ModivCare Inc. (NASDAQ:MODV) Q4 2021 Earnings Conference Call February 25, 2022 8:00 AM ET

Company Participants

Dan Greenleaf ??? President & Chief Executive Officer
Jonathan Bush ??? Senior Vice President & General Counsel
Heath Sampson ??? Chief Financial Officer
Jason Anderson ??? Chief Executive Officer, VRI

Conference Call Participants

Bob Labick ??? CJS Securities
Pito Chickering ??? Deutsche Bank
Brian Tanquilut ??? Jefferies
Brooks O'Neil ??? Lake Street Capital
Mike Petusky ??? Barrington Research

Operator

Greetings, welcome to ModivCare's Fourth Quarter 2021 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions]. 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.

Jonathan Bush

Thank you, Operator. Good morning and thank you for joining ModivCare's Fourth Quarter 2021 conference call and webcast. With me today from the company are Dan Greenleaf, President and Chief Executive Officer, Jason Anderson, President of our Home Division, and Heath Sampson, Chief Financial Officer. Before we get started, I would like to remind everyone that during today's call, the company's management will make forward-looking statements under the Private Securities Litigation Reform Act. Those statements involve risks and uncertainties and other factors that may cause actual results or events that differ materially from expectations. Information regarding these factors is contained in today's press release and in the company's filings with the SEC. We will also discuss non-GAAP financial measures to provide additional information to investors.

A definition of these non-GAAP financial measures and reconciliation to their most directly comparable GAAP measures is included in our press release and Form 8-K. We have arranged for a replay of this call, which will be available approximately one hour after today's call on our website, ModivCare.com. This morning, Dan Greenleaf, our Chief Executive Officer, will begin with opening remarks and provide an update on our NEMT segment. Afterwards, Jason Anderson will provide an update on our home division, followed by Heath Sampson, who. We're brought nothing 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?

Dan Greenleaf

Thank you, Jon. Good morning, everyone. On a consolidated basis, ModivCare reported strong financial results in the fourth quarter of 2021, delivering 44% revenue growth driven by contributions from our recent acquisitions and 17% growth from our NEMT segment. Adjusted EBITDA was $58 million in the fourth quarter, an increase of 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 Modivcare 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 in our existing patient base, which today exceeds 30 million patients or roughly 9% of the U.S. population.

Today, we have built a one-of-a-kind supportive care platform with a comprehensive suite of solutions that address the social determinants of health. We have evolved and 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 by making care accessible to all. Whether on-the-go or in the home, we meet our patients wherever they are. Now we remain focused on executing to make our vision a reality. I would like to spend a little bit of time talking about our NEMT segment, which continues to be a key component of our vision to connect patients to care. Recently, we were pleased to see medical transportations, access coalitions, new study, validating NEMT s role in assisting elderly and vulnerable populations to navigate the healthcare system more successfully. We fundamentally believe NEMT will continue to be a very necessary component in broadening access to care for patients, regardless of demographics, location, or economic well-being.

As it relates to our NEMT business, we're focused on four key strategic priorities in 2022, centered around enhancing the patient experience in 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 NEMT 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 in our position to maintain and expand market share due to our scale, low cost, value-based care offering in a high touch, high-tech approach, which meets the member where they are, coupled with consistent best-in-class performance in customer relationships.

Our second strategic priority for NEMT is to create a consistent patient experience. One of the ways we intend to do this as by evolving our relationships with our transportation providers or TP s, creating a greater sense of partnership between us. Our national scale coupled with our regional, state, and local presence, allows us 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 TPs. Our initial focus has been to increase engagement through initiatives such as ModivCare Academy, which provides technology insights, best practice sharing, and training, as well as efficacy programs like our TP advisory council, focused 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 NEMT is delivery standardized experience for patients through our multi modal solution. Our goal is for patients who received the appropriate multi-modal mobility solution, either a high-touch experience to an experienced care coordinator in our contact centers, or a high-tech experienced through our member app or portal. The substantial enhancements we have made in our contact centers and investments in enhancing our technology platform over the past year, primarily through our execution of projects storm, positions 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 BPO partners, which has helped us drive improved contact center KPIs while enhancing the patient experience.

