S&P trims ModivCare

S&P said it lowered its ratings for ModivCare Inc. and its senior unsecured notes to B from B+ and placed them on CreditWatch with negative implications. The 4 recovery rating on the notes is unchanged.

“The downgrade primarily reflects our expectation for S&P Global Ratings-adjusted leverage to remain over 5x for the next 12 months. As utilization in the company's largest segment, non-emergency medical transportation (NEMT), has picked up following a period of lower usage during the pandemic, the company has seen an increase in its service cost per trip which has burdened margins over the last 12 months,” the agency said in a press release.

S&P warned, “The CreditWatch negative reflects the potential for a further downgrade if EBITDA and cash flow generation fails to strengthen, covenant headroom continues to erode, and the company is unable to amend its credit agreement, severely limiting its access to its revolver and constraining liquidity.”

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