Simplura Is First Block in ModivCare’s Mission to Build $1B Personal Care Business

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Ever since ModivCare Inc. (Nasdaq: MODV) entered the personal care space with a major acquisition last year, it has been working to solidify its place in the larger social determinants of health movement. ModivCare completed its personal care-focused acquisition of Simplura last November. The acquisition was an all-cash transaction that […]

Ever since ModivCare Inc. (Nasdaq: MODV) entered the personal care space with a major acquisition last year, it has been working to solidify its place in the larger social determinants of health movement.

ModivCare completed its personal care-focused acquisition of Simplura last November. The acquisition was an all-cash transaction that placed an enterprise value of $575 million on Simplura.

At the time, Simplura operated a network of home health and personal care agencies across seven states. ModivCare still delivers those services under the Simplura name.

Dan Greenleaf, president and CEO of ModivCare, talked about how market tailwinds and support from the Biden administration coincide with ModivCare’s entrance into the personal care space during the company’s Q1 2021 earnings call Friday.

“The average daily cost of care in the home is approximately 95% less than in the hospital and about half the cost of skilled nursing facilities or similar institutional settings,” he said. “Furthermore, our nation’s continued shift to value-based care models, combined with the new administration’s advocacy for home care funding and focus on addressing health care inequities, harmonizes closely with our strategy and offerings.”

Atlanta, Georgia-based ModivCare is a technology-enabled health care services company that provides non-emergency medical transportation (NEMT), personal care and nutritional meal delivery services. The company serves 30 million Medicaid members.

For ModivCare, Simplura is only the first “building block” in a rapidly growing $55 billion home and personal care market.

The company plans to grow its personal care segment through acquisitions and organic growth, according to Greenleaf.

“Among our key personal care acquisition criteria, we are focused on Medicaid aged, blind and disabled populations, growing existing geographical density or entering new geographies, reputation, service quality of the target, reimbursement in state budget environment and labor markets dynamics,” he said.

Greenleaf also noted that ModivCare is focused on attractive multiples and strategic opportunities that would create substantial shareholder value. The company currently has 20 personal care targets in its M&A pipeline, he said.

“I want to see that business at $1 billion in revenue and $100 million of EBITDA,” Greenlead explained. “That’s where we’re going to trend toward. And we’re going to do what we need to do.”

In total, there have been nine personal care-related deals in Q1 2021, according to data from M&A advisory firm Mertz Taggart.

Ultimately, having a personal segment aligns with ModivCare’s strategy to offer supportive care solutions that improve outcomes by addressing the socioeconomic and environmental factors that impact differences in health status.

Overall, ModivCare reported revenue of $453.6 million in Q1 2021, a 23.5% increase compared to $367.3 million during the same period last year.

Despite a reduction in personal care service hours and visits due to winter weather events and a COVID-19 surge, the company’s personal care segment contributed $110 million in revenue during the first quarter.

In comparison, Addus HomeCare Corporation (Nasdaq: ADUS)’s personal care segment brought in roughly $164 million in Q1 2021. Addus is one of the largest personal care services providers in the nation.

“The normalized run rate of this business is 20% higher in a post-pandemic environment and we believe personal care services as a counterbalance to NEMT as utilization increases,” Greenleaf said. “We are patiently weathering the COVID-19 storm, with a heightened focus on recruiting and driving hours as demand for home and personal care substantially outweighs supply.”

ModivCare was previously known as The Providence Service Corporation (Nasdaq: PRSC). It rebranded in January.

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