Lastly, our fourth strategic priority for NEMT is the further modernize and automate our platform to expand access to care. Given the investments we have made over the last 18 months. ModivCare has the nation's largest credential and digitally connected advanced notice network of multi modal NEMT provides. 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. I'm 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 at our contact our centers, improve quality, establish a healthy network of transportation providers and ultimately enhance the member experience. Moving to our personal care and remote patient monitoring segments. In January, we announced a major milestone for ModivCare, reorganizing and aligning of home-based offerings under a new division, ModivCare Home. We were pleased to promote VRI CEO, Jason Anderson, to president of ModivCare Home.

We believe the alignment of our home-based services under Jason's leadership will unlock greater cross-selling opportunities, which is a key component of additional organic growth as a referral source in the case manager are typically the same call point for personal care, remote patient monitoring, and meals. Jason will cover ModivCare Home in more detail, including his strategic priorities a bit later. Consolidating our home-based services under ModivCare Home puts us in a position to accelerate our value-based care initiatives. We are making significant advancements and 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 is 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 while 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 2021's retention rates of 98% for managed care organization contracts at a 100% for stake relationships. We believe a few significant new state contracts will be awarded this year and remains steadfast in our position to capture these. In summary, we have assembled a one-of-a-kind suite of supportive 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 re-branding.

The strategic priorities of our business segments aligned with these pillars, harmonizing, focus and driving value across the entire organization. I would like to take a moment to recognize our team members, transportation partners, and customers whose compassion and commitment to making a difference in our patients??? lives have made our accomplishments 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 probably have a highly diverse team member population where it represents the communities and patients we serve. To that end, we are pleased to announce the appointment of Nate Vaughn as our first Chief Diversity Officer, who will work closely with team members across the organization to ensure that ModivCare continues to advance diversity, equity, inclusion in creating 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?

Jason Anderson

Thank you, Dan. As Dan mentioned, we recently announced the reorganization of our home-based offerings into a new division, ModivCare Home, which encompasses our personal care and remote patient monitoring segment. As healthcare accelerates into the home, we believe that ModivCare 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. The integrated supportive care pilot, which Dan mentioned, will be a proof point for us to deliver a bundled and coordinated offering. 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 plans with GAAP 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 food service partner, and we are focused on scaling this business to service the strong demand that exists 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 of inorganic growth opportunities. We see significant opportunity to drive organic growth, in our personal care segment with our plans to open the noble branches in several key markets within our existing seven states footprint. We expect that the noble 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 ModivCare's 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 healthcare 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?

Heath Sampson

Thanks, Jason. Starting with our consolidated fourth quarter of 2021 financial results. We recorded revenue of $576 million, a 44% increase compared to the prior year period. A net loss from continuing operations of $31 million or a loss of $2.25 per share, adjusted net income of $30 million or $2.11 per diluted share, and adjusted EBITDA of $58 million. For the full-year 2021, we recorded revenue of 1 billion, $997 million, a 46% increase compared to 2020, a net loss from continuing operations of $6 million or a loss of $0.45 per share, adjusted net income of $112 million or $7.89 per diluted share and adjusted EBITDA of $205 million. Turning to our NEMT segment financials for the fourth quarter of 2021. NEMT 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. Service expense for NEMT segment, which includes all the direct costs, increased 16% year-over-year in the fourth quarter of 2021 to $317 million.

The increase was primarily driven by higher service costs associated with higher trip volume, as well as higher cost per trip or unit costs. As we highlighted on our last call, we experienced higher unit costs in 2021 due to driver shortages at 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. NEMT segment net income from continuing operations was $2 million in the fourth quarter of 2021, 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 costs and technology-related general and administrative expenses, partially offset by the benefit from a favorable revenue true-up for our capitated contracts.

Excluding the favorable revenue true-up, adjusted EBITDA would have been more in line with our NEMT segment, adjusted EBITDA expectations that we shared on the third quarter earnings call. Adjusted EBITDA margins for our NEMT segment were 9% in the fourth quarter of 2021, which is in line with our long-term NEMT 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 2021 was a $157 million compared to $54 million in the prior-year period.

