The law firm of Kessler Topaz Meltzer & Check, LLP reminds Healthcare Services Group, Inc. (Nasdaq: HCSG) (Healthcare Services) investors that a securities fraud class action lawsuit has been filed on behalf of purchasers of Healthcare Services securities between April 11, 2017 and March 4, 2019, inclusive (the Class Period).
REMINDER: Investors who purchased Healthcare Services securities during the Class Period may, no later than May 21, 2019, seek to be appointed as a lead plaintiff representative of the class. For additional information or to learn how to participate in this litigation please visit www.ktmc.com/healthcare-services-group-inc-securities-class-action.
According to the complaint, Healthcare Services engages in the management, administrative, and operating services to the housekeeping, laundry, linen, facility maintenance, and dietary service departments to nursing homes, retirement complexes, rehabilitation centers, and hospitals in the United States. Healthcare Services operates through two segments, Housekeeping and Dietary. The Housekeeping segment engages in the cleaning, disinfecting, and sanitizing of resident rooms and common areas of a clients facility, as well as laundering and processing of the bed linens, uniforms, resident personal clothing, and other assorted linen items utilized at a client facility. The Dietary segment is involved in the food purchasing and meal preparation activities, as well as in the provision of professional dietitian services, which include the development of menus that meet the dietary needs of residents. After years of purported growth and strong earnings on the part of Healthcare Service, on March 22, 2017, Monocle Accounting Research (Monocle) published an article on Seeking Alpha, entitled Healthcare Services Group: A Decade of Strategic Rounding.
The Class Period commences on April 11, 2017, when Healthcare Services reported that revenues for the three months ended March 31, 2017 increased approximately 5% to $404.5 million, and that net income for the three months ended March 31, 2017 was $22.0 million, or $0.30 per basic and diluted common share, compared to the three months ended March 31, 2016 net income of $18.6 million, or $0.26 per basic and diluted common share.
The complaint alleges that, on March 4, 2019, in a Form 8-K filed with the SEC, Healthcare Services disclosed that it had received a letter in November 2017 from the SEC regarding an inquiry that the SEC was conducting into earnings per share (EPS) calculation practices and requesting that Healthcare Services voluntarily provide certain information and documents relating to its EPS rounding and reporting practices. The March 4, 2019 Form 8-K further disclosed that Healthcare Services also had received a subpoena in March 2018 from the SEC in connection with these matters and that it had been providing information and documents to the SEC. Also, on March 4, 2019, Monocle published an article entitled ˜Strategic Rounding At Healthcare Services Group: A Subpoena From The SEC And An Internal Investigation, stating that Healthcare Services Groups decade of apparent earnings manipulation through the ˜strategic rounding of its quarterly EPS has finally bitten the company and its investors.
Following this news, Healthcare Services stock price fell $4.96 per share, or 13.14%, to close at $32.78 on March 4, 2019.
The complaint alleges that throughout the Class Period: (1) Theodore Ted Wahl, the CEO and President of Healthcare Services, either knew or was reckless in not knowing that Healthcare Services had been accused of strategically rounding quarterly EPS and therefore, investors could not rely upon Healthcare Services track record without conducting a thorough investigation into the allegations; (2) the defendants concealed from investors the fact that the SEC had written to Healthcare Services in November 2017 to inquire into its EPS rounding practices; (3) Healthcare Services concealed from investors the fact that the SEC delivered a subpoena to Healthcare Services in March 2018 commanding the company to produce documents to the SEC in connection with how it calculated EPS; and (4) as a result, the defendants statements about the Healthcare Services business, operations and prospects were materially false and misleading and/or lacked a reasonable basis at all relevant times.
Investors who wish to discuss this securities fraud class action lawsuit and their legal options are encouraged to contact Kessler Topaz Meltzer & Check, LLP (James Maro, Jr., Esq. or Adrienne Bell, Esq.) at (888) 299-7706 (toll free) or at [email protected].
Healthcare Services investors may, no later than May 21, 2019, seek to be appointed as a lead plaintiff representative of the class through Kessler Topaz Meltzer & Check, or other counsel, or may choose to do nothing and remain an absent class member. A lead plaintiff is a representative party who acts on behalf of all class members in directing the litigation. In order to be appointed as a lead plaintiff, the Court must determine that the class members claim is typical of the claims of other class members, and that the class member will adequately represent the class. Your ability to share in any recovery is not affected by the decision of whether or not to serve as a lead plaintiff.
Kessler Topaz Meltzer & Check prosecutes class actions in state and federal courts throughout the country involving securities fraud, breaches of fiduciary duties and other violations of state and federal law. Kessler Topaz Meltzer & Check is a driving force behind corporate governance reform, and has recovered billions of dollars on behalf of institutional and individual investors from the United States and around the world. The firm represents investors, consumers and whistleblowers (private citizens who report fraudulent practices against the government and share in the recovery of government dollars). The complaint in this action was not filed by Kessler Topaz Meltzer & Check. For more information about Kessler Topaz Meltzer & Check, please visit www.ktmc.com.
Kessler Topaz Meltzer & Check, LLP
James Maro, Jr., Esq.
280 King of Prussia Road
Radnor, PA 19087
299-7706 (toll free)