Acadia Healthcare Company, Inc. touted its “competitive strength” in “quality” in the British mental healthcare market, but according to the complaint for this securities class action, those advantages were an illusion. The complaint claims that the company’s statements about its UK operations and its guidance for 2017 were false or misleading, violating both the Securities Act of 1933 and the Securities Exchange Act of 1934.
The class for this action is all buyers of Acadia publicly-traded securities between February 23, 2017 and October 24, 2017 and were damaged thereby.
Acadia Healthcare operates inpatient psychiatric facilities, residential treatment centers, group homes, substance abuse facilities, and outpatient behavioral healthcare service facilities to provide behavioral and recovery services in the US, the UK, and Puerto Rico.
On February 23, 2017, Acadia put out a press release with its results for the fourth quarter of 2016, discussing a recent acquisition in the UK, and providing guidance for 2017 that included Adjusted EBITDA of from $625 million to $640 million and adjusted earnings per diluted share of $2.42 to $2.47.
The annual report filed the following day confirmed these results and discussed the mental healthcare market in the UK, which supposedly had a growing emphasis on quality. Its Form 10-Q first-quarter 2017 report contained similar information and provided similar guidance. The company’s July 27, 2017 press release narrowed the company’s guidance, with Adjusted EBITDA at $628 million to $635 million.
The company also filed a shelf registration statement during the class period that covered the offering of over 1.5 million shares of company stock. The filings incorporated others by reference.
But according to the complaint, the company’s statements were false or misleading, in that the company did not have “competitive strength” derived from quality in the UK. Also, on October 24, 2017, a press release went back on the company’s guidance, projecting Adjusted EBITDA of only $600 million to $605 million and adjusted earnings per diluted share of $2.23 to $2.25.
At this news, the company’s stock price fell by 26%. During the offering, the price had been over $50 per share; now it was at $32.68. The complaint claims that the company violated Sections 11, 12(a), and 15 of the 1933 Act and Sections 10(b) and 20(a) of the 1934 Act.