The restructuring plan will cut more than $1 billion in debt and provide $100 million in fresh financing to keep operations running, although existing shareholders face the risk of being largely wiped out.
Modivcare caught a wave of attention from retail traders on Wednesday after it filed for Chapter 11 bankruptcy, marking a restructuring move that gives the keys to its lenders and leaves shareholders staring at the possibility of losing almost everything.
In overnight trading, Modivcare stock fell 8.6% on top of the 12.3% drop in Wednesday’s regular session.
The Denver-based healthcare group said the plan already has strong support, with more than 90% of its top lenders and over 70% of its second-tier lenders on board.
The plan includes $100 million in fresh financing to fund operations during the bankruptcy process, giving Modivcare over $100 million in liquidity once the loan closes.
The restructuring is designed to eliminate about $1.1 billion in funded debt, which accounts for over 85% of the total, and reduce interest costs, while transferring ownership of the reorganized business to its creditors.
Modivcare said it expects to exit bankruptcy early in the fourth quarter of 2025.
The bankruptcy filing follows the weakening of fundamentals. In July, the company posted a deeper-than-expected adjusted first-quarter loss of $1.71 per share versus expectations for a $0.45 loss.
Revenue of $650.7 million beat forecasts but fell 4.9% year-over-year due to contract attrition in its Non-Emergency Medical Transportation segment and weaker volumes in Personal Care Services and Monitoring.
Net loss for the quarter was $50.4 million, while free cash flow was negative $86.2 million.
CEO Heath Sampson said the recapitalization will strengthen the balance sheet and allow for more investment in technology and member engagement. The company has also outlined cost actions it expects will deliver more than $20 million in annualized savings.
Operations across Modivcare’s transportation, personal care, and monitoring divisions are expected to continue without disruption. The company said clients, employees, and vendors will see no impact during the process.
On Stocktwits, retail sentiment for ModivCare was ‘extremely bullish’ amid ‘high’ message volume.
Retail users on the platform expressed worries concerning the Chapter 11 filing. A user hoped that fellow retailers got out of the stock, warning that they would get wiped out.
ModivCare’s stock has declined 84.4% so far in 2025.
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