| COMPANY |
ModivCare Inc. |
| COURT |
United States District Court for the District of Colorado |
| CASE NUMBER |
1:25-cv-00306 |
| JUDGE |
The Hon. Kathryn A. Starnella |
| CLASS PERIOD |
November 3, 2022 through September 15, 2024 |
| SECURITY TYPE |
Securities |
LEAD PLAINTIFF DEADLINE IS MARCH 31, 2025.
If you have suffered losses and would like to discuss your rights, please fill out this form or you may contact Jonathan Naji, Esq. at (484) 270-1453 or via e-mail at info@ktmc.com.
Case Background:
A class action lawsuit alleging violations of the federal securities laws has been filed on behalf of those who purchased or otherwise acquired ModivCare Inc. (“ModivCare”) (NASDAQ: MODV) securities between November 3, 2022, and September 15, 2024, inclusive (the “Class Period”).
On November 3, 2022, the start of the Class Period, before market hours, ModivCare issued a press release on a Form 8-K filed with the SEC reporting its financial results for third quarter 2022 and touted the benefits of its newly negotiated capitated contracts to its non-emergency medical transportation (“NEMT”) segment.
On May 4, 2023, before the market opened, ModivCare announced its first quarter 2023 financial results. On the corresponding earnings call, ModivCare revealed a “$7 million reduction in contract payables and $31 million increase in contract receivables.” But for these changes, ModivCare’s “cash flow from operations would have been better in the first quarter by $38 million.” On this news, the price of ModivCare common stock declined $11.30 per share, or more than 16%, from a close of $69.30 per share on May 3, 2023, to close at $58.00 per share on May 4, 2023.
On August 3, 2023, after the market closed, ModivCare announced its second quarter 2023 financial results. On the corresponding earnings call, ModivCare revealed negative cash flow from operations of $108 million, “mainly due to a $96 million decrease in our net contract payables.” On this news, the price of ModivCare common stock declined $2.86 per share, or more than 7%, from a close of $38.24 per share on August 3, 2023, to close at $35.38 per share on August 4, 2023.
On February 23, 2024, before the market opened, ModivCare announced its fourth quarter and full year 2023 financial results. On the corresponding earnings call, ModivCare again revealed that company generated negative free cash flow, of $37 million attributed to “delay in payment from an MCO client.” ModivCare also anticipated that “free cash flow for the first half of the year will be constrained to the ongoing build in contract receivables and the settlement of several large payables expected in the second quarter.” On this news, the price of ModivCare common stock declined $17.25 per share, or more than 39%, from a close of $43.87 per share on February 22, 2024, to close at $26.62 per share on February 23, 2024.
On September 12, 2024, before the market opened, ModivCare announced that it would “undertak[e] actions to seek additional capital, including filing a shelf registration statement” with the SEC to improve its liquidity. On this news, the price of ModivCare common stock declined $18.43 per share, or more than 59%, from a close of $31.19 per share on September 11, 2024, to close at $12.76 per share on September 12, 2024.
Then, on September 16, 2024, before the market opened, ModivCare announced that the company reduced its 2024 adjusted EBITDA guidance range from “$185 [million]-$195 million to $170 [million]-$180 million, primarily due to NEMT segment pricing accommodations made to strategically retain and expand key customer relationships.” On this news, the price of ModivCare common stock declined $1.40 per share, or nearly 10%, from a close of $14.12 per share on September 13, 2024, to close at $12.72 per share on September 16, 2024.
The complaint alleges that, throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the company’s business, operations, and prospects. Specifically, Defendants misrepresented and/or failed to disclose that: (1) certain of the company’s NEMT contracts, rather than mitigating the risks to cash flow as ModivCare asserted, actually negatively impacted its free cash flow; (2) contract renegotiations and pricing accommodations negatively impacted the company’s adjusted EBITDA; (3) ModivCare had insufficient liquidity; and (4) as a result, Defendants’ statements about the company’s business, operations, and prospects were materially false and misleading and/or lacked a reasonable basis at all relevant times.
What is a Lead Plaintiff?
A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member’s claim is typical of the claims of other class members, and that the class member will adequately represent the class. Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. Filling out the online form above or communicating with any counsel is not necessary to participate or share in any recovery achieved in this case. Any member of the purported class may move the court to serve as a lead plaintiff through counsel of his/her choice, or may choose to do nothing and remain an inactive class member.