ModivCare: Largest NEMT Provider Cuts $1.1 Billion Debt in 117-Day Restructuring

ModivCare Inc., the nation's largest provider of non-emergency medical transportation services, filed a prepackaged chapter 11 bankruptcy on August 20, 2025, with approximately 90% of first lien lenders and 70% of second lien lenders supporting a restructuring that would reduce funded debt by more than $1.1 billion—over 85% of the company's $1.4 billion debt load. The Denver-based healthcare services company, which coordinates approximately 36.8 million transportation trips annually and serves 29.5 million members across 48 states, secured $100 million in DIP financing and targeted emergence within 110 days of the petition date. Judge Alfredo R. Perez entered the Confirmation Order on December 15, 2025, and ModivCare emerged from chapter 11 on December 29, 2025—117 days after filing—as a privately-owned company with approximately $300 million in funded debt and $100 million in new capital.

The case reflects pressures cited in public reporting, including elevated leverage from acquisition-driven growth, rising labor costs against Medicaid reimbursement rates, and higher interest expense on floating-rate debt as benchmark rates rose. ModivCare's 2024 financials showed the financial stress: $2.79 billion in service revenue generated $161.1 million in adjusted EBITDA while producing a $201.3 million net loss and $34 million in negative free cash flow. The restructuring maintained continuous operations for the millions of Americans who depend on ModivCare's services to access healthcare appointments.

From Providence to ModivCare: Corporate History

ModivCare traces its origins to 1996 when Providence Service Corporation was established, with common stock beginning to trade publicly in 2003. For its first two decades, the company operated primarily as a government-funded social services provider. In 2017, Providence acquired LogistiCare, a strategic acquisition that positioned the company as the largest non-emergency medical transportation broker in the United States. This acquisition shifted the business model toward technology-enabled healthcare services coordination and supported subsequent expansion.

The LogistiCare integration set the stage for additional acquisitions. In November 2020, Providence completed its acquisition of Simplura Health Group for aggregate consideration of approximately $575 million in cash. Simplura operated home health and personal care agencies across seven states, establishing the Personal Care Services (PCS) segment and expanding ModivCare beyond transportation into in-home supportive care. The transaction added $575 million in cash consideration and expanded the PCS segment.

Effective January 6, 2021, Providence Service Corporation formally rebranded to ModivCare Inc., with its principal subsidiary LogistiCare Solutions, LLC becoming ModivCare Solutions, LLC. The rebranding aligned with a stated focus on supportive care services spanning transportation, personal care, and remote patient monitoring. The 2021 Care Logistics acquisition expanded operations and added debt to the capital structure.

Key corporate milestones:

Multi-Segment Business Model.

At the time of filing, ModivCare operated as a technology-enabled healthcare services company through three primary business segments, each serving distinct but complementary roles in supportive care delivery:

The NEMT segment represented ModivCare's core business. The company operated as a broker coordinating transportation through contracted provider networks rather than directly operating vehicles, a capital-light model that created exposure to transportation provider costs outside the company's direct control. ModivCare's relationships with state Medicaid programs, managed care organizations, and health systems provided recurring revenue streams tied to covered populations' healthcare utilization.

Prepetition Financial Stress.

Financial results in 2024 and early 2025 showed pressure. Despite generating approximately $2.79 billion in service revenue during 2024, the company produced adjusted EBITDA of $161.1 million—a margin of roughly 5.8% on a $1.4 billion capital structure. The 2024 fiscal year ended with a net loss of $201.3 million and negative free cash flow of $34 million alongside the existing debt load.

By January 2025, the company sought liquidity relief. ModivCare raised $105 million in incremental financing backed by stakeholders across the capital structure, including a $30 million commitment from Coliseum Capital Management for second lien notes due 2029. Coliseum, which owned more than 15% of ModivCare's common stock, agreed to purchase $30 million in second lien notes and exchange approximately $20 million of senior notes for additional second lien notes. The transaction required stockholder approval given Coliseum's ownership stake and included covenant relief from revolving lenders. Kirkland & Ellis LLP represented ModivCare in the incremental financing, a restructuring-focused engagement that preceded the chapter 11 filing seven months later.

