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Published February 28, 2025
ModivCare made investors sick when it revealed its cash flow was on life support and the Company had liquidity problems. After learning this news, investors rapidly dumped their shares and ModivCare’s stock price dropped 10% overnight. Some of those investors have filed a class-action lawsuit against the Company.
ModivCare provides medical services including medical transport services. In 2022, the Company’s CEO revealed ModivCare was renegotiating many of its transport contracts. But, he reassured investors this was going to be “beneficial.” He later raised the Company’s revenue guidance when discussing these contracts.
But behind the scenes, ModivCare executives knew things were bad. The Company repeatedly announced negative cash flow and had racked up debt. By September 2024, the Company announced it was having major liquidity problems. A couple days later, the ModivCare slashed its guidance.
Stunned investors quickly sold off their shares. Some of those investors are now joining the class-action.