A securities class action was recently filed against Hanger, Inc.
Hanger, Inc. provides a comprehensive suite of orthotic and prosthetic patient care, therapeutic solutions and product distribution. The firm consists of nine separate business units, which cater to different subsectors of the O and P industry. Through this corporate structure, the company offers a diverse array of rehabilitative solutions.
The Rosen Law Firm announced on Nov. 14, 2014, that it had proposed a class action lawsuit that would represent all purchasers of company securities between Aug. 1, 2013 and Aug. 7, 2014. These dates are inclusive, and represent the class period. At the time of report, no class had been certified. The proposed securities class action involved claims involving material misstatements and or failure to disclose adverse facts.
Securities class action allegations
More specifically, the suit alleged the company, as well as specific directors and officers, either misstated or neglected to reveal material adverse facts about how the company's business, and in particular its reserves for both accounts receivable and bad debt, were impacted by Medicare audits.
The legal claim brought forth by The Rosen Law Firm specifically noted an announcement the company made on Aug. 7, 2014, in which the solutions provider said that Medicare audits caused its earnings per share to plunge 23 percent. Allegedly, this news caused shares to plunge in value, which hurt the holdings of investors.
A separate lawsuit, which was filed by Ryan & Maniskas, provided further detail on the financial announcements. The law firm brought forth this legal claim to represent all investors who bought – or otherwise came to own – securities of Hanger, Inc. The legal action filed by Ryan & Maniskas noted that after the close of trading on Aug. 5, 2014, the company indicated it was postponing the issuance of its earnings for 2014's second fiscal quarter.
The solutions provider announced on Aug. 7, 2014 that not only had its earnings per share fallen 23 percent from the same quarter in 2013, but that it was cutting its 2014 fiscal year estimate for earnings per share to between $1.60 and $1.70, compared to the prior figure of $2.01 to $2.11. The company cited an increase in Recovery Audit Contractor audits of its reimbursement claims, and the impact this had on the organization, when explaining the change in financial statements.
Hanger, Inc. also announced a 1.5 percent decline in same-stores sales growth, which it blamed on a deceleration in authorization and payments, a $8 million increase in annual operating costs, $4.2 million of which was caused by a rising amount of bad debt, and that the greater number of RAC audits had caused the firm's accounts receivable over 120 days to rise $14 million year-over-year. On Aug. 8, 2014, company shares fell $7.39, or nearly 25 percent, to $22.48 during intraday trading.
Opportunity to serve as lead plaintiff
Investors who belong to the class have the ability to move the court to serve as lead plaintiff. For both the securities class action brought forth by Ryan & Maniskas and The Rosen Law Firm, eligible shareholders have until Jan. 12, 2015, to move the Court.
If individuals want more information, they can contact Richard Maniskas, esquire, at Ryan & Maniskas, LLP, or Phillip Kim or Kevin Chan of The Rosen Law Firm.