Modivcare Inc. ($MODV): Too Much Debt, Not Enough Care
A pandemic-fueled shopping spree turned ModivCare into a distressed mess with no margin for error
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ModivCare bet the farm and now they’re wondering if they’ll get foreclosed on. What started as a steady business shuttling Medicaid patients to doctor appointments has morphed into a debt-laden healthcare services conglomerate teetering on the financial brink.
The numbers tell the story. Debt ballooned to $1.3 billion. Leverage approaching 7x. EBITDA margins collapsed from a pandemic high of 14% to a measly 6%. The company’s senior unsecured notes now trade at an abysmal 30 cents on the dollar—the bond market’s way of saying “we don’t think you’re making it through this intact.” It’s the classic tale of corporate overreach.
When COVID temporarily inflated their margins, executives went shopping—dropping over $1.2 billion on acquisitions in personal care and remote monitoring. Now they’re frantically raising emergency capital and begging lenders for covenant relief.
The core transportation business is handling more volume than ever—36.8 million trips in 2024—but revenue per trip keeps dropping due to competition while costs keep rising. The growth in trips can’t overcome pricing pressures and wage inflation.
The real question now: with caregiver costs surging and transportation margins squeezed, can ModivCare engineer a turnaround before the debt collectors come knocking?
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