Group 1: ModivCare (NASDAQ: MODV) - ModivCare is undergoing a significant restructuring process following a Chapter 11 bankruptcy filing, focusing on debt reduction and capital stabilization [2][3] - The restructuring has the support of over 90% of First Lien and 70% of Second Lien Lenders, with the company set to receive $100 million in debtor-in-possession financing and maintain over $100 million in liquidity while reducing debt by $1.1 billion [3] - Despite challenges such as potential delisting and operational hurdles, analysts are observing whether these efforts could lead to recovery or make ModivCare an acquisition target, with the stock priced at $0.18, having corrected almost 100% year to date [4] Group 2: Ceragon Networks (NASDAQ: CRNT) - Ceragon Networks has experienced bearish momentum in 2025, with the stock dropping almost 50% year to date, trading at $2.37 [5] - The company generates steady revenue and is involved in modernizing communications networks, although recent statutory profit was reduced by $5.3 million due to unusual one-off items, indicating potential for profit growth if these items do not recur [8] - Ceragon faces challenges in India related to carrier financing and logistics, while North America shows strong performance; management is focused on technology leadership, validated by a recent U.S. tier 1 win expected to ramp in 2026, but profitability issues and competitive pressures remain concerns [9]

[Restructuring Support Agreement](index=1&type=section&id=RESTRUCTURING%20SUPPORT%20AGREEMENT) This agreement outlines the terms and conditions for the capital restructuring and recapitalization of ModivCare Inc. and its subsidiaries through Chapter 11 proceedings [Preamble](index=1&type=section&id=Preamble) This agreement, signed August 20, 2025, outlines the capital restructuring of ModivCare Inc. and its subsidiaries through Chapter 11 proceedings - The agreement was signed on **August 20, 2025**, to restructure the capital of ModivCare Inc. and its subsidiaries[5](index=5&type=chunk) - The restructuring will be implemented through voluntary Chapter 11 bankruptcy proceedings initiated by the Company Entities[9](index=9&type=chunk) Key Creditor Holdings | Claim Type | Creditor | Claim Amount (Approx.) | Proportion Held by Signatories (Approx.) | | :------- | :----- | :------------ | :----------------------- | | First Lien Loans | First Lien Lenders | $805 million | 90% | | Second Lien Notes | Second Lien Noteholders | $223 million | 70% | [1. Certain Definitions](index=3&type=section&id=1.%20Certain%20Definitions) This section defines key terms used in the agreement, providing a foundation for understanding its terms and conditions - “Restructuring” refers to the restructuring and recapitalization transactions described in the agreement and Exhibit A (Restructuring Term Sheet)[9](index=9&type=chunk)[87](index=87&type=chunk) - “Chapter 11 Cases” refers to the voluntary bankruptcy cases initiated by the Company Entities under Chapter 11 of the Bankruptcy Code[9](index=9&type=chunk)[21](index=21&type=chunk) - The “Support Effective Date” requires the Company Entities, initial Consenting First Lien Lenders (holding at least **66.67%** of First Lien Claims), and initial Consenting Second Lien Noteholders (holding at least **66.67%** of Second Lien Claims) to execute and deliver the agreement[101](index=101&type=chunk) [3. Restructuring](index=13&type=section&id=3.%20Restructuring) This section outlines the core commitment of all parties to use commercially reasonable efforts to confirm the restructuring plan promptly after the Petition Date - All parties will use commercially reasonable efforts to obtain confirmation of the restructuring plan as soon as practicable after the Petition Date and comply with applicable milestones[107](index=107&type=chunk) - All final documents related to the restructuring must be fully consistent with the terms and conditions of the agreement (including the Restructuring Term Sheet) and acceptable to the consenting parties[108](index=108&type=chunk) [4. Agreements of the Consenting Creditors](index=13&type=section&id=4.