The first quarter 2025 financial results showed declines across all segments. Total service revenue declined 4.9% year-over-year to $650.7 million, driven by NEMT contract attrition, lower PCS billed hours, and monitoring segment churn. NEMT revenue fell 6.3% to $449 million, PCS decreased 1.0% to $181.8 million, and Monitoring declined 9.8% to $18.1 million. Management initiated cost reduction actions expected to generate over $20 million in annualized G&A savings, while revenue declines continued.

Causes of Financial Distress

ModivCare's filing attributed financial distress to multiple structural and macroeconomic factors that compressed profitability. The company blamed labor cost inflation and declining reimbursements from public payers as primary challenges, and the company also carried elevated leverage from acquisition-driven growth.

Acquisition-Driven Leverage.

The prepetition capital structure reflected the use of debt capital to fund growth:

The 2021 Care Logistics acquisition contributed to leverage. With adjusted EBITDA of approximately $161 million supporting $1.4 billion in funded debt, the company operated at approximately 8.7x leverage.

Labor Costs and Reimbursement Rate Mismatch.

The NEMT business model depends on contracted transportation provider networks whose costs increased substantially during the post-pandemic period. Rising fuel costs, driver wages, insurance premiums, and compliance requirements all pressed on transportation provider economics, costs that ultimately flow through to NEMT brokers like ModivCare. Simultaneously, Medicaid reimbursement rates failed to keep pace with these cost increases, creating margin pressure.

The mismatch between rising costs and stagnant reimbursements reflects a challenge in government-funded healthcare services: state Medicaid programs face budget constraints that limit rate increases even as providers experience inflation. For ModivCare, which derived the majority of NEMT revenue from public payers, this dynamic translated to margin pressure.

Floating-Rate Debt Exposure.

ModivCare's credit facilities carried variable interest rates tied to benchmark indices. As the Federal Reserve increased interest rates during 2022-2024, the company's interest expense grew substantially without corresponding revenue increases. The SEC 8-K filing disclosed DIP facility terms at SOFR plus 7.00%, reflecting the rate environment.

For a company operating with thin margins and elevated leverage, the interest rate increase raised interest expense. Fixed charges consumed a larger share of operating cash flow.

NEMT Industry Systemic Pressures.

ModivCare's filing occurred amid broader systemic pressure in the NEMT ecosystem. Industry analysis characterizes NEMT as a thin-margin business where rising fuel costs, insurance premiums, compliance requirements, and staffing challenges squeeze profitability while reimbursement rates fail to keep pace. The market structure—dominated by large state contracts with regulated pricing—limits providers' ability to pass cost increases to payers, creating recurring margin pressure during inflationary periods.

The home-based care industry pressure cooker extends beyond NEMT to encompass ModivCare's Personal Care Services segment, where similar dynamics of rising labor costs and constrained reimbursement rates apply.

Prepackaged Restructuring

ModivCare's chapter 11 filing executed a prepackaged restructuring strategy, as described in the First Day Declaration, entering bankruptcy with a restructuring support agreement and a first-day plan filing intended to shorten time in court. The approach required prepetition negotiation to align stakeholder interests before the petition date.

Restructuring Support Agreement.

The RSA secured creditor support across the capital structure:

The deleveraging target contemplated reducing funded debt from approximately $1.4 billion to approximately $300 million—a reduction of approximately 79%—through substantial debt-for-equity conversion. First lien creditors would receive a combination of new exit debt, equity in the reorganized company, and cash distributions. Second lien creditors would convert their claims to equity, positioning them as minority owners alongside the first lien group. Existing common shareholders would receive no recovery, with their equity interests cancelled upon confirmation.

DIP Financing.

The DIP Motion sought $100 million in DIP financing from the first lien lender group to fund operations during the restructuring period:

The court entered the Final DIP Order on October 6, 2025. The DIP facility provided working capital and operational continuity throughout the restructuring, allowing ModivCare to maintain normal operations across all service lines without interruption to clients, members, providers, or partners.

