Breaking Down ModivCare Inc. (MODV) Financial Health: Key Insights for Investors

You're looking at ModivCare Inc. (MODV) and trying to map the path forward, but the Q1 2025 results paint a complex picture of transition and risk, so let's cut through the noise. The company reported service revenue of $650.7 million, a 4.9% year-over-year dip, which is a clear signal that Non-Emergency Medical Transportation (NEMT) contract attrition is biting, particularly in that segment's 6.3% revenue decline. Honestly, the real pressure point is the bottom line: a net loss that widened to $50.4 million, largely due to a near-doubling of interest expense on their significant debt load, which is why the $105.0 million in new Q1 financing was crucial for liquidity. Here's the quick math: negative free cash flow of $86.2 million in a single quarter means the clock is ticking on their operational turnaround, even with the promise of over $20.0 million in annualized General and Administrative (G&A) savings. You need to understand if the strategic initiatives can defintely outpace the cash burn, because this is a classic turnaround scenario where execution is everything.

Revenue Analysis

You need to know where ModivCare Inc. (MODV) makes its money, especially as the company navigates a challenging 2025. The direct takeaway is that while the Non-Emergency Medical Transportation (NEMT) segment remains the dominant revenue driver, it's also the primary source of the recent decline, putting pressure on the Personal Care Services (PCS) segment to stabilize the top line.

For the first quarter of 2025 (Q1 2025), ModivCare Inc. reported a total service revenue of $650.7 million, which marks a 4.9% year-over-year decline from the same period in 2024. This contraction is a clear indicator of the headwinds from contract attrition and lower service volumes. Here's the quick math: nearly all segments saw a drop, so the total revenue naturally followed.

The company's revenue is split across three core segments, with one clearly outweighing the others. This reliance on a single business line is a key risk factor you should defintely be watching.

• Non-Emergency Medical Transportation (NEMT): The largest segment, managing rides for eligible members to healthcare appointments.
• Personal Care Services (PCS): Provides in-home care, like assistance with daily living activities.
• Monitoring: Offers remote patient monitoring (RPM) and personal emergency response systems (PERS).

The segment contribution to Q1 2025 revenue shows a heavy concentration in NEMT, which is typical for ModivCare Inc., but the recent performance is concerning. The trailing twelve months (TTM) revenue as of Q1 2025 stood at $2.75 billion, reflecting a modest -1.21% change year-over-year.

The segment breakdown for Q1 2025 tells the story of the current financial pressures:

The significant change in revenue streams is the pronounced 6.3% decrease in NEMT revenue, primarily due to known contract attrition, meaning they lost some business. Also, the 9.8% drop in the smaller Monitoring segment due to membership churn is a drag on growth. To combat this, management is focused on securing new contracts, like the two new Medicaid managed care NEMT contracts secured in Q1 2025, which are expected to generate an estimated $52 million in annual contract value (ACV). That's a clear action to offset the losses, but it will take time to fully materialize.

The company is also implementing targeted cost reduction actions, anticipating over $20 million in annualized General and Administrative (G&A) savings. This is a defensive move to protect the bottom line while they work to stabilize the top line. The whole picture is one of operational restructuring under financial duress, which is why a deep dive into the rest of their financials is crucial for any investor. You can read more in our full analysis on Breaking Down ModivCare Inc. (MODV) Financial Health: Key Insights for Investors.

Profitability Metrics

You need to know the true cost structure of ModivCare Inc. (MODV), and the current margins tell a clear, if challenging, story: the company is currently operating at a net loss, but there are signs of operational efficiency improvements in its core business. In the first quarter of 2025 (Q1 2025), ModivCare Inc. reported a net loss of $50.4 million on service revenue of $650.7 million, translating to a net loss margin of approximately -7.75%. This is a critical number to ground your analysis.

The profitability picture is complex because of non-cash charges, but the core business is working toward stabilization. For the full fiscal year 2024, the company's Gross Profit Margin stood at about 15.1%, based on a Gross Profit of $420.4 million against $2.787.6 million in revenue. That 15.1% is the buffer for all operating, interest, and tax expenses. By the time you factor in sales, general, and administrative costs, the full-year 2024 Operating Loss Margin was -3.33% (an operating loss of $92.8 million), showing that core operations are not yet covering all fixed costs.