%20Agreements%20of%20the%20Consenting%20Creditors) This section details the obligations of consenting creditors during the support period, including voting, financing, and transfer restrictions - Consenting Creditors commit to timely vote in favor of the restructuring plan after solicitation commences and may not withdraw their votes[109](index=109&type=chunk) - Consenting Creditors agree to the occurrence of DIP financing and the Company Entities' use of their cash collateral[109](index=109&type=chunk) - Claim transfers are strictly restricted; transfers are void unless the transferee is already a Consenting Creditor or signs a joinder agreement[112](index=112&type=chunk) - During the Support Period, Consenting Creditors agree not to exercise rights or remedies for any Company Entity default, unless otherwise specified in the agreement or final documents[121](index=121&type=chunk) [5. Agreements of the Company Entities](index=19&type=section&id=5.%20Agreements%20of%20the%20Company%20Entities) This section specifies the Company Entities' key obligations during the support period, including implementing the restructuring and adhering to financial and operational commitments - The Company Entities commit to taking all necessary actions to implement the restructuring and prepare final documents consistent with the agreement[123](index=123&type=chunk) - The Company Entities will timely pay all restructuring fees and expenses and operate in the ordinary course of business[124](index=124&type=chunk) - The Company Entities shall not seek or solicit alternative restructuring proposals, nor modify final documents, without the written consent of the Required Consenting First Lien Lenders[126](index=126&type=chunk) [6. Additional Provisions Regarding Company Entities' Commitments](index=21&type=section&id=6.%20Additional%20Provisions%20Regarding%20Company%20Entities'%20Commitments) This section clarifies the Company Entities' flexibility in fulfilling commitments, particularly regarding fiduciary duties and considering alternative restructuring proposals - If the Company Entities' Board determines, consistent with its fiduciary duties, that continuing the restructuring is not appropriate, it is not required to take actions inconsistent with the agreement, provided prior notice is given to Consenting Creditors[127](index=127&type=chunk) - The Company Entities may consider and discuss alternative restructuring proposals, but must notify the Required Consenting Creditors within **two business days** and provide a summary of the material terms of the proposal[128](index=128&type=chunk) [7. Termination of Agreement](index=22&type=section&id=7.%20Termination%20of%20Agreement) This section details the conditions and consequences for the termination of the agreement, including specific termination events and the survival of certain obligations - The agreement will automatically terminate on the Effective Date[130](index=130&type=chunk) - The agreement may be terminated upon the occurrence of specific termination events, following written notice (typically a **three-business-day** notice period)[132](index=132&type=chunk) - Termination events include the Company Entities withdrawing or modifying the plan, material default, failure to meet milestones, DIP Credit Agreement default, failure to pay restructuring fees, conversion or dismissal of Chapter 11 Cases by the Bankruptcy Court, appointment of an examiner or trustee, or a fiduciary out decision by the Company Entities' Board[134](index=134&type=chunk)[135](index=135&type=chunk)[137](index=137&type=chunk)[138](index=138&type=chunk)[139](index=139&type=chunk)[140](index=140&type=chunk)[141](index=141&type=chunk) - Upon termination of the agreement, parties are released from obligations, but liability for pre-termination breaches remains[143](index=143&type=chunk) [8. Additional Documents](index=27&type=section&id=8.%20Additional%20Documents) This section requires parties to cooperate in good faith to negotiate and execute final documents, while also protecting sensitive information - All parties commit to cooperate in good faith to negotiate, draft, execute, and deliver final documents, subject to the consent rights specified in the agreement[145](index=145&type=chunk) - Initial Consenting First Lien Lenders or initial Consenting Second Lien Noteholders are not required to provide information they deem sensitive or confidential[145](index=145&type=chunk) [9. Inconsistency of Terms](index=28&type=section&id=9.