American Renal Associates Holdings, Inc. (NYSE: ARA)
A class action has been commenced in the Southern District of New York on behalf of purchasers of American Renal Associates Holdings, Inc. (NYSE: ARA) common stock during the period between April 20, 2016 and August 18, 2016, including purchasers pursuant and/or traceable to the April 21, 2016 IPO (the “Class Period”).
The complaint charges American Renal and certain of its officers with violations of the Securities Act of 1933 and the Securities Exchange Act of 1934. American Renal operates as a dialysis services provider in the United States focused exclusively on joint venture partnerships with physicians. The Company, through its subsidiaries, owns and operates kidney dialysis facilities for patients suffering from chronic kidney failure or end stage renal disease. As of March 31, 2016, it owned and operated 194 dialysis clinics in 25 states and the District of Columbia.
On or about April 21, 2016, American Renal completed its initial public offering (“IPO”), issuing 8.625 million shares of common stock at $23 per share and raising net proceeds of approximately $189.75 million.
The complaint alleges that during the Class Period and in the Registration Statement issued in connection with the IPO, defendants made false and misleading statements and/or failed to disclose material adverse facts about the Company's business, operations and prospects, including that American Renal was engaged in a fraudulent scheme to steer patients away from Medicare and Medicaid plans into more expensive Affordable Care Act ("ACA") plans to obtain greater reimbursement for the Company's dialysis services in violation of federal and state law. As a result of defendants’ false statements and/or omissions, American Renal shares traded at artificially inflated prices during the Class Period, with its stock trading at a high over $29 per share.
On July 1, 2016, three insurance companies filed a lawsuit against American Renal and an affiliated entity in the United States District Court for the Southern District of Florida alleging that American Renal was engaged in a "fraudulent and illegal scheme" that involved persuading patients who qualified for Medicare or Medicaid coverage to enroll in commercial healthcare plans and then putting those patients in touch with an American Renal-affiliated charity that would pay the patients' insurance premiums in full or in part. As Medicaid and Medicare provide for only predetermined reimbursement rates for dialysis services, the suit alleged that American Renal would thus receive much larger reimbursements from the ACA insurer as a commercial payor than it would from Medicare or Medicaid. On news of the lawsuit, the price of American Renal stock fell $2.82 per share, or nearly 10%, to close at $25.71 per share on July 5, 2016.
Then on August 18, 2016, the Centers for Medicare and Medicaid Services (the "Agency") announced that it had sent warning letters to all dialysis centers that participate in the federal Medicare program and that it was weighing financial penalties for providers found to have directed people eligible for Medicare into ACA plans instead, as American Renal was alleged to have done. On this news, the price of American Renal shares fell $2.31 per share, or more than 10%, to close at $19.81 per share on August 19, 2016.
If you are a current shareholder and/or purchased stock between April 20, 2016 and August 18, 2016, including purchasers pursuant and/or traceable to the April 21, 2016 IPO , and would like to discuss your options of exercising your rights as a shareholder, please contact us.
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