Modivcare Secures $105 Million Financing to Enhance Growth

Modivcare Secures $105 Million Financing for Future Growth

Modivcare Inc. (NASDAQ: MODV), a leading technology-driven healthcare services provider, has recently announced the successful acquisition of $105 million in additional financing. This significant investment is backed by stakeholders across its capital structure, emphasizing the trust and confidence investors have in Modivcare's strategic vision for the future.

Details of the Financing Agreement

Out of the total financing, $75 million is categorized as an incremental term loan, structured under the Company's existing credit agreement. Additionally, there is a commitment from Coliseum Capital Management to purchase $30 million worth of new second lien senior notes, which are due by 2029 and are pending approval from the stockholders. This financing arrangement is designed to provide Modivcare with the necessary liquidity to support its various strategic initiatives and enhance its long-term operational capabilities.

Leadership Changes and Strategic Initiatives

As part of these recent developments, Chad Shandler has been appointed as the Chief Transformation Officer. His role will focus on spearheading transformative efforts within the Company, leveraging his extensive experience in executing strategic financial plans across the healthcare industry. In parallel, Modivcare is actively enhancing its board by adding three independent directors, which will further consolidate its leadership strength.

Statements from Top Executives

Heath Sampson, the Chief Executive Officer of Modivcare, remarked on the significance of this financing, stating, "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.” He expressed excitement about working alongside Chad Shandler and the board to drive Modivcare’s strategic objectives forward.

Community and Stakeholder Impact

Leslie Norwalk, Interim Chair of the Board, stated, "The steps Modivcare is taking now to transform its business will ensure the Company remains well positioned to connect people with the care they need, now and in the future.” This emphasis on community service reflects Modivcare’s commitment to enhancing operational performance and delivering meaningful healthcare solutions to its members.

Transaction Overview

The transaction is structured to ensure Modivcare optimally utilizes its financial resources. The incremental term loan has a competitive pricing structure set at SOFR + 750 basis points, with a 1.00% SOFR floor. This strategic move allows Modivcare to maintain operational integrity while pursuing its long-term objectives.

Financial Covenant Relief

In conjunction with this financing, Modivcare's existing lenders have agreed to provide financial covenant relief, enabling the Company to meet its short-term obligations while focusing on growth strategies. This includes a covenant holiday for certain financial metrics, which is a significant boon for the Company's operational flexibility.

Role of Advisors in the Transaction

To facilitate this transaction, Modivcare engaged several notable advisory firms, including Kirkland & Ellis LLP and Moelis & Company. Their expertise has been vital in navigating this complex financial landscape, ensuring that Modivcare is well-positioned for a promising future.

Future Outlook and Guidance

In light of the recent developments and shifting market dynamics, the Company has decided to withdraw its previous revenue and adjusted EBITDA forecasts for the upcoming fiscal periods. This decision is reflective of Modivcare's commitment to maintaining transparency with its stakeholders while adapting to the current environment.

About Modivcare

Modivcare Inc. is a prominent technology-enabled healthcare services firm dedicated to providing integrated supportive care solutions for various payors. Its comprehensive services include non-emergency medical transportation (NEMT), remote patient monitoring (RPM), and personal care services (PCS). By addressing the social determinants of health, Modivcare plays a crucial role in helping health plans manage costs and improve overall health outcomes.

Frequently Asked Questions

What is Modivcare's primary business focus?

Modivcare primarily focuses on technology-enabled healthcare services, providing integrated supportive care solutions to public and private payors.

How much financing did Modivcare secure?

Modivcare secured $105 million in additional financing aimed at enhancing its liquidity and supporting future strategic initiatives.

Who has been appointed as Chief Transformation Officer?

Chad Shandler has been appointed as the Chief Transformation Officer, responsible for driving strategic and operational excellence.

What will the financing allow Modivcare to do?

The financing will bolster Modivcare's financial position, enabling it to maintain high service levels and pursue long-term strategic goals.

What is the significance of the new board members?

The addition of three new independent directors aims to strengthen Modivcare's governance and support its growth initiatives more effectively.

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