Vandevar v. American Renal Associates Holdings, Inc. et al 2:19-cv-09074-ES-MAH — On March 28, 2019, investors sued American Renal Holdings, Inc. (“American Renal” or the “Company”) in United States District Court, District of New Jersey. Plaintiffs in the ARA class action allege that they acquired American Renal stock at artificially inflated prices between August 01, 2016 and March 27, 2019 (the “Class Period”). They are now seeking compensation for financial losses incurred upon public revelation of the Company’s alleged misconduct during that time. For more information on the ARA Lawsuit, please contact us today!
Summary of the Allegations
The Company (NYSE: ARA) says it is “is one of the largest dialysis services providers in the United States.” As such, the Company serves patients with the most advanced stage of chronic kidney disease, or End Stage Renal Disease (ESRD).
American Renal also says that it teams up with local nephrologists (doctors specializing in the treatment of kidney disease) to develop, own and operate dialysis clinics. By the end of 2018, the Company operated more than 200 dialysis clinics in 27 states and Washington, D.C., serving more than 16,000 patients with ESRD in partnership with approximately 400 local nephrologists.
Summary of Facts
American Renal and three of its current and/or former officers and directors (the “Individual Defendants”) now stand accused of deceiving investors by lying and withholding critical information about the Company’s business practices, operations and financial results during the Class period.
Specifically, they are accused of omitting truthful information about American Renal’s accounting practices from SEC filings and related material during the time in question. By knowingly or recklessly doing so, they allegedly caused the Company’s stock to trade at artificially inflated prices during the time in question.
The truth came out in a series of events that transpired between November 9 2018 and March 27, 2019. First, the Company acknowledged on a form filed with the SEC that in October 2018, “SEC staff ‘requested that the Company voluntarily provide documents and information relating to certain revenue recognition, collections and related matters.’”
Then, before the Market opened on March 8, 2019, the Company filed a form with the SEC announcing that it “would delay the filing of its earnings report for the fiscal year ended December 31, 2018. At the time, the Company attributed the delay to an ongoing review of certain accounting practices.
Finally, after the market closed on March 27, 2019, American Renal announced the resignation of its Chief Financial Officer (one of the Individual Defendants) and that it would “restate its financial results for the fiscal years ended 2014 through 2017.” At that time, the Company also announced that the investigation into certain accounting practices was sill ongoing.
A closer look
As alleged in the March 28 complaint, the Company and/or Individual Defendants repeatedly made false and misleading public statements during the Class Period.
For example, on a form filed with the SEC at the beginning of the Class Period, the Company stated in pertinent part: “Patient service operating revenues are reduced by the provision for uncollectible revenues to arrive at net patient service operating revenues. Provision for uncollectible accounts represents reserves established for amounts which patients are primarily responsible that we believe will not be collectible.”
Then, on another form filed with the SEC on March 6, 2018, the Company also stated in relevant part: “[M]anagement concluded that our internal control over financial reporting was effective as of December 31, 2017.”
Finally, on another form filed with the SEC on November 9, 2018, the Company stated in relevant part: “There have been no changes in our internal control over financial reporting(as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended September 30, 2018 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.”
Impact of the Alleged Fraud on American Renal’s Stock Price and Market Capitalization
|Closing stock price prior to disclosures:
|Closing stock price the trading day after disclosures:
|One day stock price decrease (percentage) as a result of disclosures:
The following chart illustrates the stock price during the class period:
Actions You May Take
If you have purchased shares during the Class Period, you may join the class action as a lead plaintiff, remain a passive class member, or opt out of this litigation and pursue individual claims that may not be available to the class as a whole.
NOTE: The deadline to file for lead plaintiff in this class action is May 28, 2019. You must file an application to be appointed lead plaintiff prior to this deadline in order to be considered by the Court. Typically, the plaintiff or plaintiffs with the largest losses are appointed lead plaintiff.
In order to identify your potential exposure to the alleged fraud during the time in question, you may wish to perform an analysis of your transactions in American Renal common stock using court approved loss calculation methods.
Recently Filed Cases
Listed below are recently filed securities class action cases being monitored by us, along with the class period and the deadline to file a motion to be appointed as the Lead Plaintiff in the action. Please contact us if you would like an LK report for any of these cases:
Levi & Korsinsky is a leading securities litigation firm with a hard-earned reputation for protecting investors’ rights and recovering losses arising from fraud, mismanagement and corporate abuse. With thirty attorneys and offices in New York, Connecticut, California and Washington D.C., the firm is able to litigate cases in various jurisdictions in the U.S., England, and in other international jurisdictions.
Levi & Korsinsky provides portfolio monitoring services for high-net worth investors and institutional clients. Our firm also assists investors in evaluating whether to opt-out of large securities class actions to pursue individual claims.