Profitability Trends and Industry Comparison

The trend in profitability has been under pressure, but management is fighting back. In 2024, the company saw a lower gross margin compared to 2023, primarily due to increased service expenses across its segments. However, the Non-Emergency Medical Transportation (NEMT) segment-ModivCare Inc.'s largest-showed a sequential gross margin increase of 120 basis points in Q2 2024, a direct result of cost savings and better trip mix. This is a defintely positive sign of traction.

When you stack ModivCare Inc.'s performance against the industry, the contrast is stark, but context matters:

• Net Profit Margin: ModivCare Inc.'s Q1 2025 net loss margin of -7.75% is far below the reported average net profit margin of 20% to 30% for smaller, regional NEMT operators. ModivCare Inc.'s role as a large-scale manager of capitated contracts (fixed-fee contracts) means it absorbs more risk and has a different cost structure than a local fleet owner.
• Operating Margin: The full-year 2024 Operating Loss Margin of -3.33% is also concerning, but it is not entirely out of line with the broader, capital-intensive healthcare services sector, which saw a median operating margin of just 1.0% in August 2025.

Operational Efficiency and Cost Management

The real opportunity lies in operational efficiency, and management is focused on what they can control. The company's Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) margin for Q1 2025 was 5.0%, which is a better measure of cash-level operating performance, excluding non-cash items and debt costs. They are targeting greater than $20.0 million in annualized General & Administrative (G&A) savings through automation and cost reductions. This focus on cost management is crucial for turning the operating loss into a profit.

Here's the quick math on the goal: if they hit their cost savings target and maintain Q1 2025 revenue run-rate, that $20.0 million in savings could potentially move the needle toward a positive operating income. Management is guiding for Adjusted EBITDA growth in excess of 10% in 2025, which would mean an Adjusted EBITDA of over $177.2 million, up from the $161.1 million reported in 2024. That's the key metric to watch for near-term financial health. For a deeper look at who is betting on this turnaround, check out Exploring ModivCare Inc. (MODV) Investor Profile: Who's Buying and Why?

Debt vs. Equity Structure

You're looking at ModivCare Inc. (MODV)'s balance sheet and seeing a lot of red ink, and honestly, you're right to be concerned. The key takeaway is that the company is currently financed almost entirely by debt, not equity, which puts it in a precarious position for a healthcare services firm.

The company's capital structure is heavily skewed toward debt, a situation that has been the focus of significant restructuring efforts in 2025. As of the end of the 2024 fiscal year, ModivCare Inc. reported total debt of approximately $1.26 Billion, calculated from a short-term debt of $274.250 million and long-term debt (net of deferred financing costs) of $986.436 million. This massive debt load is set against a negative stockholders' equity (deficit) of ($38.474 million). That's a serious imbalance.

The Debt-to-Equity Reality

When a company has negative equity, its Debt-to-Equity (D/E) ratio is technically a large negative number, which signals that total liabilities exceed total assets. Here's the quick math: with over $1.26 Billion in total debt and negative equity, ModivCare Inc.'s D/E ratio is around -32.77:1. For context, the average D/E ratio for US companies is typically around 0.83:1, and capital-light industries like healthcare usually aim for much lower ratios. A D/E ratio this extreme means the company is defintely swimming in debt just to keep its operations afloat.

This high leverage is why the company's lenders required a reset of its financial covenants (rules for borrowing). In January 2025, ModivCare Inc. secured covenant relief, which included resetting the maximum total net leverage ratio to 6.75:1.00 for the third and fourth fiscal quarters of 2025. That target is still very high, but it gives them a little breathing room to manage their debt.

• Total Debt (Mar 2025): $1.40 Billion
• Stockholders' Equity (Dec 2024): ($38.474 million)
• D/E Ratio (Analyst Reported): -74.27

Recent Debt Management and Financing

ModivCare Inc. is actively trying to balance this debt-heavy structure, but it's mostly through more debt, not equity funding. In January 2025, they raised $105 million in incremental financing, which included a $75 million incremental term loan and $30 million in new Second Lien Senior Secured PIK Toggle Notes (Payment-In-Kind, meaning interest can be paid with more debt instead of cash). This is a short-term liquidity boost, but it adds to the long-term burden.