The increase was driven by a full quarter contribution of revenue from the Simplura acquisition, which closed in November 2020. As well as $48 million of revenue from the CareFinders acquisition, which closed in mid-September 2021. Our personal care hours on a combined basis declined, low single digit 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 depressed hours of service and elevated levels of overtime.

We are focused on realizing synergies from our acquisition of CareFinders and Simplura, 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 and also increase wages for our caregivers. Remote Patient Monitoring or RPM revenue in the fourth quarter of 2021, was $16 million driven by our full quarter contribution from the acquisition of VRI, 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 in active 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 IT and other personnel expenses. Consolidated cash flow from operations in the fourth quarter of 2021 was $12 million. Full-year 2021 cash flow from operations was a $187 million. During the fourth quarter of 2021, cash flow from operations was favorably impacted by cash generated from a reduction in accounts receivable of $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 or settle roughly $100 million to $150 million of these contract payables over the next two to four quarters. 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 a $100 million, an increased flexibility for the company's future capital needs are consolidated pro forma net leverage was 3.7 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 in new and existing markets. However, we remain disciplined in our approach to M&A with a focus on creating meaningful value for our 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 into ModivCare 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, results continue to lag compared to prior year due to lower revenue from clinical solutions, which significantly benefited from COVID-19 related business. Matrix's clinical care showed continued momentum during the fourth quarter of 2021. Due to recent declines in the company's revenue, Matrix recorded a non-cash impairment of goodwill of $111 million in the fourth quarter of 2021. For full-year of 2021, Matrix recorded revenue of $398 million and adjusted EBITDA of $67 million. While Matrix's performance in the second half of 2021 was below expectations, we remain highly aligned with our private equity partner Frazier and engaged as the supportive Board members at Matrix transitions, its business focus to a post Covid environment, and returning to its historical financial profile through various strategic initiatives. We're also excited by the appointment of Catherine Tabaka as the Interim CEO and Chief Operating Officer of Matrix.

We're encouraged by the steps she's 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. NEMT revenue growth in the mid-single-digits with adjusted EBITDA margins between 7% and 10%, personal care revenue growth in the high single digits with adjusted EBITDA margins between 10% and 12%, and remote patient monitoring 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 patients and payer partners. This concludes our prepared remarks with that, Operator, please open the call for questions.

Question-and-Answer Session

Operator

Thank you. At this time, we'll now be conducting a question-and-answer session. [Operator Instructions]. Thank you. Our first question comes from the line of Bob Labick with CJS Securities. Please proceed with your question.

Bob Labick

Good morning and congratulations on a strong Q4.

Dan Greenleaf

Thank you very much, Bob.

Bob Labick

Absolutely. Yes. I wanted to start -- lots to talk about, lots of good stuff. The update on the transportation provider network was great. You obviously, as you said, filled in thousands -- of thousands -- couple thousand new vehicles and whatnot. Curious where you stand now in terms of the density of the provider network versus where you want to be. And then also, utilization was up year-over-year. Give us a -- broadly speaking -- where is it now versus pre - Covid and how you think that trend will continue to recover to pre - Covid levels or how long?

Dan Greenleaf

Yes. So, Bob, a couple of things. In terms of network health, we have a pretty sophisticated algorithm that we use. We actually look all the way down to the county level where we're evaluating the number of vehicles, we need based on the needs of our member population. As I mentioned, we look at this every day. I think we feel pretty good where we are from a network health standpoint. I would say four or five months ago, on the tail end of the fueled the pandemic, I guess we could make the argument that the omicron is still around, but we were -- we're in a pretty good position right now. I think we know where the opportunities are. Is it a 100% solve for? I would say no, but our network is much healthier than it's been in quite some time. So that's what 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 -- from our forecasting, our own internal forecast, our view, it will incrementally increase over the net -- over the next several quarters. I think we do doubt that it will ever go back to the levels it was pre - COVID. And there's one really good reason for that is that we've done a much better job managing ineligible riders and we review that a percent of our business not coming back, so that's kind of where we are as it stands right now.

