Modivcare Inc. announced on January 9, 2025, it has raised $105 million in incremental financing, comprising a $75 million incremental term loan and $30 million in new Second Lien Notes. This financing is backed by stakeholders across its capital structure.
In connection with the financing, the company secured amendments to its existing credit agreement, providing covenant relief through Q2 2025 and resetting certain financial covenants for Q3 and Q4 2025. The minimum liquidity covenant was also reduced from $75 million to $25 million.
Modivcare has appointed Chad Shandler as Chief Transformation Officer to focus on strengthening the company and supporting potential strategic divestitures, with the Monitoring platform and PCS segment identified as candidates. The company also withdrew its previously stated revenue and adjusted EBITDA guidance for fiscal year 2024 and adjusted EBITDA growth guidance for fiscal year 2025.
The incremental term loan is priced at SOFR + 750 bps with a 1.00% SOFR Floor and matures on January 10, 2026, highlighting the short-term nature of this liquidity solution. The Second Lien Notes, subject to stockholder approval, will bear interest at 5% cash or 10% PIK.
These actions are intended to strengthen Modivcare's financial foundation and enhance operational performance. However, the need for covenant relief, the withdrawal of guidance, and the exploration of asset sales underscore the significant financial pressures and strategic uncertainties facing the company.
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