%20Inconsistency%20of%20Terms) This section stipulates that in case of any inconsistency between the Restructuring Term Sheet and the agreement, the terms of the Restructuring Term Sheet shall prevail - If there is any inconsistency between the Restructuring Term Sheet and the agreement (excluding the Restructuring Term Sheet), the terms of the Restructuring Term Sheet shall prevail[147](index=147&type=chunk) [10. Representations and Warranties](index=28&type=section&id=10.%20Representations%20and%20Warranties) This section outlines the representations and warranties made by all parties, covering legal standing, authorization, and compliance - All parties warrant their legal existence, authority to sign the agreement, and that its execution and performance do not violate laws or contracts[148](index=148&type=chunk) - Consenting Creditors warrant they are not Qualified Marketmakers and possess beneficial ownership and voting rights over their claims[150](index=150&type=chunk) - Consenting Creditors commit to commercially reasonable efforts to recall loaned claims, but inability to vote or consent on loaned claims does not constitute a default[150](index=150&type=chunk)[151](index=151&type=chunk) [11. Disclosure; Publicity](index=29&type=section&id=11.%20Disclosure%3B%20Publicity) This section governs the disclosure of information related to the agreement, including public filings and restrictions on revealing specific creditor holdings - Before releasing public information related to the agreement, the Company Entities must submit drafts to the First Lien Agent and Consenting Creditors' counsel for review and comment[152](index=152&type=chunk) - Without the written consent of Consenting Creditors, the specific amount or percentage of First Lien Claims and/or Second Lien Claims held by any Consenting Creditor shall not be disclosed[153](index=153&type=chunk) - Public filings of the agreement will anonymize creditor holding information, but an unredacted version may be filed under seal with the Bankruptcy Court[153](index=153&type=chunk) [12. Amendments and Waivers](index=30&type=section&id=12.%20Amendments%20and%20Waivers) This section specifies the procedures for amending or waiving provisions of the agreement, requiring various levels of consent depending on the nature of the change - Amendments and waivers to the agreement generally require the written consent of the Company Entities and the Required Consenting First Lien Lenders[154](index=154&type=chunk) - Modifying the definition of “Required Consenting Creditors” requires the consent of each Consenting Creditor[154](index=154&type=chunk) - Modifications materially adverse to Second Lien Noteholders require the written consent of the Required Consenting Second Lien Noteholders and each Second Lien Noteholder as of the Support Effective Date[154](index=154&type=chunk) - Modifications materially adverse to any Consenting First Lien Lender or Consenting Second Lien Noteholder require the written consent of the affected creditor[154](index=154&type=chunk) [13. Effectiveness](index=31&type=section&id=13.%20Effectiveness) This section outlines the conditions under which the agreement becomes effective for the parties involved, including initial signatories and those joining later - The agreement becomes effective for the Company Entities, initial Consenting First Lien Lenders, and initial Consenting Second Lien Noteholders on the Support Effective Date[156](index=156&type=chunk) - Consenting Creditor signature pages will be delivered in anonymized form,

Core Viewpoint - Bragar Eagel & Squire, P.C. is investigating potential claims against ModivCare, Inc. on behalf of long-term stockholders following a class action complaint alleging misleading statements and omissions regarding the company's cash flow stability [1][2]. Group 1: Legal Investigation - A class action complaint was filed against ModivCare on January 29, 2025, with a class period from November 3, 2022, to September 15, 2024 [1]. - The investigation focuses on whether ModivCare's board of directors breached their fiduciary duties to the company [1]. Group 2: Stock Performance Impact - During the class period, ModivCare allegedly made misleading statements about its contracts' ability to stabilize cash flow, leading to significant stock price declines as the truth emerged [2]. - On September 16, 2024, ModivCare revised its 2024 Adjusted EBITDA guidance from $185-$195 million to $170-$180 million, resulting in a stock price drop of $1.40, or nearly 10%, from $14.12 to $12.72 per share [2].