Heath Sampson

Yeah Bob, just a little bit more on the stage that to den, type of network health, 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 where to target and we have strategies for all the states across the board.

Dan Greenleaf

The other thing I would also say, Bob, we're -- I think we're getting much more sophisticated in terms of what's the right modality for the member. So, whether that be mass transit, whether that be the member's family member brings that person to the appointment, to the use of Lyft or Uber, or use of our own provider, which is our own TNC, which we apply to different networks. So, I think we're also getting much more sophisticated on that end. We're using our call center representatives to engage the member and really evaluate what's the best modality for them. That's something else that I think will be pretty significantly different in terms of how we've historically run this business.

Bob Labick

Okay, great. That's helpful. Thank you. Then just last one on NEMT, you alluded to 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 large bids outstanding. Now, any update on the 2022 outlook for opportunities ahead of you and when we might learn about any of the current bids that are out there?

Dan Greenleaf

What I would say to Bob, is we feel very strong about our position. As we mentioned in my remarks, we are a 100% retention and state contract since 2021 and 98% retention in our MCO contracts since 2021. We're very well-positioned. We've got 70% of our network now has been digitized. Some of the issues related to our service levels as our contact centers are -- we've taken a contact center that had bumpy performance and one that I would say is unequivocally best-in-class performance and now it's way to world-class performance. So, I think we're really well-positioned. And I think some of the other opportunities we saw was in network health and our ability to build networks very quickly is -- it's a superpower, if you will. And we did it -- we bought the united business and we've done it again in 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 marketplace, we did a recent analysis, it is growing on a compound growth rate at 7.6%. I think that was not well understood previously and I think the size of the market is larger than what we had been indicating previously because we updated our analysis very recently and so we feel really good about where this is. We also know that some of the data that came out of that MTEC study around seniors, particularly Medicare Advantage members, was really powerful. In terms of their -- the ones who have the most severe conditions were most inclined to use the service and that's exactly what you'd want. Because that ends up being prevented it. So that's where we are. 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 going forward.

Bob Labick

Okay. That sounds terrific. Pretty good on the network and then opportunities ahead. So, I'll just ask one more and I will jump back in queue. But -- and it kind of relates to, you just rebuilt the transportation network again and now you're past with the recruiting of caregivers for personal care. Maybe just -- I know part of the priorities are modernize and improve that process as well. Maybe dig a little bit more, give us a sense of the ability to recruit and how long you think it takes to get your caregiver population or network, for lack of better terms, to where you want it to be?

Dan Greenleaf

So, I think there is light at the end of the tunnels here. I would say that historically this company has handled things on a very much a regional basis and operated much like a whole -- more like a holding company than an operating company. And that's something that Jason has made some pretty dramatic changes to and we've also promoted another person to Chief Operating Offer who was an internal person 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 7 months in the State of New Jersey, and that accounts for about a third of our revenue. Then New York, we have a strong concentration as well as Pennsylvania and those are all, I think are very good states in terms of what we foresee from a reimbursement standpoint. So, I would share with you that. I don't think we've been as sophisticated as we could have been in this area.

I also know that we were working in states where they did have mandates which probably slowed things down a little bit in terms of recruiting, but we're very bullish on it. I don't -- I -- we feel like the tide is changing and we feel like -- that we're very well-positioned to, particularly given our density in New York, New Jersey, and Pennsylvania, to be the personal care company of choice. We've got 95 locations disproportionately weighted in those states. I think we have the right concentration of locations in the zip codes and I feel very good about what's happening from a labor perspective. I don't know anything else you'll add to that.

Jason Anderson

It's a little more -- the specifics -- the local people used to recruit -- they are going to continue to do that. As Dan said, we'll 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 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 why we feel good about the transition to what Dan talked about and it'll all add up and they'll all result in us getting caregivers back.

Dan Greenleaf

The other beauty, Bob, at this business is that demand exceeded supply by 50% in many of our markets. So, as we bring in the caregivers, the opportunities to provide care are significant. So, we again, I think we've got -- we're in a really good position here Bob, and feel very optimistic about what the future looks like.

