Robbins Arroyo LLP: Quorum Health Corporation (QHC) Misled Shareholders According to a Recently Filed Class Action
Robbins Arroyo LLP announces that a class action complaint was filed against Quorum Health Corporation (NYSE: QHC) in the U.S. District Court for the Middle District of Tennessee. The complaint is brought on behalf of all purchasers of Quorum securities between May 2, 2016 and August 10, 2016, for alleged violations of the Securities Exchange Act of 1934 by Quorum’s officers and directors. Quorum owns and operates hospitals.
Quorum Accused of Misleading Investors About Its Business Prospects
According to the complaint, in a press release issued on May 2, 2016, just days after Quorum was spun off from Community Health Systems, Inc. (“CHS”), Quorum stated, “QHC launches with a clear vision to focus on improving the health care in every community where services are provided” and that it intended to make rural hospitals essential in their communities. In a filing with the U.S. Securities and Exchange Commission, Quorum reaffirmed the company’s prior fiscal year 2016 financial guidance, stating, “We are very confident and optimistic about the long-term future of this new company.” Finally, the company noted that according to its last annual goodwill evaluation during the fourth quarter of 2015, no impairment was indicated.
However, the complaint alleges that Quorum officials failed to disclose that: (i) a number of Quorum’s hospitals were underperforming at the time of the spin-off from CHS; (ii) various other indicators of impairment existed at the time of Quorum’s spin-off from CHS; and (iii) Quorum disregarded and/or failed to advise investors of the foregoing issues. On August 10, 2016, Quorum announced disappointing financial results for the second quarter 2016. The company reported a substantial net loss and operating loss, citing the $250.4 million in impairment charges taken in the quarter. On this news, Quorum stock fell $4.99 per share, or nearly 50%, to close at $5.03 per share on August 11, 2016. Then, in a conference call after hours on August 11, 2016, Quorum’s Chief Financial Officer admitted that there were indicators of impairment at the time of the spin-off, and the company’s Chief Executive Officer stated that there was lack of focus on the foregoing issues leading up to the spin-off.
Quorum Shareholders Have Legal Options
Concerned shareholders who would like more information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, or you can complete the form below and we will contact you directly.
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