Modivcare Restructures to Strengthen Finances, Reduce Debt, and Inject Capital.

Modivcare Inc. has filed for Chapter 11 bankruptcy to restructure and reduce debt by $1.1 billion, or 85% of its outstanding funded debt obligations. The company has secured $100 million in debtor-in-possession financing and expects to exit the restructuring process by the fourth quarter of 2025. Modivcare's service lines will continue to operate in the ordinary course, and the company remains committed to providing excellent service to clients and their members.

Modivcare Inc. (MODV), a technology-enabled healthcare services company, has taken significant steps to strengthen its financial foundation by filing for Chapter 11 bankruptcy. The company aims to reduce its debt by approximately $1.1 billion, which constitutes about 85% of its outstanding funded debt obligations [1]. This move is part of a comprehensive restructuring agreement supported by a supermajority of secured lenders.

The restructuring process is expected to inject $100 million in new investment to support ongoing operations and future growth. This funding, known as debtor-in-possession (DIP) financing, will be used to finance the restructuring and maintain day-to-day operations [1]. Upon closing the DIP loan, Modivcare will have liquidity in excess of $100 million.

Modivcare's service lines, including non-emergency medical transportation, personal care services, and remote patient monitoring, will continue to operate uninterrupted. The company expects no impact on clients, members, employees, or transportation providers during this period. The restructuring is designed to reduce annual cash interest and transition ownership to a group of seasoned investors committed to Modivcare's success [1].

The company's leadership is confident that this recapitalization will enable Modivcare to accelerate its investment in innovation, combining technology and data with high-touch member engagement. The restructuring aims to improve access, quality, and cost for payors, providers, and facilities, positioning Modivcare to lead the future of coordinated care [1].

Modivcare remains committed to providing excellent service to its clients and members. The company has filed customary motions to meet obligations to clients and critical vendors, including transportation providers, and to pay employee wages and benefits as usual. The restructuring process is expected to be completed early in the fourth quarter of 2025 [1].

References:
[1] https://www.businesswire.com/news/home/20250820661662/en/Modivcare-Enters-into-Comprehensive-Restructuring-Agreement-to-Strengthen-its-Future-Reduce-Debt-and-Inject-Capital