NEW YORK, April 10, 2019 /PRNewswire/ -- Pomerantz LLP announces that a class action lawsuit has been filed against Healthcare Services Group, Inc. ("Healthcare Services" or the "Company") (NASDAQ: HCSG) and certain of its officers. The class action, filed in United States District Court, Eastern District of Pennsylvania, and indexed under 19-cv-01227, is on behalf of a class consisting of all persons other than Defendants who purchased or otherwise acquired securities of Healthcare Services between April 11, 2017 and March 4, 2019, both dates inclusive (the "Class Period"). Plaintiff seeks to pursue remedies against Healthcare Services and certain of its most senior executives under §§10(b) and 20(a) of the Securities Exchange Act of 1934 (the "Exchange Act"), and Rule l0b-5 promulgated thereunder.
If you are a shareholder who purchased Healthcare Services securities during the class period, you have until May 21, 2019, to ask the Court to appoint you as Lead Plaintiff for the class. A copy of the Complaint can be obtained at www.pomerantzlaw.com. To discuss this action, contact Robert S. Willoughby at firstname.lastname@example.org or 888.476.6529 (or 888.4-POMLAW), toll-free, Ext. 9980. Those who inquire by e-mail are encouraged to include their mailing address, telephone number, and the number of shares purchased.
Healthcare Services, based in Bensalem, Pennsylvania, 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.
The complaint alleges that throughout the Class Period, Defendants made materially false and misleading statements regarding the Company's business, operational and compliance policies. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: Defendants made false and misleading statements and engaged in a scheme to deceive the market and a course of conduct that artificially inflated the price of Healthcare Services securities and operated as a fraud or deceit on Class Period purchasers of Healthcare Services securities by misrepresenting the value of the Company's business and prospects by overstating its earnings and concealing the significant defects in its internal controls.
On March 4, 2019, in a Form 8-K filed with the Securities and Exchange Commission ("SEC"), the Company disclosed that it had received a letter in November 2017 from the SEC regarding an inquiry that the SEC was conducting into EPS calculation practices and requesting that the Company voluntarily provide certain information and documents relating to its EPS rounding and reporting practices. The March 4, 2019 Form 8-K further disclosed that the Company 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.
The March 4, 2019 Form 8-K also revealed to investors that, during the fourth quarter of 2018, the Company authorized its outside counsel to conduct an internal investigation, under the direction of the Company's Audit Committee, into matters related to the SEC subpoena. The Form 8-K acknowledged that, as a result of these circumstances, the Company was unable to file its Annual Report on Form 10-K for the year ended December 31, 2018 on time.
Then, on March 4, 2019, Monocle published an article entitled 'Strategic Rounding' At Healthcare Services Group: A Subpoena From The SEC And An Internal Investigation (the "March 2019 Article"). The March 2019 Article referred back to a prior article published by Monocle in March 2017—the allegations of which Healthcare Services categorically denied following its publication—claiming, in pertinent part: "[I]t appeared that the company had been actively engaging FOR OVER A DECADE in aggressive accounting by fiddling with its revenues and/or expenses in order to ensure that its earnings per share rounded up to the nearest penny every quarter. This helped enable the company to meet or beat the consensus sell-side earnings expectation most quarters, which in turn helped the company achieve premium earnings multiple for the stock. Arguably, this allowed founder and Chairman Daniel McCartney to personally realize millions of dollars more for the stock that he sold to the public than he otherwise would have."
Additionally, according to the March 2019 Article, Healthcare Services "dramatically amend[ed]" the way it managed its quarterly EPS following Monocle's publication of the March 2017 Article, as well as after Monocle informed the Company, the Company's sell-side analysts, and the SEC of its findings. The March 2019 article also noted how Healthcare Services' EPS continued to climb dramatically in the wake of Monocle's release of the 2017 article.
Following these disclosures, the Company's stock price fell $4.96 per share, or 13.14%, to close at $32.78 on March 4, 2019.
The Pomerantz Firm, with offices in New York, Chicago, Los Angeles, and Paris is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, the Pomerantz Firm pioneered the field of securities class actions. Today, more than 80 years later, the Pomerantz Firm continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members. See www.pomerantzlaw.com
Robert S. Willoughby
SOURCE Pomerantz LLP