Core Viewpoint - Kuehn Law, PLLC is investigating potential breaches of fiduciary duties by certain officers and directors of ModivCare, Inc. related to misrepresentation of financial conditions and operational performance [1] Group 1: Legal Investigation - Kuehn Law is looking into whether ModivCare's insiders misrepresented or failed to disclose critical information regarding contracts in the non-emergency medical transportation (NEMT) segment [2] - The investigation focuses on claims that these misrepresentations led to a deterioration in the company's free cash flow and negatively impacted adjusted EBITDA due to contract renegotiations and pricing accommodations [2] Group 2: Financial Implications - The company reportedly faced insufficient liquidity as a result of the aforementioned issues, which raises concerns about its financial stability [2] - Positive statements made by the company regarding its business operations and future prospects were deemed materially misleading and lacked a reasonable basis [2]

Core Viewpoint - Bragar Eagel & Squire, P.C. is investigating potential claims against ModivCare, Inc. due to a class action complaint alleging breaches of fiduciary duties by the board of directors during a specified class period [1] Summary by Relevant Sections Class Action Allegations - The class action claims that ModivCare made misleading statements regarding its contracts' ability to stabilize cash flow, leading to significant stock price declines as the truth about the company's business emerged [2] - On September 16, 2024, ModivCare revised its 2024 Adjusted EBITDA guidance from a range of $185-$195 million to $170-$180 million, primarily due to pricing accommodations in the NEMT segment to retain key customer relationships [2] - Following this announcement, ModivCare's stock price dropped by $1.40, nearly 10%, from $14.12 per share on September 15, 2024, to $12.72 per share on September 16, 2024, with unusually high trading volume [2] Contact Information - Long-term stockholders of ModivCare who have information or questions regarding the claims can contact Bragar Eagel & Squire, P.C. via email or telephone, with no cost or obligation [3] About the Law Firm - Bragar Eagel & Squire, P.C. is a nationally recognized law firm that represents individual and institutional investors in various complex litigations across state and federal courts [4]

Financial Performance - Consolidated service revenue decreased by 4.9% YoY to $650.7 million in 1Q 2025[40] - Consolidated Adjusted EBITDA increased by 1.4% YoY to $32.6 million in 1Q 2025[40] - Net loss was $50.4 million in 1Q 2025[40] Segment Performance (1Q 2025) - NEMT service revenue was $449.0 million, a decrease of 6.3% YoY, with Adjusted EBITDA of $27.8 million, an increase of 2.5% YoY[40] - PCS service revenue was $181.8 million, a decrease of 1.0% YoY, with Adjusted EBITDA of $12.2 million, an increase of 8.5% YoY[40] - Monitoring service revenue was $18.1 million, a decrease of 9.8% YoY, with Adjusted EBITDA of $5.2 million, a decrease of 17.4% YoY[40] NEMT Segment Details - NEMT total paid trips decreased by 4.0% YoY to 8,458[58] - NEMT revenue per trip decreased by 2.4% YoY to $53.09[58] - NEMT revenue per member per month increased 15.6% to $6.35[58] PCS Segment Details - PCS total hours decreased by 2.1% YoY to 6,818[64] - PCS revenue per hour increased by 1.1% YoY to $26.66[64] - PCS service expense per hour increased by 0.8% YoY to $21.64[64] Monitoring Segment Details - Monitoring members decreased by 7.3% YoY to 231K[70] - Monitoring revenue per member per month decreased by 2.8% YoY to $26.15[70] - Monitoring service expense per member per month decreased by 1.1% YoY to $11.07[70]

Core Viewpoint - ModivCare reported a significant quarterly loss of $1.71 per share, which was much worse than the Zacks Consensus Estimate of a loss of $0.34, indicating a substantial earnings surprise of -402.94% [1] Financial Performance - The company posted revenues of $650.65 million for the quarter ended March 2025, slightly exceeding the Zacks Consensus Estimate by 0.96%, but down from $684.45 million in the same quarter last year [2] - Over the last four quarters, ModivCare has surpassed consensus EPS estimates only once, while it has topped consensus revenue estimates two times [2] Stock Performance - ModivCare shares have declined approximately 88.6% since the beginning of the year, contrasting sharply with the S&P 500's decline of only -4.3% [3] Future Outlook - The company's earnings outlook is critical for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The current consensus EPS estimate for the next quarter is -$0.06 on revenues of $653.77 million, and for the current fiscal year, it is -$0.16 on revenues of $2.64 billion [7] Industry Context - The Medical Services industry, to which ModivCare belongs, is currently ranked in the top 22% of over 250 Zacks industries, suggesting a favorable industry outlook [8] - Another company in the same industry, HealthEquity, is expected to report quarterly earnings of $0.81 per share, reflecting a year-over-year increase of 1.3% [9]

