Modivcare Pursues Chapter 11 Restructuring to Slash Debt and Reinforce Future Growth
Modivcare Inc. (Nasdaq: MODV), a leading technology-enabled healthcare services provider, announced a sweeping financial restructuring plan designed to cut debt, inject new capital, and strengthen its long-term financial foundation. The company has voluntarily filed for Chapter 11 protection in the U.S. Bankruptcy Court for the Southern District of Texas in order to implement a comprehensive restructuring strategy supported by a majority of its key stakeholders.
The move comes as Modivcare seeks to better align its balance sheet with its long-term vision of providing integrated supportive care solutions across the United States. The company emphasized that despite the restructuring, all of its business lines—non-emergency medical transportation (NEMT), personal care services, and remote patient monitoring—will continue operating without disruption.
A Strategic Step to Secure the Future
Modivcare said the restructuring plan has been developed in close collaboration with its lenders and investors. More than 90% of First Lien Lenders and over 70% of Second Lien Lenders have signed onto a Restructuring Support Agreement (RSA), underscoring broad creditor confidence in the company’s strategy.
The RSA outlines commitments by lenders to provide $100 million in debtor-in-possession (DIP) financing. This financing will ensure that Modivcare has sufficient liquidity to operate seamlessly throughout the restructuring process. Once the DIP loan closes, the company expects to have more than $100 million in liquidity.
The restructuring will eliminate roughly $1.1 billion in funded debt—representing more than 85% of Modivcare’s total outstanding obligations—resulting in a leaner balance sheet and significantly reduced annual cash interest costs. The plan will also transition ownership to a new group of experienced investors with both the financial resources and strategic vision to guide Modivcare into its next phase of growth.
Commitment to Uninterrupted Care
While financial restructuring processes often create uncertainty, Modivcare emphasized that its services will not be interrupted. Clients, patients, and healthcare partners should expect business as usual across its national operations.
The company has filed customary “first-day motions” with the court, seeking authorization to continue meeting obligations to employees, vendors, and transportation providers. These measures ensure that workers continue receiving wages and benefits, vendors are paid, and clients experience no disruptions in service delivery.
According to the company, the goal is to exit the Chapter 11 process quickly, with completion expected early in the fourth quarter of 2025.
CEO’s Perspective: A Recapitalization for Growth
Heath Sampson, Chief Executive Officer and President of Modivcare, framed the restructuring as a decisive and positive step toward building a stronger company that can deliver better outcomes for patients and providers.
“Modivcare sits at the center of the preventive healthcare ecosystem,” Sampson said. “This recapitalization strengthens our balance sheet and allows Modivcare to accelerate our investment in innovation by combining technology and data with high-touch member engagement. As the connector to care, our seamlessly connected platform improves access, quality, and cost for payors, providers, and facilities, while positioning us to lead the future of coordinated care.”
Sampson emphasized that the company’s long-term strategy remains focused on leveraging its technology-enabled model to improve healthcare access and outcomes, particularly for underserved populations that rely on supportive services like transportation, in-home care, and monitoring.
The Scale of Modivcare’s Services
Modivcare has become a critical player in the U.S. healthcare ecosystem. Through its portfolio of integrated care solutions, the company helps bridge gaps in access for millions of patients.
- Non-Emergency Medical Transportation (NEMT): Modivcare is one of the nation’s largest providers of NEMT, ensuring patients can reach hospitals, clinics, and specialists even if they lack reliable transportation.
- Personal Care Services: The company also offers in-home personal care services that support seniors and individuals with disabilities, helping them live independently while reducing unnecessary hospital visits.
- Remote Patient Monitoring: By combining data and technology with personalized engagement, Modivcare helps healthcare providers monitor patients remotely, improving outcomes while reducing overall system costs.
Together, these services position Modivcare as a connector between patients, payors, and providers, ensuring care continuity and reducing systemic barriers that often contribute to poor health outcomes.
Financial Details of the Restructuring
The financial restructuring is ambitious, aiming to transform Modivcare’s debt-heavy balance sheet into one that allows for greater operational flexibility and strategic investment.
- Debt Reduction: Approximately $1.1 billion in debt will be eliminated, representing more than 85% of Modivcare’s total funded obligations.
- Interest Expense Relief: The reduction in debt will significantly lower annual cash interest payments, freeing up resources for reinvestment into technology and operations.
- DIP Financing: The $100 million DIP loan ensures liquidity during the restructuring process and instills confidence in the company’s ability to maintain operations.
- Ownership Transition: Control of the company will shift to a group of seasoned investors committed to the company’s long-term success.
This recapitalization positions Modivcare to achieve financial sustainability and pursue innovation in service delivery, data integration, and member engagement.
Stakeholder Support and Confidence
The broad support from lenders is a key feature of the restructuring plan. With over 90% of First Lien Lenders and more than 70% of Second Lien Lenders aligned with the RSA, Modivcare has secured a strong foundation of creditor backing, reducing the likelihood of drawn-out legal battles that sometimes plague Chapter 11 cases.
Stakeholders appear confident that a restructured Modivcare will not only survive but thrive, thanks to its central role in the healthcare continuum and its ability to adapt technology-driven solutions to complex patient needs.
Advisors and Legal Counsel
To navigate the restructuring, Modivcare has retained a team of seasoned advisors. Latham & Watkins LLP and Hunton Andrews Kurth LLP are serving as legal counsel, while Moelis & Company LLC is the company’s investment banker. FTI Consulting is providing restructuring advisory services.
On the lender side, Paul Hastings LLP is serving as legal counsel, with Lazard acting as financial advisor. This experienced group of advisors is expected to guide the process toward a smooth and expedited resolution.
A Path Toward Transformation
Modivcare’s restructuring underscores a broader trend within healthcare services companies facing financial pressures from debt loads, rising costs, and evolving market dynamics. By proactively addressing its capital structure, Modivcare is aiming to secure its long-term ability to deliver essential services to vulnerable populations while positioning itself for innovation and growth.
The company’s focus remains on its mission of improving access to care, reducing healthcare costs, and enhancing outcomes for patients across the country. With its debt burden drastically reduced and its operations stabilized, Modivcare intends to accelerate investments in technology-enabled solutions that bring together data, member engagement, and care coordination.