Plan Timeline and Confirmation.

The prepackaged structure supported a shorter timeline with first-day plan filing:

The 117-day timeline from petition to confirmation reflects the prepackaged structure where creditor consent is obtained before filing. The plan process did face resistance from unsecured creditors, who objected to the plan claiming the company was undervalued. Judge Perez overruled these objections and approved the reorganization.

Plan Treatment by Class.

The confirmed plan provided differentiated treatment based on claim priority:

The equity-for-debt conversion concentrated ownership in the first and second lien creditor groups, with first lien holders receiving the majority position based on their priority and larger claim amounts. The cancellation of existing equity eliminated approximately $51.7 million in unsecured convertible notes along with all common stock interests.

Exit Financing Structure.

The reorganized company emerged with a substantially deleveraged capital structure:

The approximately 79% reduction in funded debt—from $1.4 billion to $300 million—reduced the capital structure. The $250 million exit revolving credit facility provides liquidity for working capital.

Emergence and Post-Restructuring Position

ModivCare emerged from chapter 11 on December 29, 2025, completing a restructuring that changed the company's financial position:

CEO Heath Sampson characterized the emergence as "Day One of a stronger Modivcare". Sampson remained in leadership throughout the restructuring.

All service lines continued normal operations throughout the case, with no interruption or change in access to care for the millions of Americans who depend on ModivCare's services. The approximately 20,160 employees retained their positions.

Nasdaq Delisting.

On August 21, 2025—one day after the chapter 11 filing—Nasdaq determined to delist ModivCare's common stock as a standard response to chapter 11 filings for publicly-traded companies. The delisting formalized the transition to private ownership under the new creditor-controlled equity structure. Former public shareholders received no recovery under the confirmed plan, with all value distributed to secured creditors.

Post-Emergence Strategy.

The post-bankruptcy recovery plan focuses on two strategic priorities: aligning people and advancing technology.

Professional Retentions

ModivCare's restructuring involved 71 debtors, $1.4 billion in debt, and operations across 48 states:

Debtor Professionals.

Creditor Professionals.

NEMT Industry Context and Market Outlook

ModivCare's restructuring occurred in a sector with industry challenges that extend beyond any single company's capital structure. The non-emergency medical transportation market provides access to healthcare appointments for covered populations and operates under economic constraints that create recurring stress for providers.

Market Growth Projections.

Despite the challenges facing current market participants, industry projections estimate the NEMT market will reach $31.87 billion by 2031, representing a compound annual growth rate of 9.7%. The report cites several drivers:

• Aging population: The number of Americans requiring healthcare services increases the addressable market for NEMT
• Medicaid expansion: Medicaid eligibility expansion in additional states increases covered populations
• Social determinants of health recognition: Recognition that transportation barriers contribute to health disparities affects demand for NEMT services
• Value-based care integration: Health systems view reliable transportation as part of care coordination and population health management

Structural Challenges Persist.

The market growth opportunity coexists with structural challenges that the ModivCare restructuring did not resolve at an industry level. The NEMT ecosystem faces systemic pressure from thin margins, rising operational costs, and constrained reimbursement rates. Transportation providers—the contracted drivers and vehicle operators who actually perform the trips—face their own economic pressures from fuel costs, insurance, and labor. These costs flow through to brokers like ModivCare, who must then negotiate rates with payers operating under their own budget constraints.

The home-based care industry pressure cooker encompasses both NEMT and personal care services, creating challenges across ModivCare's multiple business segments. Reimbursement structures have not kept pace with cost increases in these services.

ModivCare's Post-Emergence Position.

Post-emergence, funded debt was reduced to approximately $300 million and annual interest expense was reduced. ModivCare retains its position as the largest NEMT provider in the United States, with relationships across 48 states and infrastructure for coordinating millions of healthcare transportation trips annually.

Key Timeline

Frequently Asked Questions

What is ModivCare and what services does it provide?

