alas, the company is moving in a new direction, but seems to be following the same path it was under Greenleaf’s watch.

“Making these acquisitions the last couple of years has really enabled us now to have a unique set of assets that allow us to be really the only supportive care company that has this stuff,” Sampson said. “So the strategy is consistent with what it has been in the past. … Now it’s about executing. How do we bring these assets together?”

The Denver-based Modivcare is a provider of personal care, non-emergency medical transportation and meal delivery services. Overall, its 20,000 employees provide supportive care services to approximately 34 million individuals.

In the last two years, its in-home personal capabilities have grown significantly, given the acquisitions. It also expects that segment to be a driver of growth moving forward.

“As we transform our business, we expect much of our growth opportunity will come from care moving into the home,” Sampson said. “Our home division is growing organically through new client growth, accelerated caregiver recruiting initiatives in existing markets, de novo openings and increasing scale and density.”

Modivcare’s revenue checked in at $628 million for the second quarter, a year-over-year increase of more than 32% compared to the $474 it brought in last year. By segment, NEMT revenue grew by 23% to $448.7 million; personal care grew by over 48% to $162.7 million; and remote patient monitoring brought in $16.7 million.

Medicare Advantage (MA) has also historically been a part of the company’s rapid growth, another trend Modivcare leaders expect to continue. At the same time, Medicaid has been the primary payer for its personal care segment, an area where Sampson believes there is much more demand to meet.

“MA for is a major focus, and it’s been a large part of our growth – primarily on the transportation side,” he said. “We expect that growth to continue across all of our business lines. The personal care side has primarily been in the Medicaid side, and there’s still a lot of growth [available] there, because we’re not even meeting the demand there.”

The quarterly results have been good enough for the company that it increased its guidance on financials moving forward.

Despite the leadership shakeup, analysts are also encouraged by Modivcare’s path forward.

“The second-quarter results reinforce the company’s strong fundamental prospects ahead,” Stephens Analyst Scott Fidel wrote in a note shared with Home Health Care News. “The underlying strength was seen across all three business segments, with revenue and EBITDA beating our model in each segment. All three segments also reported double-digit adjusted EBITDA margins in the quarter. … We see strong prospects ahead for Modivcare.”

The call was generally lacking details on the leadership change, which was sudden – at least from an outsider’s perspective.

But Sampson did mention that the company may be adding to its executive team moving forward. 

“In the home business, we have great talent there,” Sampson said. “But we know we also need some additional executive talent to ensure we continue to grow.”

The board is currently searching for its next CEO. For now, it seems as if Sampson – who has been with the company for a year and a half – could have a chance at the permanent title. 

“When these changes happen, there’s people involved, and there’s a lot of emotion,” he said. “But there’s really all professionals here. And these professionals individually process [these things] and are now focusing on what they can do to help the company continue to grow.”

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