Bob Labick

Okay, that's great. Thank you very much.

Operator

Thank you. Our next question comes from the line of Pito Chickering with Deutsche Bank. Please proceed with your question.

Pito Chickering

Hey, good morning, guys. Thanks for taking my questions. First one is on the long-term guidance. As I said, you've reiterated that today, but as you think about 2022, I know that you aren't getting guidance at this time, but can you provide any thoughts on where consensus is today versus your own internal expectations?

Dan Greenleaf

Yes. Good morning, Pito. Yes. For us right now, that you guys have done a good job as 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.

Pito Chickering

Okay. Got it. Then back to Bob's question on the margins on the Home segment. I understand your fourth quarter seasonality due to weather and normal seasonality. But can you help us quantify for the number of open positions you guys have at this point today. As you think about hiring for 2022, do you guys think you can higher to the demand you guys saw you could, let's say in the third quarter call? How we should model that from both a revenue perspective in terms of filling that demand and from a margin perspective in terms of the impact of the labor inflation on the Home segments?

Dan Greenleaf

Well, unless he said I will double team this one. I will say one of the things Pito that from a margin perspective has been most impactful was going overtime. Historically the company had brought it about 10% overtime. We during COVID, we got as high as 21% and we believe that this trending back down to 16 right now. And ultimately, we believe will be back at 10%. So just, I just want to point that out, that that's the driver right now. And I think we've got a good handle on it, we again, as we recruit caregivers, we certainly believe that number will continue to go down?

Heath Sampson

The other item, and this is good now that we have all the answers too, and we said this when we bought that there our 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 gates. So that will also help with margin and then to your first question around demand dense at this earlier, in some markets is up to 50% short on staffing relative to demand. That can range anywhere from 10% to 50%. Now we understand where it is and where our efforts need to be to implement the recruiting stuff that we talked about from Bob, the question earlier. So, we have the visibility. We got the right leader in team in place. So now it's about execution. With what we have, we feel good about where we are from a margin perspective and then meeting that demand in each of the markets that we're working on.

Dan Greenleaf

Pito, the other thing I also want to point out that we -- why we aligned around the Home is the case manager. And that case manager is your one-stop shop for personal care, for meals, and for 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 at the case manager.

Pito Chickering

Okay. Great. And then so last one here, a follow up on Bob's question on capitated NEMT. Are you seeing that overall, fourth quarter demand is generally the steady-state that we should be modeling going forward? And on the cost side, like I said, that the yield dry unit costs lower, the macro environment is going the other way. Can you give us a little more detail as how you guys can counter the overall macro environment? Thanks so much.

Dan Greenleaf

I would say a couple of things. One of the about 44% at for risk [Indiscernible], and the reason I bring that up is that some of the increases we see are pass throughs. So even if unit costs, for example, are going up in some shape or form, I would say disproportionate amount of that as a pass. And so, it's not going to have what I would describe as the impact on the bottom line as you might think. I just wanted to point that out, and Heath, you want to take the other part of that?

Heath Sampson

From a macro environment perspective, can utilization been relatively stable? We expect that to incrementally increase. But again, not to the levels -- definitely nothing close to the levels pre-COVID. Then also the buying behavior with our customers, whether that state, more MCO, the priority right now is member experience. That member experience and then consistency and an operational and then price. For share prices from number three or four for our states. With that in mind, everything we're doing is focused on the member experience and operations. Then in other cases where maybe the contract was a little thin, we're renegotiating price up. We just renegotiated price with a large payer nationally. So, I think with where we are, scale matters, what we've done to ensure customer experience is most important, what we're doing with the driver network to make sure that we're stabilizing unit cost and that's been the biggest challenge, and then three, renegotiating where we think we need to renegotiate.

Pito Chickering

Great. Thanks so much guys.

Dan Greenleaf

I would say, in essences, I mean, the quality of product that we provide our members, and our payer partners, and our state partners is just been massively improved. Whether it be the service levels and the contact centers which have been running at about 95%. Historically, the company had occasionally gotten above 80% to even things like encounter data, even things like 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's still substantive opportunities to improve. But the improvements we've made at this point, it's been so material.

