Dive Brief:
- Medical transportation firm ModivCare filed for bankruptcy in the the southern district of Texas last week, following a monthslong effort to financially course correct in the face of mounting headwinds.
- Under the restructuring deal, ModivCare expects to receive $100 million through debtor-in-possession financing and to slash its debt levels by approximately 80%, or $1.1 billion. The agreement will also transfer the majority of ownership to a consortium of ModivCare’s investors.
- MotivCare received a delisting notice from the Nasdaq following its bankruptcy filing. Trading of the company’s common stock will be paused beginning Aug. 28, and ModivCare could be delisted shortly after, the company said Friday.
Dive Insight:
Bankruptcy filings have been elevated across the healthcare industry over the past two years, according to research by Gibbins Advisors. In 2023 and 2024, workforce shortages, high labor costs and pressure from payers strained operators’ bottom lines.
Although 2025 has brought fewer filings, the restructuring firm warned this month that the reprieve could be short lived, as operators brace for looming impacts of changes to federal healthcare programs, including cuts to Medicaid.
In first day court filings, ModivCare’s chief restructuring officer said industry headwinds had plagued the medical transportation firm.
ModivCare delivers in-home and on-site healthcare services, remote patient monitoring and transportation for non-emergency appointments. Its portfolio serves millions annually across 48 states and Washington, D.C., and employs over 23,600 employees, according to court documents.
However, a large portion of ModivCare’s services involve supporting low-income patients on Medicaid.
ModivCare said it has already experienced financial pressures related to declining state reimbursements for Medicaid and predicts the financial strain will worsen next year as cuts from Republicans’ One Big Beautiful Bill Act begin.
The company said that many, “if not all,” of its most significant customers are at least considering budget cuts in response to the federal healthcare cuts, darkening ModivCare’s expectations for revenue in 2026.
Meanwhile, ModivCare has also been impacted by broader challenges, including labor cost inflation, mounting competition for clients and Medicare Advantage plan design changes, which the company says have reduced coverage for supplemental benefits, like its services.
Last year, ModivCare’s financial position deteriorated. The operator reported a net loss of $201.3 million for the fiscal year, despite generating approximately $2.8 billion in service revenue. ModivCare said it’s been weighed down by debt, including $1.4 billion in funded debt.
ModivCare said restructuring is its only option. Its revolving credit facility is fully drawn and ModivCare will have a $75 million payment due at the beginning of next year. Attorneys called the current leverage ratio “unsustainable.”
ModivCare’s restructuring is meant to streamline the portfolio and help it focus on its key initiatives — including technology adoption. Services are expected to continue without interruption during the bankruptcy proceedings.
“This recapitalization strengthens our balance sheet and allows Modivcare to accelerate our investment in innovation by combining technology and data with high-touch member engagement,” said Heath Sampson, CEO and president of ModivCare, in a statement.
ModivCare will be guided through the bankruptcy proceedings by its chief transformation officer, Chad Shandler, who has also advised in the high-profile restructurings of Steward Health Care, Prospect Medical Holdings and Beverly Community Hospital, according to the first day filings.
The company’s stock price plummeted 70% following its bankruptcy announcement.
