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 client’s 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 Group’s 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 info@ktmc.com.
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 member’s 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.
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