Financial Data and Key Metrics Changes - Revenue for Q1 was $650.7 million, down 5% year over year and 2% sequentially, primarily due to known NEMT contract attrition, lower build hours in PCS, and membership churn in monitoring [20][21] - Net loss for the quarter was $50.4 million, up from $22.3 million a year ago, mainly due to higher interest expense which rose to $38.8 million [21] - Adjusted net loss was $24.5 million or negative $1.71 per share, reflecting the exclusion of restructuring-related costs and amortization of intangibles [21] - Adjusted EBITDA was $32.6 million, essentially flat year over year but down sequentially, with key drivers including an $8 million impact from net NEMT contract development [21][22] Business Line Data and Key Metrics Changes - In NEMT, revenue was $449 million, representing 69% of total revenue, declining 6% year over year due to previously disclosed contract losses [22] - Average monthly members in NEMT declined 19% year over year and 20% sequentially, while utilization from the normalization of healthcare increased to 12% [22] - PCS contributed $181.8 million in revenue or 28% of total revenue, with revenue per hour rising 1.1% while service hours declined 2.1% due to expected seasonality [24] - Monitoring contributed $18.1 million in revenue, representing just 3% of total revenue but 16% of total adjusted EBITDA, with adjusted EBITDA at $5.2 million for a 29% segment margin [25] Market Data and Key Metrics Changes - The broader opportunity in the 2026 pipeline exceeds $500 million in potential contract value, with the company securing two new Medicaid managed care contracts worth approximately $52 million [6][7] - Retention remains a key performance priority, with four strategic agreements signed in Personal Care expected to generate 90,000 monthly service hours [9] Company Strategy and Development Direction - The company is focused on five strategic objectives: growing core customer relationships, digitizing and automating the Care Access platform, optimizing the operating model, increasing capital efficiency, and delivering high-impact client-centric supportive care [4][5] - The long-term vision is to become the digital infrastructure for supportive care, unifying fragmented benefits and delivering a coordinated member experience [19] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in improving cash flow generation as contracts are restructured and working capital needs decrease [38] - The company is not issuing formal guidance for 2025 but is focused on executing measurable initiatives and communicating progress through clear KPIs [28] Other Important Information - The company launched a company-wide G&A reduction initiative targeting approximately $25 million in annualized savings [13][14] - The company is in the process of restructuring the organization to build a more tech-first model, adding talent in data, AI, and agile operations [12] Q&A Session Summary Question: Can you walk us through how we should be thinking about cash flow generation throughout the rest of the year? - Management indicated that EBITDA is driving cash flow and expects meaningful improvement in cash flow generation as the year progresses, particularly with contract restructuring [32][38] Question: Why did contract receivables increase despite overall revenue decline? - Management explained that the increase in accounts receivable was due to shared risk contracts that had not yet been converted, leading to a disconnect between revenue and receivables [39][40] Question: Is there a positive cash flow possibility in Q3? - Management confirmed that while Q2 and Q4 will see negative cash flows due to large debt payments, they feel good about cash flow generation for the rest of the year [51][53] Question: Can you elaborate on the G&A savings? - Management stated that the $25 million in G&A savings primarily comes from labor reductions in corporate and shared service areas due to increased operational efficiency [56][58]

Financial Data and Key Metrics Changes - Revenue for Q1 2025 was $650.7 million, down 5% year over year and 2% sequentially, primarily due to known NEMT contract attrition, lower build hours in PCS, and membership churn in monitoring [20][21] - Net loss for the quarter was $50.4 million, up from $22.3 million a year ago, mainly due to higher interest expense which rose to $38.8 million [21] - Adjusted net loss was $24.5 million or negative $1.71 per share, reflecting the exclusion of restructuring-related costs and amortization of intangibles [21] - Adjusted EBITDA was $32.6 million, essentially flat year over year but down sequentially, with key drivers including an $8 million impact from net NEMT contract development [21][22] Business Line Data and Key Metrics Changes - In NEMT, revenue was $449 million, representing 69% of total revenue, declining 6% year over year due to previously disclosed contract losses [22] - Average monthly members in NEMT declined 19% year over year and 20% sequentially, while utilization from the normalization of healthcare