ModivCare Inc. is a technology-enabled healthcare services company based in Denver, Colorado, operating as the nation's largest provider of non-emergency medical transportation. The company coordinates approximately 36.8 million transportation trips annually, serving 29.5 million members across 48 states through its NEMT segment. Beyond transportation, ModivCare provides personal care services through Providence Human Services and Simplura Health Group, plus remote patient monitoring through Matrix Medical Network. The company employs approximately 20,160 people and generated $2.79 billion in 2024 revenue.

What caused the bankruptcy filing?

ModivCare's distress resulted from multiple converging factors: approximately $1.4 billion in acquisition-driven debt accumulated through purchases including the 2021 Care Logistics acquisition, rising labor and transportation costs outpacing Medicaid reimbursement rates, and increased interest expense on floating-rate debt as benchmark rates rose. The company reported a $201.3 million net loss and $34 million in negative free cash flow during 2024 despite generating $2.79 billion in revenue. All three business segments showed declining revenue by Q1 2025, with total service revenue falling 4.9% year-over-year.

What was the outcome of the restructuring?

ModivCare reduced funded debt by more than $1.1 billion—over 85% of prepetition debt—from approximately $1.4 billion to $300 million. The company added $100 million in new capital and emerged on December 29, 2025, as a privately-owned company. The 117-day case proceeded under a prepackaged plan with 90% first lien and 70% second lien creditor support. First and second lien creditors converted substantial debt to equity, becoming the reorganized company's owners.

What is non-emergency medical transportation (NEMT)?

NEMT provides transportation services to healthcare appointments for patients who lack reliable transportation, primarily serving Medicaid, Medicare, and managed care beneficiaries. ModivCare operates as a broker coordinating transportation through contracted provider networks rather than directly operating vehicles. The NEMT market is projected to reach $31.87 billion by 2031 with 9.7% compound annual growth, driven by aging demographics and recognition of transportation as a social determinant of health.

What is the corporate history of ModivCare?

The company was established in 1996 as Providence Service Corporation and became publicly traded in 2003. The 2017 acquisition of LogistiCare made it the largest U.S. NEMT provider. In November 2020, Providence acquired Simplura Health Group for approximately $575 million to add personal care services. The company rebranded to ModivCare Inc. in January 2021 to reflect its expanded supportive care platform.

Did operations continue during bankruptcy?

Yes. All service lines continued normal operations throughout the restructuring with no interruption or change in access to care for clients, members, providers, or partners. The $100 million DIP facility provided working capital and operational continuity. The approximately 20,160 employees retained their positions throughout the process.

What happened to shareholders?

Existing equity was cancelled with no recovery under the confirmed plan. Nasdaq delisted ModivCare common stock on August 21, 2025, one day after the chapter 11 filing. The reorganized company emerged as privately owned by creditors who converted debt to equity. Unsecured convertible notes totaling approximately $51.7 million also received no recovery.

Who are the new owners post-emergence?

First lien and second lien creditors converted substantial portions of their claims to equity in the reorganized company. First lien creditors, holding approximately $1.14 billion in claims (term loans plus revolver), received the majority ownership position. Second lien creditors holding approximately $225 million in claims received minority equity stakes. The company operates privately without publicly-traded securities.

What challenges does the NEMT industry face?

The NEMT industry operates on thin margins with rising fuel costs, driver wages, insurance premiums, and compliance requirements squeezing profitability. Reimbursement rates from state Medicaid programs have not kept pace with these cost increases, creating structural margin pressure throughout the ecosystem. ModivCare's filing coincided with broader industry stress that extends beyond any single company's capital structure.

Who were the key professionals in the restructuring?

Debtor professionals included Latham & Watkins LLP and Hunton Andrews Kurth LLP (legal), Moelis & Company and Evercore (investment banking), and FTI Consulting (restructuring advisor). White & Case LLP represented the First Lien Ad Hoc Group, Milbank LLP represented the Second Lien Ad Hoc Group, and AlixPartners advised the UCC. Verita Global (KCC) served as claims and noticing agent.

Who is the claims agent for ModivCare?

Verita Global (formerly Kurtzman Carson Consultants) serves as the claims and noticing agent. The firm maintains the official claims register and distributes case notifications to creditors and parties in interest.

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