Heath Sampson

With large, as giving sample around that. There is a large payer on primarily in the Medicaid side, that wants to grow with us. We're about half of their business now. And they say they like it a lot more, it potentially all of it.

Dan Greenleaf

Yeah.

Heath Sampson

And the reason being is because they know were there. We know we're performing, and want to grow with us. So, this is like every year, this is a big year for us and with the stuff we put in place to stuff we're going to do. That's why the initiative that Dan talked about winning to go into NEMT, starting with growth, because we can grow within our current payer base, we know each opportunity that's out there getting to Bob's questions, we know exactly where the competitor bids are coming up, we know exactly where the MA opportunities are, and because of where we are, that's why we think we can really start gaining market share this year.

Pito Chickering

Great. Thanks so much.

Operator

Our next question is from the line of Brian Tanquilut with Jefferies. Please proceed with your question.

Brian Tanquilut

Good morning, guys. Congrats on the quarter.

Dan Greenleaf

Thank you, Brian.

Brian Tanquilut

Yes. Not too many questions for me, but I guess I'll start, Dan. Obviously we're thinking about the three different offerings that you have with RPM -- or I guess four -- RPM, food, transport, and PC. So, any details you can share with us on the traction you're getting or interest you're getting around contracting opportunities for multiple service lines and what MA penetration has looked like in that kind of like unique offering that you have there?

Dan Greenleaf

So, I think the interest level is really high and 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 businesses that we've gone out and acquired the pieces that one needs to do this from a supportive care sampler. Then, obviously, we already had the transportation business which was an incredible asset when you think about the -- how the relationships with 30 million members or 30 million patients. So, it's high Brian and I think there'll be a lot coming out of that over the next several months. We do have a pilot underway with a very large payer in the Midwest and we certainly think that's going to be something that's going to be very attractive to others as the results come out. I will say, look at -- when you ask me about MA, I'd say look at two large payers, United Healthcare and Anthem. They've both gone on record to say, the way we're going to handle MA offerings in the future is going to include transportation, is going to include personal care, and is going to include meal delivery.

And they've both gone on record in the last five months, most recently, Anthem in the last three weeks, about what they believe the offering should be. And obviously, we think there's a lot of opportunity with them on the remote monitoring piece, remote monitoring for the record about 44% of our revenue and remote monitoring is in Medicare. So, Brian, we're really well-positioned. And what's fastening I think is that we were doing all this stuff before, either United or Anthem one on record about what they felt that the Medicare Advantage population needed.

Brian Tanquilut

I appreciate that, Dan. Then I guess Heath, I think about Project Storm and Lightning. How should we be thinking about telling the timing for those things? How you think those initiatives will trickle down to the margins for the different segments that they touch?

Heath Sampson

Yeah. So first the -- for Storm and for Lightning. For Stormy, you break it into two macro categories. The OpEx side and then what happens with our unit costs side. The OpEx side primarily within the contact center. That was the majority of the costs that we were able to get out. Those are out. We have BPO, 50% offshore. We've implemented technology that's allowed us to reduce our onshore headcount by factor anywhere around 30%. So, the costs on Storm are out from a context in our operations perspective. We're starting to see that now. We had to get through the language challenges and finish that off. Now and I can, wait, I know we're reducing our headcount right now on that site.

Dan Greenleaf

Yes. One of the things that I thought I'd point out [Indiscernible] Brian, a little on the labor side, but if our call centers are any indication about what's happening on the labor side, it's pretty amazing. We're seeing -- we've seen absenteeism get as low as 10%, which, during COVID, the middle of COVID, it was high as 45%. The attrition rates at the call centers for this company had historically been at the 250% range; in the month of January, it was around 4%. The reason I'm bringing this up is that we're looking at labor from a lot of different perspectives and a lot of things we've been doing, and if what we've done at 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 -- 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 and things like attrition and absenteeism.

