Modivcare Raises $105 Million in Incremental Financing Backed by Stakeholders Across the Capital Structure and Takes Strategic Steps to Position Business for the Future
Modivcare (MODV) has secured $105 million in incremental financing, consisting of a $75 million term loan and $30 million in new second lien notes from Coliseum Capital Management. The company has appointed Chad Shandler as Chief Transformation Officer and plans to add three new independent directors.
The financing package includes covenant relief from lenders and amendments to the existing credit agreement. The incremental term loan is priced at SOFR + 750 bps with a 2026 maturity date. The company will also pursue a strategic review of its assets, which may include potential asset sales.
As part of these developments, Modivcare has withdrawn its previously stated revenue and adjusted EBITDA guidance for fiscal year 2024 and adjusted EBITDA growth projections for fiscal year 2025.
Modivcare (MODV) ha ottenuto 105 milioni di dollari in finanziamenti incrementali, costituiti da un prestito a termine di 75 milioni di dollari e 30 milioni di dollari in nuove obbligazioni di secondo lien da Coliseum Capital Management. L'azienda ha nominato Chad Shandler come Chief Transformation Officer e prevede di aggiungere tre nuovi amministratori indipendenti.
Il pacchetto di finanziamento include il sollievo da covenant dai creditori e modifiche all'accordo di credito esistente. Il prestito a termine incrementale è quotato a SOFR + 750 punti base con scadenza nel 2026. L'azienda avvierà anche una revisione strategica dei suoi asset, che potrebbe includere potenziali vendite di attivi.
Come parte di questi sviluppi, Modivcare ha ritirato le previsioni precedentemente dichiarate sui ricavi e sull'EBITDA rettificato per l'anno fiscale 2024 e le proiezioni di crescita dell'EBITDA rettificato per l'anno fiscale 2025.
Modivcare (MODV) ha conseguido 105 millones de dólares en financiamiento incremental, que consiste en un préstamo a plazo de 75 millones de dólares y 30 millones de dólares en nuevas notas de segundo gravamen de Coliseum Capital Management. La compañía ha nombrado a Chad Shandler como Director de Transformación y planea agregar a tres nuevos directores independientes.
El paquete de financiamiento incluye alivio de covenants de los prestamistas y modificaciones al acuerdo de crédito existente. El préstamo a plazo incremental está tasado en SOFR + 750 puntos base con vencimiento en 2026. La empresa también llevará a cabo una revisión estratégica de sus activos, que puede incluir ventas de activos potenciales.
Como parte de estos desarrollos, Modivcare ha retirado sus proyecciones anteriores de ingresos y EBITDA ajustado para el año fiscal 2024 y las proyecciones de crecimiento del EBITDA ajustado para el año fiscal 2025.
Modivcare (MODV)는 1억 5천만 달러의 추가 자금을 확보했으며, 이는 7천 5백만 달러의 대출과 3천만 달러의 새 2순위 채권으로 구성됩니다. 회사는 Chad Shandler를 최고 변혁 책임자로 임명했으며, 세 명의 새로운 독립 이사를 추가할 계획입니다.
자금 패키지에는 대출자들로부터의 금융 조건 완화와 기존 신용 계약에 대한 수정이 포함됩니다. 추가 대출은 SOFR + 750bp로 책정되며, 만기는 2026년입니다. 회사는 또한 자산에 대한 전략적 검토를 진행할 것이며, 이에는 잠재적인 자산 매각이 포함될 수 있습니다.
이러한 개발의 일환으로 Modivcare는 2024 회계연도에 대한 이전의 수익 및 조정된 EBITDA 지침과 2025 회계연도에 대한 조정된 EBITDA 성장 전망을 철회했습니다.
Modivcare (MODV) a sécurisé 105 millions de dollars de financement supplémentaire, comprenant un prêt à terme de 75 millions de dollars et 30 millions de dollars de nouvelles obligations de deuxième rang de Coliseum Capital Management. La société a nommé Chad Shandler au poste de Chief Transformation Officer et prévoit d'ajouter trois nouveaux administrateurs indépendants.
Le paquet de financement comprend un allégement des engagements des prêteurs et des modifications de l'accord de crédit existant. Le prêt à terme supplémentaire est fixé à SOFR + 750 points de base avec une date d'échéance en 2026. L'entreprise poursuivra également un examen stratégique de ses actifs, qui pourrait inclure d'éventuelles ventes d'actifs.
Dans le cadre de ces développements, Modivcare a retiré ses prévisions de revenus et d'EBITDA ajusté pour l'exercice 2024 ainsi que les prévisions de croissance de l'EBITDA ajusté pour l'exercice 2025.
Modivcare (MODV) hat 105 Millionen Dollar an zusätzlicher Finanzierung gesichert, die aus einem 75 Millionen Dollar darlehen und 30 Millionen Dollar neuen zweiten Hypothekenanleihen von Coliseum Capital Management besteht. Das Unternehmen hat Chad Shandler zum Chief Transformation Officer ernannt und plant, drei neue unabhängige Direktoren hinzuzufügen.
