DEF: ModivCare Inc. Announces Details for 2025 Annual Stockholders Meeting

ModivCare Inc. has released its proxy statement outlining proposals for the 2025 Annual Meeting of Stockholders, including the election of directors, executive compensation, and ratification of the independent auditor.

Summary

• ModivCare Inc. will hold its 2025 Annual Meeting of Stockholders on June 17, 2025, in Denver, CO.
• Stockholders will vote on the election of seven directors, an advisory vote on executive compensation, and the ratification of KPMG LLP as the independent registered public accounting firm for 2025.
• The Board recommends voting FOR all director nominees, the advisory vote on executive compensation, and the ratification of KPMG.
• In 2024, ModivCare maintained consistent revenue compared to 2023 despite challenges such as Medicaid redetermination and lower Medicare Advantage reimbursements.
• The company's executive compensation philosophy is designed to attract, motivate, and retain talented individuals while aligning pay with performance and stockholder interests.
• The Compensation Committee introduced a new structure of PRSUs in 2024 which vest three years from the grant date at a performance target split of 40% performance condition and 60% market condition.
• The company is committed to furthering its sustainability practices and addressing the social determinants of health.
• As of April 21, 2025, there were 14,349,099 shares of Common Stock outstanding and entitled to vote at the Annual Meeting.

Sentiment

Score: 6

Explanation: The document presents a mixed sentiment. While it highlights the company's efforts to maintain revenue and adapt to market challenges, it also acknowledges economic pressures, client attrition, and a net loss due to goodwill impairment charges. The focus on corporate governance and sustainability initiatives adds a positive element.

Positives

• The company is committed to furthering its sustainability practices and addressing the social determinants of health.
• The company retained core members of its executive leadership team, which was further enhanced by the addition of Chelsey Berstler, Executive Vice President of Personal Care Services.
• The company delivered leading supportive care services to its payor partners and their members across its segments.

Negatives

• Economic pressure and rising costs had a significant impact on the Company's payor clients which led to the attrition of clients.
• The net loss in 2023 and 2024 is related to a goodwill impairment charge that was recorded during the second quarter of 2023 and 2024, respectively.
• As of December 31, 2024, none of the non-employee directors met the holding level under our stock ownership guidelines.
• As a result of the Company's performance for 2024 coming in below the Compensation Adjusted EBITDA targets set by the Compensation Committee, neither Mr. Sampson nor the other NEOs were awarded STI payouts in 2024.

Risks

• The company faces challenges related to Medicaid redetermination and an evolving Medicare Advantage landscape.
• Economic pressure and rising costs had a significant impact on the Company's payor clients which led to the attrition of clients.
• The company operates in complex and dynamic markets.

Future Outlook

The Company continues with its advisors to evaluate its options to develop an appropriate 2025 LTI intended to motivate its executives to enhance long-term value while also minimizing equity dilution.

Management Comments

• On behalf of the board of directors and management of the Company, I extend our appreciation for your continued support, stated L. Heath Sampson, President, Chief Executive Officer and Director.

Industry Context

ModivCare operates in the technology-enabled healthcare services industry, providing integrated supportive care solutions for public and private payors and their members.

Comparison to Industry Standards

• The document references a peer group of 17 health services related companies that were comparable to ModivCare in terms of business mix and size (e.g., revenue, EBITDA, and market capitalization) when it was chosen for 2024.
• The peer group includes Acadia Healthcare Company, Inc., Brookdale Senior Living Inc., National HealthCare Corporation, AdaptHealth Corp., Chemed Corporation, Option Care Health, Inc., Addus HomeCare Corporation, CorVel Corporation, Select Medical Holdings Corporation, Amedisys, Inc., Encompass Health Corporation, The Ensign Group, Inc., Apollo Medical Holdings, Inc., Enhabit, Inc., Veradigm Inc. (formerly Allscripts), Aveanna Healthcare Holdings Inc., and Healthcare Services Group, Inc.

Management Changes

Related Party Transactions

• CCP, a beneficial owner of more than 5% of our capital stock, (i) purchased $24.0 million in aggregate principal amount of the Company's 5.000%/10.000% Second Lien Senior Secured PIK Toggle Notes due 2029 (the Second Lien Notes) and (ii) exchanged $16.2 million in aggregate principal amount of the Company's existing 5.000% Senior Notes due 2029 held by CCP for an equivalent principal amount of Second Lien Notes (the Exchange and together with all other transactions contemplated thereunder, including the reimbursement of fees, the Coliseum Transactions).
• In addition, the Company reimbursed an aggregate of $150,000 in fees and expenses to CCP under the Agreement.

Stakeholder Impact

• The company's performance and strategic decisions can impact stockholders, employees, customers, suppliers, and creditors.
• The company is committed to responsible corporate citizenship and we continue to make progress on our sustainability initiatives as we provide high quality care and services every day to approximately 30 million members nationwide.

Next Steps

• Stockholders are encouraged to vote promptly via the Internet, telephone, or mail.
• The Board will consider stockholder feedback on executive compensation.

Key Dates

Keywords

ModivCare, Annual Meeting, Proxy Statement, Directors, Executive Compensation, KPMG, Stockholders, Governance, NEMT, PCS, Monitoring