increased to 12% [22] - PCS contributed $181.8 million in revenue or 28% of total revenue, with revenue per hour rising 1.1% while service hours declined 2.1% due to expected seasonality [24] - Monitoring contributed $18.1 million in revenue, representing just 3% of total revenue but 16% of total adjusted EBITDA, with adjusted EBITDA at $5.2 million for a 29% segment margin [25] Market Data and Key Metrics Changes - The broader opportunity in the 2026 pipeline exceeds $500 million in potential contract value, with the company experiencing a loss of a regional contract totaling $15 million in annual revenue [6][7] - In Indiana, referral volume increased by more than 45% year over year, while new Southeastern markets delivered sequential growth [9] Company Strategy and Development Direction - The company aims to grow and retain core customer relationships, digitize and automate the Care Access platform, optimize the operating model for simplicity and scale, increase capital efficiency, and deliver high-impact client-centric supportive care [4][5] - The long-term vision is to become the digital infrastructure for supportive care, unifying fragmented benefits and delivering a coordinated member experience [19] Management's Comments on Operating Environment and Future Outlook - Management noted that the decline in revenue was expected and reflects prior year customer transitions and market dynamics that are largely behind the company [20] - The company is focused on executing against measurable initiatives and communicating progress through clear objective KPIs and milestones, without issuing formal guidance for 2025 [28] Other Important Information - The company launched a company-wide G&A reduction initiative targeting approximately $25 million in annualized savings [14] - The net contracts receivable rose to $109 million, up from $95 million in Q4, due to expected billing timing [26] Q&A Session Summary Question: How should cash flow generation be modeled for the rest of the year? - Management indicated that EBITDA is driving cash flow and expects meaningful improvement in cash flow generation as the year progresses, particularly due to contract restructuring and working capital improvements [31][38] Question: Why did contract receivables increase despite a decline in revenue? - The increase in accounts receivable was attributed to the contract mix and shared risk contracts that have not yet been converted [39][40] Question: Is there a positive cash flow possibility in Q3? - Management acknowledged that due to large debt payments in Q2 and Q4, positive cash flow from operations may not be achievable in those quarters, but they feel good about cash flow generation for the year overall [51][54] Question: Can you elaborate on the G&A savings? - The $25 million in G&A savings primarily comes from labor efficiencies within corporate and shared service areas as the company continues to streamline operations [57][59]

Revenue and Segments - ModivCare reported service revenue for the NEMT segment generated from non-emergency medical transportation services, with payment structures including capitated and fee-for-service models [122]. - The company operates four reportable segments: NEMT, PCS, Monitoring, and Corporate and Other, each contributing to overall revenue and expenses [135]. - Service revenue for the PCS segment is primarily generated on a fee-for-service basis, billing third-party payors including MCOs and Medicaid agencies [126]. - The Monitoring segment generates revenue from the sale of monitoring equipment and services, primarily on a per-member, per-month basis [127]. - The NEMT segment reported service revenue, net of $449.0 million in Q1 2025, down from $479.3 million in Q1 2024, with total paid trips decreasing by 4.0% [146]. - The PCS segment's service revenue, net for Q1 2025 was $181.8 million, a slight decrease from $183.6 million in Q1 2024, with operating income improving to $2.3 million [154]. - Monitoring segment service revenue, net decreased by $2.0 million, or 9.8%, for Q1 2025, primarily due to a 2.8% decrease in revenue per member per month and a 7.2% decrease in average monthly members [163]. Financial Performance - Consolidated service revenue, net for Q1 2025 decreased by $33.8 million, or 4.9%, compared to Q1 2024, with declines across all segments [137]. - Service expense for Q1 2025 decreased by $30.6 million, or 5.2%, compared to Q1 2024, primarily due to a decrease in the NEMT segment [138]. - Total operating expenses for Q1 2025 were $655.1 million, a decrease from $687.8 million in Q1 2024, leading to an operating loss of $4.4 million [137]. - General and administrative expense increased by $1.4 million, or 1.8%, in Q1 2025, with a notable increase in the Corporate and Other segment [139]. - Interest expense, net for Q1 2025 increased by $20.2 million, or 107.8%, compared to Q1 2024, due to new debt facilities and higher interest rates [141]. - The effective tax rate for Q1 2025 was 8.2%, compared to 2.5% for Q1 2024, influenced by various tax credits and changes in reserves [144]. - Total