Cambridge Retirement System v. Mednax, Inc. et al 0:18-cv-61572-WPD — On July 10, 2018, investors sued Mednax, Inc. (Mednax, MD, or the Company) in United States District Court, Southern District of Florida. The Mednax lawsuit alleges that plaintiffs acquired Mednax stock at artificially inflated prices between February 4, 2016 and July 27, 2017 (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 about the MD Lawsuit, please contact us today!
Summary of the Allegations
Mednax (NYSE: MD) bills itself as a “national medical group that comprises the nation’s leading providers of neonatal, anesthesia, maternal-fetal and pediatric medical and surgical subspecialty services.”
Founded in 1979, the Company provides “administration services” for the doctors in the physician practice groups it acquires. Specifically, it handles “ billing patients and third-party payors for services rendered by the affiliated physicians.” In return, the doctors in practice groups obtained by the Company sign limited “employment contracts” providing for “a base salary and incentive bonuses.”
According to the July 10 complaint, the Company “added 13 physician groups through acquisitions” in 2016. Of those, eight were anesthesiology practices, which brought the total number of affiliated anesthesiologists to 1,390 at year’s end.
Summary of Facts
Mednax and two of its officers and/or directors now stand accused of deceiving investors by lying and withholding critical information about the Company’s business practices during the Class Period.
Specifically, they are accused of omitting truthful information about the viability of Mednax’s business model from SEC filings and related material. 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 began to emerge on April 20, 2017, when the Company announced “negative financial results for the first quarter of 2017, including missing earnings.”
Then, July 28, 2017 conference call held to discuss its second quarter earnings, Mednax announced that it “failed to complete any acquisitions of anesthesiologist practices during the quarter.” During the same call, the Company also revealed that, “any future anesthesiologist acquisitions were unlikely.”
A closer look…
As alleged in the July 10 complaint, Mednax repeatedly made false and misleading public statements throughout the Class Period.
For instance, on a form filed with the SEC at the beginning of the Class Period, the Company referenced its revenue growth, stating that it was “driven primarily by contributions from acquisitions completed since October 2014.”
During a February 4, 2016, conference call held to discuss the Company’s earnings for the fourth quarter of 2015, one of the Individual Defendants described the Company as a “preferred partner” for anesthesiologists and said in relevant part: ‘Based on our pipeline, I believe that we will continue to be one of the most active acquirers in this specialty at reasonable rates.”
Then, at a healthcare conference held on June 7, 2016, one of the Individual Defendants also stated in pertinent part: “Our pipeline is very robust… there will be more to come, because we do have plenty in the pipeline as well as, even with these acquisition activities, we have roughly about 2 times leverage ratio.”
Finally, on a form filed with the SEC on February 10, 2017, the Company stated in relevant part: “We continue to seek to expand our operations by acquiring established physician practices in our specialties which include neonatology, anesthesiology, maternal-fetal medicine and pediatric cardiology.”
Impact of the Alleged Fraud on Mednax’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 September 10, 2018. 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 Mednax 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:
|This information is provided for general information purposes only, and should not be construed as legal advice, nor does it establish an attorney-client relationship with Levi & Korsinsky LLP. Any and all information herein is simply an opinion based on publicly available information and should not necessarily be construed as fact. For more information, please visit our website at www.zlk.com.
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.
For additional information about the Mednax Lawsuit or other institutional services we provide, please contact us.