ModivCare's Q1 2025 Earnings Call: Unraveling Key Contradictions in Revenue, Costs, and Contracts

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Revenue Decline and Contract Dynamics:
- ModivCare's revenue for Q1 2025 was $650.7 million, down 5% year-over-year and 2% sequentially.
- The decline was primarily driven by known NEMT contract attrition and lower build hours in PCS.

Capital Efficiency and Contract Restructuring:
- The company is focusing on improving cash flow and reducing capital intensity with a strategic objective to advance deleveraging.
- ModivCare transitioned several large NEMT customers to faster-settling fee-for-service models, enhancing collection predictability.

Automation and Cost Savings:
- ModivCare continues to automate and digitize its care access platform, reducing unit costs in NEMT by 1.2% year-over-year.
- The company implemented a company-wide G&A reduction initiative targeting approximately $25 million in annualized savings.

Strategic Initiatives and Leadership Changes:
- The company appointed a Strategic Alternatives Committee to oversee potential divestitures, emphasizing the importance of capital discipline and governance.
- Barb Gutierrez, CFO, and Jessica Kral, CIO, are departing the company, aligning with near-term priorities and long-term strategic directions.