service expense for the PCS segment decreased by $1.9 million, or 1.3%, in Q1 2025, mainly driven by a $1.5 million, or 1.0%, decrease in payroll and related costs [159]. - General and administrative expense decreased by $1.8 million, or 7.6%, for Q1 2025 compared to Q1 2024, attributed to lower salaries and personnel expenses [160]. - Depreciation and amortization expense decreased by $3.6 million, or 13.2%, in Q1 2025, primarily due to certain intangible assets being fully amortized [140]. - Depreciation and amortization expense for Q1 2025 decreased by $3.4 million, or 26.3%, due to certain intangible assets being fully depreciated during 2024 [161]. Economic and Operational Challenges - Adverse economic conditions, including high inflation and labor shortages, have negatively impacted profit margins in the NEMT and PCS segments, with rising costs outpacing reimbursement rates [120]. - ModivCare's business environment is competitive, with regulatory complexities and a constrained labor market for healthcare professionals affecting operational performance [121]. - The company faces risks related to extended collection periods for receivables, impacting cash flow and financial stability [122]. - The company experienced financial challenges, including increased transportation and caregiver costs, leading to negative impacts on cash flow generation and liquidity [201]. - The company is likely to require additional liquidity to support ongoing operations over the next year due to prolonged cash conversion cycles [201]. - Management has concluded that substantial doubt exists about the company's ability to continue as a going concern [204]. Cash Flow and Liquidity - Cash used in operating activities was $82.1 million for YTD 2025, a decrease of $91.7 million compared to cash provided by operating activities of $9.6 million for YTD 2024 [177]. - Net cash provided by financing activities was $93.0 million for YTD 2025, an increase of $86.6 million compared to $6.4 million for YTD 2024, primarily due to the issuance of the Incremental Term Loan Facility [179]. - The balance of cash and cash equivalents, excluding restricted cash, was $116.0 million at March 31, 2025, compared to $112.6 million at December 31, 2024 [175]. - Cash requirements over the next 12 months totaled $880.5 million, including $88.8 million in guarantees and letters of credit not expected to be settled in cash [200]. - The company has cash requirements of $880.5 million due within one year and $1,376.6 million due beyond one year as of March 31, 2025 [207]. - Total future cash obligations amount to $2,257.1 million, with $880.5 million due in less than one year and $1,376.6 million due in more than one year [208]. - The company has a combined $344.6 million of short-term debt outstanding and $495.2 million of long-term debt as of March 31, 2025 [211]. - Management has implemented cost optimization measures and secured additional financing to improve liquidity [205]. - The company is evaluating potential strategic asset divestitures and operational efficiencies to enhance liquidity [205]. - Management continuously monitors liquidity and adjusts the balance between sources and uses of funds as necessary [209]. Debt and Financing - The principal balance of the 2029 Notes was reduced to $228.8 million from $500.0 million as of March 31, 2025, while the principal balance of the Second Lien Notes was $301.2 million [188]. - The company entered into an Incremental Term Loan Facility of $75.0 million with a maturity date of January 10, 2026, priced at a SOFR-based benchmark plus 7.50% [197]. - The Revolving Credit Facility has an aggregate principal amount of $325.0 million, with sublimits for swingline loans, letters of credit, and alternative currency loans [190]. - The Term Loan Facility established on July 1, 2024, has an aggregate principal amount of $525.0 million and requires quarterly principal payments [194]. - The company was granted a covenant holiday for the fourth quarter of 2024 through the second fiscal quarter of 2025, allowing for temporary relief from certain financial covenants [193]. - Interest rates on the Revolving Credit Facility and Term Loan Facility are variable, with the Incremental Term Loan accruing at a rate equal to the SOFR-based benchmark plus 7.50% [211]. - A one-percentage point increase in interest rates would have an approximate $8.7 million negative impact on pre-tax earnings [211]. - There are statutory, regulatory, and debt covenant limitations affecting the company's ability to access capital markets for funding [209]. Strategic Focus - The company anticipates increased demand for healthcare services driven by an aging population and the prevalence of chronic illnesses requiring ongoing monitoring [122]. - ModivCare's strategic focus includes leveraging technological advancements to improve service delivery and reduce operational costs [122]. - The governance structure has been strengthened with the establishment of the Strategic Alternatives Committee to support asset divestitures and cost savings initiatives [205].