ModivCare Inc.

ModivCare Inc. (NASDAQ: MODV) is a healthcare services firm that leverages technology to offer a comprehensive range of supportive care options to both public and private payors, as well as the individuals they serve. In addition to non-emergency medical transportation (NEMT), the company also delivers personal and in-home care services, along with nutritional meal delivery. ModivCare operates across distinct segments, namely NEMT, Personal Care, RPM, and Matrix Investment. Most of its revenue is derived from the NEMT segment.

Recent Financial and Business Updates:

• Second Quarter Income Statement Review:
• Service revenue amounted to USD699.1 million, marking an 11.3% growth compared to the USD628.2 million recorded in the second quarter of 2022.
• The net loss for the period stood at USD190.9 million, equivalent to USD13.47 per diluted common share, primarily due to a goodwill impairment charge of USD183.1 million.
• Adjusted EBITDA reached USD52.4 million, while adjusted net income came in at USD20.8 million, resulting in adjusted earnings per share of USD1.47 per diluted common share.
• Operating activities consumed USD108.2 million in cash during the quarter, in addition to USD8.9 million in capital expenditures.
• Contract payables decreased by USD78.5 million to reach USD109.1 million, while contract receivables increased by USD17.4 million, reaching USD119.8 million. Consequently, net contract receivables totalled USD10.7 million as of June 30, 2023.
• As of June 30, 2023, USD126.5 million was drawn from the USD325.0 million revolving credit facility.
• The maximum Total Net Leverage Ratio under the amended credit agreement was adjusted to enhance access to liquidity.
• Second Quarter Balance Sheet Review:
  • Total assets amounted to USD 1.78 billion as on June 30, 2023.
  • Total liabilities were reported to be USD 1.62 billion as on June 30, 2023.
  • Total stockholders' equity amounted to USD 161.44 million as on June 30, 2023.
  • Company Update:
  • Barbara Gutierrez assumed the role of Chief Financial Officer (CFO) at Modivcare from September 18, 2023.

Technical Observation (on the daily chart)

The Relative Strength Index (RSI) over a 14-day period stands at 38.12, recovered from the oversold zone with expectations of consolidation or a short term upward movement from the support zone around USD 27-USD 29. The volume traded also showed a drastic increase during mid-September, further shows expectations around the support levels. Additionally, the stock's current positioning is below the 21- period SMA and 50-period SMA, which may serve as dynamic short-term resistance levels.

As per the above-mentioned price action, recent key business and financial updates, momentum in the stock over the last month, and technical indicators analysis, a ‘SPECULATIVE BUY’ rating has been given to ModivCare Inc. (NASDAQ: MODV) at its current price of USD29.76 as on September 28, 2023, at 8:50 am PDT.

Individuals can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario. 

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing. 

Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc. 

How to Read the Charts?

The yellow colour line reflects the 21-period simple moving average (SMA) while the blue line indicates the 50- period simple moving average (SMA). SMA helps to identify existing price trends. If the prices are trading above the 21-period and 50-period moving average, then it shows prices are currently trading in a bullish trend.

The orange colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period) which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.

The red and green colour bars in the chart’s lower segment show the volume of the stock. The volume is the number of shares that changed hands during a given day. Stocks with high volumes are more liquid than stocks with lesser volume as liquidity in stocks helps with easier and faster execution of the order.

The Orange colour lines are the trend lines drawn by connecting two or more price points and used for trend identification purposes. The trend line also acts as a line of support and resistance.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock. 

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock. 

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices. 

The reference date for all price data, currency, technical indicators, support, and resistance levels is September 28, 2023. The reference data in this report has been partly sourced from REFINITIV. 

Abbreviations

CMP: Current Market Price

SMA: Simple Moving Average

RSI: Relative Strength Index

USD: United States dollar 

Note: Trading decisions require a thorough analysis by individual. Technical reports in general chart out metrics that may be assessed by individuals before any stock evaluation. The above are illustrative analytical factors used for evaluating the stocks; other parameters can be looked at along with additional risks per se. Past performance is neither an indicator nor a guarantee of future performance.

Disclaimer

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