Das Finanzierungsangebot umfasst die Aufhebung von Covenants durch die Kreditgeber sowie Änderungen am bestehenden Kreditvertrag. Das zusätzliche Termingeld hat einen Zinssatz von SOFR + 750 Basispunkten und eine Fälligkeit im Jahr 2026. Das Unternehmen wird auch eine strategische Überprüfung seiner Vermögenswerte anstreben, die potenzielle Vermögensverkäufe umfassen könnte.
Im Rahmen dieser Entwicklungen hat Modivcare seine zuvor genannten Umsatz- und angepassten EBITDA-Prognosen für das Geschäftsjahr 2024 sowie die Wachstumsprognosen für das angepasste EBITDA für das Geschäftsjahr 2025 zurückgezogen.
- Secured $105M in new financing to strengthen financial position
- Obtained covenant relief from lenders through Q2 2025
- Appointed experienced healthcare executive as Chief Transformation Officer
- Reduction in minimum liquidity covenant from $75M to $25M
- Withdrawal of FY2024 revenue and EBITDA guidance
- Withdrawal of FY2025 EBITDA growth guidance
- Potential asset sales indicating possible restructuring needs
- Higher borrowing costs with new term loan at SOFR + 750 bps
Insights
The
The planned exchange of
The appointment of Chad Shandler as Chief Transformation Officer alongside a comprehensive strategic review signals a major operational overhaul. The strategic review with potential asset sales suggests management is considering breaking up the company to address financial pressures. The addition of three new independent directors indicates a governance reset, likely prompted by stakeholder pressure.
The withdrawal of forward guidance is particularly concerning as it suggests management lacks visibility into near-term performance. Coliseum Capital's involvement through the
This refinancing reflects broader challenges in the healthcare services sector, particularly for companies focused on supportive care and transportation logistics. The company's critical role in healthcare access for vulnerable populations means any operational restructuring must be carefully managed to maintain service continuity. The transformation strategy will likely focus on streamlining operations while preserving core services.
The addition of healthcare restructuring expertise through FTI Consulting suggests a complex operational turnaround ahead. For a company with a sub-
Will Pursue Strategic Review of Assets with Key Company Advisors to Maximize Value
Chief Transformation Officer and Board Additions Bolster Company Leadership
Company Withdraws Previously Stated Revenue and Adjusted EBITDA Growth Guidance
“This financing highlights broad-based support from stakeholders across the capital structure and provides the Company with additional resources to focus on long-term strategic priorities,” said Heath Sampson, Chief Executive Officer and President of Modivcare. “As we turn to the future, we are also excited to welcome Chad Shandler as Chief Transformation Officer. He brings a wealth of experience supporting large-scale transformations across the healthcare industry. I’m looking forward to working with him, the Board and our financial partners to advance Modivcare’s strategic goals.”
“The steps Modivcare is taking now to transform its business will ensure the Company is well positioned to connect people with the care they need, now and in the future,” said Leslie Norwalk, Interim Chair of the Board. “We and the leadership team have worked diligently to strengthen the Company’s financial foundation and remain focused on improving the Company’s operational performance with a view toward long-term growth.”
“We are pleased to be able to provide this incremental financing to Modivcare, which will bolster its balance sheet and position the Company to achieve its long-term strategic priorities and deliver value to its stakeholders,” said a representative of the supporting lenders. “Modivcare plays a critical role in the country’s healthcare network with an important mission to connect people to care, wherever they are. As we continue to work with Modivcare’s leadership team and the Board, our goals are aligned in ensuring the Company is well positioned to continue to support its members nationwide.”
Transaction Details
Modivcare has raised
The incremental term loan was priced at SOFR + 750 bps, with
The Company's existing credit agreement was amended to, among other things, replace the pricing grid in respect of revolving loans with pricing set at SOFR + 425 bps, with a
The Company’s existing lenders have agreed to provide financial covenant relief in the form of (i) a covenant holiday with respect to the maximum net leverage ratio and interest coverage ratio from Q4 2024 through and including Q2 2025, (ii) resetting the maximum total net leverage ratio covenant to 6.75:1.00 for the third fiscal quarter of 2025 and the fourth fiscal quarter of 2025 and (iii) resetting the minimum interest coverage ratio to 1.65:1.00 for the third fiscal quarter of 2025 and the fourth fiscal quarter of 2025. The Company’s lenders have also agreed to reduce the minimum liquidity covenant from
Pursuant to the amended credit agreement, upon the receipt of requisite consents to make certain amendments to the indenture governing the Company’s
In addition, the Company entered into a purchase and exchange agreement with clients of Coliseum Capital Management pursuant to which Coliseum has agreed to purchase
Modivcare was advised in the transaction by Kirkland & Ellis LLP, Moelis & Company, and FTI Consulting.
Transformation
As part of Modivcare’s efforts to drive strategic and operational excellence, Chad Shandler, Senior Managing Director and Co-Leader of the Corporate Finance Healthcare practice at FTI Consulting, has been appointed as Chief Transformation Officer. This newly created role will focus on strengthening Modivcare in the near and long term and supporting the transformation of the Company via strategic divestitures or other potential initiatives. Mr. Shandler has more than 30 years of experience in executing on strategic and financial plans and has previously served in executive and advisory roles on behalf of a number of companies across the healthcare space. He will focus on advancing key strategic priorities and enhancing operational efficiencies for Modivcare.
