Modivcare's stock has taken a significant hit following the company's announcement of raising $105 million in incremental financing and the withdrawal of its financial outlook. The financing, which includes a $75 million term loan and a $30 million commitment from Coliseum Capital Management for new second lien senior notes, is intended to provide liquidity for strategic initiatives. However, the decision to withdraw its revenue and adjusted EBITDA forecasts has raised concerns among investors about the company's future financial performance and stability.
The financing arrangement, while providing necessary liquidity, also involves amendments to Modivcare's existing credit agreement, including financial covenant relief and changes to the pricing grid for revolving loans. These measures, along with the appointment of Chad Shandler as Chief Transformation Officer and the addition of new independent directors, are part of Modivcare's efforts to strengthen its financial foundation and enhance operational performance. Despite these strategic moves, the market's reaction suggests a lack of confidence in the company's ability to navigate the current economic environment and achieve its long-term goals.
Modivcare (MODV) shares have plummeted 34.51% to $8.18 as of 10:51 am on January 10th, down from its previous close of $12.49.