In a more significant move in March 2025, the company finalized a debt restructuring deal, exchanging $251 million in senior notes for these new Second Lien PIK Toggle Notes. The new notes carry an interest rate of 5.000% if paid in cash, but a much higher 10.000% if paid in kind. This PIK feature is a clear sign of financial distress; it helps preserve cash flow now, but it compounds the debt principal later. This is the central tension in their financing strategy: using debt to manage current debt, which is a high-wire act for investors to watch.

For a deeper dive into the operational side of their turnaround, you can check out our full report: Breaking Down ModivCare Inc. (MODV) Financial Health: Key Insights for Investors.

Next step for you is to monitor the Q2 2025 filings closely to see if the recent debt restructuring has stabilized their cash burn, especially given the high PIK interest rate on the new notes.

Liquidity and Solvency

You're looking at ModivCare Inc. (MODV)'s balance sheet to gauge its ability to cover near-term obligations, and the short answer is that the company is facing significant liquidity pressure. The key ratios are flashing a warning sign, and management's actions confirm the urgency.

The Current Ratio (current assets divided by current liabilities) for ModivCare Inc. (MODV) is sitting at 0.80 as of November 2025 (Trailing Twelve Months, TTM). This means for every dollar of short-term debt, the company only holds 80 cents of assets that can be converted to cash within a year. A ratio below 1.0 is a red flag for any business; it defintely suggests potential difficulty in meeting obligations without selling long-term assets or securing new financing.

Drilling down further, the Quick Ratio (or acid-test ratio), which strips out less-liquid inventory, is even tighter at 0.74. This ratio is a more conservative measure of immediate liquidity, and its low value confirms that ModivCare Inc. (MODV) has a shallow pool of highly liquid assets-like cash and receivables-to pay its immediate bills.

Here's the quick math on working capital trends: The company is actively working to improve its working capital discipline, but the First Quarter (Q1) of 2025 saw a working capital build that contributed to cash burn. Net contract receivables, which is a critical component of working capital for a service-based business, increased to $108.5 million in Q1 2025, up from $95.2 million in the prior quarter. This increase suggests that ModivCare Inc. (MODV) is taking longer to collect payments from clients, tying up cash that should be used for operations.

The Cash Flow Statement overview provides the clearest picture of the liquidity crunch:

• Operating Cash Flow (OCF): Q1 2025 OCF was a use of $82.1 million. This negative figure means the core business activities-transportation, personal care, and monitoring-are not generating enough cash to cover expenses.
• Investing Cash Flow (ICF): Capital expenditures in Q1 2025 were a relatively modest $4.1 million, which is typical for a service company investing in technology. The low level of investing activity suggests a focus on conserving cash.
• Financing Cash Flow (FCF): To offset the negative operating cash flow, ModivCare Inc. (MODV) executed $105.0 million in new financing during Q1 2025. This is a necessary, but costly, action to maintain liquidity, and the company remained fully drawn on its revolving credit facility.

The clear takeaway is that ModivCare Inc. (MODV) is currently reliant on external financing to cover its operational cash needs, a major liquidity concern. The negative free cash flow of $86.2 million in Q1 2025 further underscores this reliance. Investors should monitor the progress of the company's strategic initiatives to accelerate collections and reduce General and Administrative (G&A) expenses, which are critical to reversing the negative cash flow trend. You can read more about their corporate objectives here: Mission Statement, Vision, & Core Values of ModivCare Inc. (MODV).

Valuation Analysis

You're looking at ModivCare Inc. (MODV) and wondering if the current stock price of around $0.43 is a screaming deal or a value trap. Honestly, the valuation metrics paint a picture of a company in deep transition, which is typical when a stock has fallen -97.22% over the last year.

When a company is losing money, the classic price-to-earnings (P/E) ratio becomes nearly meaningless. ModivCare's trailing twelve months (TTM) P/E ratio is effectively -0.0268 as of November 2025, which simply confirms their earnings are negative. You can't compare a negative P/E to a positive one, so we need to look at other metrics to judge if the stock is overvalued or undervalued.