Modivcare has also engaged advisors to conduct a strategic review of its assets to maximize shareholder value, which may include the potential sale of assets of the Company. There is no assurance that this review will result in a transaction, nor can the Company provide certainty on timing or outcomes.
Guidance
The Company has withdrawn its previously stated revenue and adjusted EBITDA guidance for fiscal year 2024 and adjusted EBITDA growth for fiscal year 2025 and related forward-looking statements due to changes in the business and overall environment.
About Modivcare
Modivcare Inc. is a technology-enabled healthcare services company that provides a suite of integrated supportive care solutions for public and private payors and their members. Our value-based solutions address the social determinants of health (SDoH) by connecting members to essential care services. By doing so, Modivcare helps health plans manage risks, reduce costs, and improve health outcomes. Modivcare is a provider of 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 (d/b/a Matrix Medical Network), an independent, at scale provider of comprehensive in-home health assessments in the
Important Information for Investors and Shareholders
This press release does not constitute an offer to sell or the solicitation of an offer to buy or exchange any securities or a solicitation of any vote or approval in any jurisdiction.
In connection with the proposed transaction between the Company and Coliseum Capital Management, the Company intends to file relevant materials with the Securities and Exchange Commission (the “SEC”), including, among other filings, a definitive proxy statement, which will be mailed to stockholders of the Company. INVESTORS AND SECURITY HOLDERS OF THE COMPANY ARE URGED TO READ THE PROXY STATEMENT AND OTHER DOCUMENTS THAT WILL BE FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Investors and security holders will be able to obtain free copies of the proxy statement (when available) and other documents filed with the SEC by the Company through the website maintained by the SEC at http://www.sec.gov. Copies of the documents filed with the SEC by the Company will be available free of charge on the Company’s website at investors.modivcare.com under the tab “SEC Filings” and under the heading “Financials.”
Certain Information Regarding Participants
The Company and its directors and executive officers may be considered participants in the solicitation of proxies from the shareholders of the Company in connection with the Company’s proposed transaction with Coliseum Capital Management. Information about the directors and executive officers of the Company is set forth in its Annual Report on Form 10-K for the year ended December 31, 2023, which was filed with the SEC on February 26, 2024, its proxy statement for its 2024 annual meeting, which was filed with the SEC on April 29, 2024, and its Current Reports on Form 8-K, which were filed with the SEC on May 10, 2024, May 22, 2024, December 13, 2024 and December 26, 2024. To the extent holdings of the Company’s securities by its directors or executive officers have changed since the amounts set forth in such filings, such changes have been or will be reflected on Initial Statements of Beneficial Ownership on Form 3 or Statements of Beneficial Ownership on Form 4 filed with the SEC. Information about the directors and executive officers of the Company and other information regarding the potential participants in the proxy solicitations and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the proxy statement and other relevant materials to be filed with the SEC regarding the proposed transaction. You may obtain these documents (when they become available) free of charge through the website maintained by the SEC at http://www.sec.gov and from the Company’s website as described above.
Cautionary Note Regarding Forward-Looking Statements
Statements contained in this press release constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are predictive in nature and are identified generally by the use of the terms “intended”, “expected”, “estimates”, “will”, and “anticipates”, and similar words or expressions indicating possible future expectations, events or actions. The Company’s expectation about reaching a mutually agreeable long-term amendment to the Credit Agreement is a forward-looking statement. Forward-looking statements are based on current expectations, assumptions, estimates and projections about the Company’s business and its industry, and are not guarantees of future performance. These statements are subject to a number of known and unknown risks, uncertainties and other factors, many of which are beyond the Company’s ability to control or predict, which may cause actual events to be materially different from those expressed or implied herein. The Company has provided additional information about the risks facing its business and the Company in its most recent annual report on Form 10-K, and in its subsequent periodic and current reports on Forms 10-Q and 8-K, filed by it with the Securities and Exchange Commission. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statements were made and are expressly qualified in their entirety by the cautionary statements set forth herein and in the periodic and current reports filed with the Securities and Exchange Commission identified above, which you should read in their entirety before making an investment decision with respect to the Company’s securities. The Company undertakes no obligation to update or revise any forward-looking statements contained in this report, whether as a result of new information, future events or otherwise, except as required by applicable law.
View source version on businesswire.com: https://www.businesswire.com/news/home/20250109762401/en/
Media and Investor Contact
Rachel Chesley / Kyla MacLennan / Victoria Zaharoff
ModivcareComms@fticonsulting.com
Source: Modivcare Inc.
FAQ
What is the total amount of new financing secured by Modivcare (MODV) in 2024?
Why did Modivcare (MODV) withdraw its 2024 and 2025 guidance?
What are the terms of Modivcare's (MODV) new incremental term loan?
What strategic changes is Modivcare (MODV) implementing in 2024?
What covenant relief did Modivcare (MODV) receive from its lenders?