Brian Tanquilut

I appreciate that. And my last question, I guess for Jason, as I think about your comments on geographic footprint for the home health business. How should we be thinking about your geographic expansion plans going forward, Florida or Western Pennsylvania then other areas that you're thinking about?

Jason Anderson

Thanks for the question. That we're looking at density in the markets we're in, so sort of a 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 we're in from that perspective. If there's opportunities that present themselves beyond that, we'll evaluate them if it makes sense. But right now, we're really going to focus on contained own the markets that we currently have applications and operations.

Heath Sampson

You know, the other item just to add on what Jason, he said this in as well, and this is relatively new to -- we're in the dense, we're in the markets, we're in but we're also going to set up these the novo locations that are really close. And that strategy on opening an office and community-based, locally based is also a strategy that will tag on to what Jason said and allow us to grow within that state. But maybe a little bit more further out from the current communities we're in. So those two things together as the priority for your firm.

Dan Greenleaf

And the only thing I would say about the Home to guys just for clarification, it is a zip code business, it's not necessarily a state business. And this is why having these locations in the specific zip codes matter so much. And so, and again, I think Jason as a tremendous amount of clarity around that on where we are 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.

Brian Tanquilut

Got it. Thanks, guys.

Dan Greenleaf

Thank you, Brian.

Heath Sampson

Thank you.

Operator

Our next question comes from the line of Brooks O'Neil with Lake Street Capital Markets. Please, proceed with your question.

Brooks O'Neil

Thank you. Good morning, guys. I have a couple of questions too. First, I was hoping you might provide just a little more detail on the true-up. You mentioned related to the capitated contracts. Can you give us a sense for the dollar amount of that true-up? Can you just help me to be sure I understand that affect revenue as well as adjusted EBITDA or was that just adjusted EBITDA impact?

Heath Sampson

The -- well, one it's not uncommon for this with the contracts we have --

Brooks O'Neil

Right.

Heath Sampson

[Indiscernible]. we have. When we reset -- redo them every whether that, every three years, so the cycle of redoing those, you clear the deck with what's currently on the balance sheet, 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 our NEMT adjusted EBITDA was probably more in line with closer to Q3, is what we said in the script. So, a few million dollars there.

Brooks O'Neil

Okay. That's helpful. Then I guess my colleagues sent me an article about Uber and Lyft coming into the NEMT business and some of the challenges they face. Can you help us to understand how you view the competency and training of the driver network you guys use relative to what sounds like the common Uber and Lyft driver, who knows how to drive his car, but not much more.

Dan Greenleaf

I mean, Brooks, we put our transportation providers through extensive training and that extensive training could be what sexual improprieties look like. It could be awareness around blood borne pathogens. It could be around -- and obviously around COVID. We partnered with an organization to do this. And it's -- we deeply discount it. And it's part of our requirement from a credentialing standpoint, either you're going to go through the training here or not. And it also is, how to handle people in terms of -- if you have to take somebody door to door, also to point out, listen, we got a whole support network, too. So that if there is an issue with the patient, there's always somebody for the transportation provider to call. And we also have safety members in our locations who also can be advisors to our TP. So, it's not just much of the training we put our transportation providers through, which is extensive.

But it's also the support network we put around that. In the event there's something that does happen or could potentially happen, we're there right by their side. That's a really unique aspect of our model. That's why we still believe in these community-based transportation providers. A lot of the stuff I've talked about related to ModivCare Academy or how we view our partnership going forward is very different than what I would describe as what a TNC would do. It's just the model is different, they have their model, we have our model. That all being said, we think in certain instances they are going to be, it has been a very good partner.

Heath Sampson

[Indiscernible] a little more specific on the model, you get this, so the TNC, Uber unless specifically those drivers are incented to get the highest dollar amount at the quickest time. And you guys know, 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 sick or 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 is different between -- the structure is different. That specific driver is competing for themselves every day to make sure they put food on their table. Not really to think about, should I wait for Mrs. Smith or can I properly lift Mrs. Smith in a way. It's totally a different model. Just a little more detail what Dan said.

Brooks O'Neil

No, that's very helpful. And then my last question, I just wanted to ask Jason. I'm particularly excited --

Dan Greenleaf

Hey, Brooks. On this model, too is --

Brooks O'Neil

Sure.

