Modivcare Secures $105 Million in Financing and Positions for Future Growth
Modivcare Inc. (Nasdaq: MODV), a technology-enabled healthcare services company focused on integrated supportive care solutions, today announced several key initiatives to support its future growth. The company has secured $75 million in incremental financing, backed by stakeholders across its capital structure, and appointed Chad Shandler as Chief Transformation Officer. Additionally, existing investor Coliseum Capital Management has committed $30 million to purchase new second lien senior notes due 2029, subject to a stockholder vote.
As part of the financing, revolving lenders have agreed to amend Modivcare’s existing credit agreement, providing covenant relief. The company also plans to strengthen its board of directors with the appointment of three new independent directors in the coming months. These efforts, combined with a strategic review of its assets in collaboration with advisors, aim to solidify Modivcare’s financial position, improve operational performance, and position the company for long-term, sustainable growth.
The company has raised $105 million in additional financing, appointed Chad Shandler as its Chief Transformation Officer, and initiated a strategic review of its assets to enhance its operational and financial positioning.
In a statement, Heath Sampson, CEO and President of Modivcare, said, “This financing underscores the broad-based support we’ve received from stakeholders across our capital structure and provides us with the resources necessary to focus on our long-term strategic priorities. We are also excited to welcome Chad Shandler as Chief Transformation Officer. His vast experience in executing large-scale transformations within the healthcare industry will be invaluable as we work toward advancing Modivcare’s strategic goals.”
Leslie Norwalk, Interim Chair of the Board, added, “The steps Modivcare is taking now will ensure the company is well-positioned to connect people to the care they need, both now and in the future. Our leadership team has worked diligently to strengthen Modivcare’s financial foundation and improve operational performance, with a focus on long-term growth.”
Financing Details and Strategic Enhancements
Modivcare has secured $105 million in additional funding, which includes a $75 million incremental term loan under its existing credit agreement and, subject to stockholder approval, $30 million in new Second Lien Senior Secured PIK Toggle Notes due 2029 (the “Second Lien Notes”). This financing will provide the company with the liquidity needed to support its strategic initiatives, enhance its financial position, and continue delivering high-quality services to its members.
The incremental term loan, priced at SOFR + 750 bps with a 1.00% SOFR Floor, will mature on January 10, 2026. The loan provides the company with the flexibility to prepay the loan in whole or in part, subject to a prepayment fee. In addition, Modivcare’s existing credit agreement has been amended to provide covenant relief, including a covenant holiday for the net leverage ratio and interest coverage ratio from Q4 2024 through Q2 2025.
The maximum total net leverage ratio covenant will be reset to 6.75:1.00 for Q3 and Q4 2025, and the minimum interest coverage ratio will be reset to 1.65:1.00 for the same period. The minimum liquidity covenant has also been reduced from $75 million to $25 million, with testing occurring weekly through April 2025 and monthly through June 2025.
The amended agreement also includes provisions for a potential exchange of $251 million of existing Senior Notes for an equal amount of Second Lien Notes, with a 5% per annum interest rate if paid in cash or 10% if paid in kind. Additionally, Coliseum Capital Management, a current investor, has agreed to purchase $30 million in Second Lien Notes at face value and exchange $20 million in Senior Notes for an equivalent amount of Second Lien Notes. This transaction is subject to stockholder approval at a special meeting scheduled for the first quarter of 2025.
Appointment of Chief Transformation Officer
Modivcare has appointed Chad Shandler as Chief Transformation Officer to lead the company’s ongoing transformation efforts. Shandler brings more than 30 years of experience in strategic and financial planning, having previously served in executive and advisory roles for various companies across the healthcare industry. In his new role, Shandler will focus on advancing Modivcare’s strategic priorities and driving operational efficiencies, including supporting potential strategic divestitures or other initiatives to optimize the company’s portfolio.
As part of its broader transformation efforts, Modivcare has engaged advisors to conduct a strategic review of its assets, potentially considering the sale of certain assets to maximize shareholder value. The company has emphasized that there is no certainty the review will result in a transaction, and no specific timeline or outcome can be guaranteed.
Financial Covenant Amendments
Modivcare’s lenders have agreed to provide significant financial covenant relief, including the suspension of the maximum net leverage ratio and interest coverage ratio covenants through Q2 2025. The company’s net leverage ratio covenant will be reset to 6.75:1.00 for the second half of 2025, while the minimum interest coverage ratio will be set at 1.65:1.00 for the same period. Additionally, the minimum liquidity covenant has been lowered to $25 million for a defined testing period, providing the company with further financial flexibility.
Guidance Withdrawal
Given the recent changes in the business environment, Modivcare has withdrawn its previously issued revenue and adjusted EBITDA guidance for fiscal year 2024, as well as its adjusted EBITDA growth forecast for 2025. This decision reflects the evolving circumstances and the company’s focus on implementing its transformation initiatives.
About Modivcare
Modivcare Inc. is a technology-enabled healthcare services company that provides a comprehensive suite of integrated supportive care solutions for public and private payors and their members. These value-based solutions help address social determinants of health (SDoH) by connecting members to essential care services, ultimately improving health outcomes while reducing costs for health plans.
Modivcare offers non-emergency medical transportation (NEMT), personal care services (PCS), and remote patient monitoring solutions (RPM). The company also holds a minority equity investment in CCHN Holdings (doing business as Matrix Medical Network), a leading provider of comprehensive in-home health assessments in the U.S.
With its new financing, leadership changes, and ongoing strategic review, Modivcare is positioning itself for sustained growth and continued success in the evolving healthcare landscape.