The enterprise value-to-EBITDA (EV/EBITDA) ratio-which compares the company's total value, including debt, to its core operating profit (Earnings Before Interest, Taxes, Depreciation, and Amortization)-is a better measure here. As of November 15, 2025, ModivCare's TTM EV/EBITDA is 6.5. Here's the quick math: Enterprise Value of $1,247 million divided by TTM EBITDA of $192 million gives you that multiple. This 6.5x multiple is actually quite low compared to the industry median of around 10.7x, which suggests the stock is potentially undervalued on an operating basis, assuming they can stabilize their business.

Another key metric is the price-to-book (P/B) ratio, which compares the stock price to the company's book value (assets minus liabilities) per share. ModivCare's latest twelve months P/B ratio is approximately 0.0x. A P/B this low suggests the market is valuing the company at or below its liquidation value, a strong sign of undervaluation, but also a reflection of the market's lack of confidence in the company's future profitability or its balance sheet health.

The stock price trend tells a brutal story. The stock is currently trading near its 52-week low of $0.16, having fallen precipitously from its 52-week high of $19.13. That's a massive wealth destruction event. Plus, ModivCare does not pay a dividend, so your dividend yield and payout ratio are both 0.00%. You are defintely not getting paid to wait for a turnaround.

Still, Wall Street analysts see a massive opportunity here. The analyst consensus rating is a Buy as of November 16, 2025, with an average one-year price target set at a staggering $6.50. This target implies an upside of over 1,400% from the current price, but what this estimate hides is the high risk. The analysts are betting on a successful execution of their transformation plan, which includes targeted cost reductions expected to generate greater than $20.0 million in annualized savings.

So, is ModivCare Inc. overvalued or undervalued? Based on the valuation multiples (low EV/EBITDA and P/B) and the analyst price target, it is fundamentally undervalued-but only if you believe management can execute a flawless turnaround and reverse the negative earnings trend. If you want to dive deeper into the operational risks behind these numbers, check out Breaking Down ModivCare Inc. (MODV) Financial Health: Key Insights for Investors.

• P/E Ratio (TTM): -0.0268 (Negative earnings).
• P/B Ratio (LTM): 0.0x (Near liquidation value).
• EV/EBITDA (TTM): 6.5 (Low vs. industry median).
• Analyst Price Target: $6.50 (Implies massive upside).

The table below summarizes the key valuation metrics:

Risk Factors

You need to understand that ModivCare Inc. (MODV) is in a critical transition, which is the single biggest factor overshadowing its near-term financial picture. The company filed for voluntary Chapter 11 protection in August 2025 to execute a comprehensive restructuring. This is not a minor risk; it's a major strategic move to survive a crippling debt load and operational headwinds.

Here's the quick math on the debt problem: ModivCare carried a significant debt burden of around $1.3 billion as of May 2025. The restructuring aims to slash total funded debt obligations by approximately $1.1 billion, or more than 85% of the outstanding funded debt. That's a massive deleveraging, but it comes with the inherent risks of a bankruptcy process, though the company expects operations to continue uninterrupted.

Internal and Operational Risks

The company's core business segments are facing clear operational stress. In the first quarter of 2025 (Q1 2025), the Non-Emergency Medical Transportation (NEMT) segment saw revenue decline by 6.3% year-over-year, largely due to contract attrition. This is compounded by a class action securities lawsuit alleging false statements about NEMT contracts, which forced contract renegotiations and pricing accommodations.

The financial metrics reflect this internal strain. The Q1 2025 results showed a consolidated service revenue of $650.7 million, a 4.9% drop from the prior year. The net loss for the quarter surged to $50.4 million, up from a $22.3 million loss in Q1 2024, driven primarily by higher interest expense. Honestly, the cash flow situation is a major red flag. Operating cash flow was a use of $82.1 million, and free cash flow was negative $86.2 million in Q1 2025. You can't burn cash like that forever.

• NEMT contract losses cut into revenue.
• Negative free cash flow of $86.2 million in Q1 2025.
• Liquidity is tight, with a current ratio of 0.79.

External and Market Risks

The external environment in healthcare services, especially for a company focused on social determinants of health (SDoH), presents its own set of challenges. One major issue is the extended collection periods from government payors like Medicare and Medicaid. These delays create significant uncertainty in cash flow and make it difficult to comply with financial covenants.