Dan Greenleaf

The patient population we serve live in broadband deserts. The patient population preserver often don't have Wi-Fi. The patient population we serve have limited data plans. The patient population we serve may have flip phones and not iPhones. So, this is why these contact centers are not going anywhere. And why having these contact centers are so important to accessing transportation. And so, I just, 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 and yes, tech matters, but high touch matters too, because the modalities our members use are very different than what most of us experienced day-to-day

Brooks O'Neil

Makes total sense. I appreciate that color. So, Jason, I'm particularly excited about the remote patient monitoring business. Obviously, that scored to your experience and background. My sense is that reimbursement rates for physicians, particularly in Medicare Advantage, I guess, maybe more broadly, have been improved significantly. Can you 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.

Jason Anderson

Yes, Brooks. Thanks for asking that question. We really focus on partnering with the health plans today. The business has been built around focusing on managed Medicare, managed Medicaid, and state Medicaid. There's certain reimbursement rates that has been improving for providers, so physician networks, and hospitals, etc. The core business has been built around partner the health plans and continue to penetrate that market. And there is this 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 some growth with physician networks and we begin leaving -- beginning to take advantage of some of those reimbursement rates. But today, as far as penetration, we really believe that continuing and penetrate with MA plans and MCO is the route to continue to build the business. And as an or another market penetrate would be physician network in the future.

Brooks O'Neil

All that makes sense. I mean, my own sense is with the growth of value-based care, that these MA plans have a massive incentive to monitor and support these patients correctly, diagnose them and support them over that, that what you see out there, and are you seeing that appetite from the MA plan providers?

Jason Anderson

Yes. Then what I'd build on that Brooke, is this really what it comes down to the remote patient monitoring is they trust the relationships we have with those numbers are. The number of times you interact with them a month. We're engaging with them a month, allows us to have real-time information that is much better than lagging claims, as well as a survey that's done months prior or sometimes quarters prior. So we're able to provide real-time information back to the health plan, which allows them to actually create a plan of care, impacts, medical expenses period. That's we've talked around our E3 solution in the past that also resonates, adapts for the future business will go with the trusted relationships we have with members and we've built throughout our different segments. So whether that's within the personal care monitoring, the deals, business, or transportation, it's going to allow us to add significant value back to the health care. And so that is definitely where everything is going today.

Brooks O'Neil

Thanks a lot for your color.

Operator

Thank you. Our final question today is from the line of Mike Petusky with Barrington Research. Please proceed with your questions.

Mike Petusky

Good morning. A couple of things. Dan, on the meal delivery, I'm assuming any revenue that sort of gets booked in NMTE, is that where that would go or is that not right?

Dan Greenleaf

That's correct.

Mike Petusky

Okay. At what point might you start talking about that in terms of quantifying it? I mean, is there a point at which to do that? Is there a number at which to do that?

Dan Greenleaf

Yeah. But it won't be this year because we're building the business and we're going several contracts with major payers, so we're ramping up there with say that [Indiscernible].

Mike Petusky

All right. 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, can you talk about what's going on there in terms of that increase in and the sort maybe give some sense of what a normalized run rate for '22 would be.

Dan Greenleaf

The bulk of the increases in our G&A expenses related technology. The need to invest in technology to 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 reduce that tech debt. So that's the primary driver for that. We do expect with what we're doing in our plans, and we just went over this with our Board two weeks ago, when we get through that, we're going to be reducing 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 go into '23 and '24.

Mike Petusky

Can I ask, I mean, is this the run rate?

Heath Sampson

So, for 2022 yeah, from a -- that's correct. From a G&A perspective, this is our run rate for the rest of this year.

Mike Petusky

Alright, that's all I got. Thanks.

Dan Greenleaf

Thank you, Mike.

Operator

Thank you. At this time, we've reached the end of our question-and-answer session, and I will turn the call over to Dan Greenleaf for closing remarks.

Dan Greenleaf

Yeah. First of all, thank you all for participating on our call this morning. And if your interest 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.

Operator

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.