Plus, macroeconomic pressures are hitting profit margins. Inflation and persistent labor shortages increase operational costs across all segments, especially in Personal Care Services (PCS). Regulatory changes are also a constant threat; for instance, ongoing Medicaid redetermination efforts are creating volatility in membership dynamics, and new CMS rules on Medicaid payments complicate the PCS segment's profitability.

Mitigation Strategies and Actions

The restructuring is the primary mitigation strategy, injecting $100 million in debtor-in-possession (DIP) financing to support ongoing operations and providing a pathway to a much lower debt load. Beyond that, management is focused on operational fixes. They secured $105.0 million in new financing in Q1 2025 to support transformation initiatives.

They are defintely prioritizing cost control and efficiency. Targeted cost reduction actions are expected to generate more than $20.0 million in annualized General and Administrative (G&A) savings. They are also taking actions to accelerate collections and improve working capital efficiency to combat those payor delays. If you want to dive deeper into the company's strategic shift, you should read our full analysis: Breaking Down ModivCare Inc. (MODV) Financial Health: Key Insights for Investors.

Growth Opportunities

You're looking at ModivCare Inc. (MODV) and seeing a mixed picture: a massive market position but also recent financial headwinds. The direct takeaway is that their future growth hinges less on new acquisitions and more on operational excellence and a strategic shift to higher-margin, tech-enabled services. They are defintely in a turnaround phase, but the underlying market-supportive care for complex populations-is a long-term winner.

The company is moving away from its previous high-growth-by-acquisition model, which you can see by the lack of major deals since the 2022 Guardian Medical Monitoring purchase. Instead, the focus is internal: digitizing operations and transitioning to more financially stable contracts. This is a necessary pivot.

• Digitize for Efficiency: Accelerating the adoption of Artificial Intelligence (AI) and integrated digital services is expected to dramatically improve efficiency and margins across all segments.
• Contract Restructuring: Shifting many shared risk Non-Emergency Medical Transportation (NEMT) contracts to fee-for-service arrangements, which should normalize working capital and improve free cash flow over the next few quarters.
• Cost Reduction: Targeted cost reduction actions are expected to generate greater than $20.0 million in annualized General and Administrative (G&A) savings.

Near-Term Revenue and Earnings Estimates

Honestly, the 2025 financial picture is one of stabilization, not explosive growth. The company reported Q1 2025 service revenue of $650.7 million, a 4.9% decline year-over-year, and a net loss of $50.4 million. This reflects contract attrition and lower volumes, but they are fighting back.

Here's the quick math on new business: In Q1 2025, ModivCare Inc. secured two new Medicaid managed care contracts with a combined annual contract value of approximately $52 million, expected to contribute around $38 million to revenue in 2025. This shows they can still win core business, but it's a grind. Adjusted EBITDA for Q1 2025 was $32.6 million, and the goal is to drive that back toward a healthy growth trajectory through these operational fixes.

To be fair, the company withdrew its formal full-year guidance in early 2025 due to business changes, but the strategic focus on securing new contracts and reducing costs is the clear path to a stronger 2026. You can dive deeper into the ownership structure in Exploring ModivCare Inc. (MODV) Investor Profile: Who's Buying and Why?.

Competitive Moat and Strategic Partnerships

ModivCare Inc.'s competitive advantage (or 'moat') is its scale and integrated service model. They are the largest national NEMT network, and they bundle that with Personal Care Services (PCS) and in-home Monitoring solutions. This integrated approach, which addresses the social determinants of health (SDoH), is exactly what large health plans want to manage total cost of care.

The company is using strategic partnerships to expand its tech footprint and clinical reach. For example, the April 2025 partnership with Aetna Better Health of Illinois to launch Health Stations shows a commitment to getting their services into the community and closer to the patient. They are leveraging their existing network to deliver value-based care.

What this estimate hides is the execution risk in a turnaround. They secured $105.0 million in new financing in Q1 2025, which provides liquidity but also signals financial pressure. The success of the turnaround rests on the new Chief Transformation Officer and the ability to execute the strategic review of assets, which may include divestitures to simplify the business.

Finance: Monitor the Q2 2025 and Q3 2025 reports closely to see if the working capital discipline and G&A savings are translating into positive free cash flow. That will be the real test.