In re Adeptus Health Securities Litigation

Court: United States District Court of the Eastern District of Texas
Case Number: No. 4:17-CV-0449-ALM
Judge: Hon. Amos L. Mazzant, III
Class Period: 06/25/2014 - 03/01/2017
Case Contacts: Jeremy P. Robinson, Abe Alexander

Securities fraud class action filed on behalf of a class of persons and entities who purchased or acquired the securities of Adeptus Health Inc. (“Adeptus” or the “Company”) between June 25, 2014 and  March 1, 2017 (the "Class Period"), including purchasers of Adeptus common stock in one or more of the Company’s public offerings.  On August 31, 2017, the Court appointed Alameda County Employees' Retirement Association and Arkansas Teacher Retirement System as Lead Plaintiffs, and BLB&G as Lead Counsel, for the Class.

The action arises from misstatements made by Adeptus and its executives overstating the Company’s profitability and concealing a number serious strains on its liquidity.  Among other things, Defendants’ misstatements concealed (1) that Adeptus routinely overbilled patients for minor treatments, leading insurers to reject claims for reimbursement; (2) serious internal control failures that materially affected the Company’s revenue collection; and (3) that the Company’s efforts to partner with existing health systems were creating a serious drag on the Company’s liquidity.  Defendants’ misstatements caused Adeptus’ share price to soar during the Class Period.  Capitalizing on Adeptus’ artificially inflated stock price, the Company’s former CEO and CFO alone were able to reap over $50 million by selling their personally held Adeptus shares at artificially inflated prices.

Investors learned about Adeptus’ misconduct and the Company’s true financial condition through a series of corrective disclosures, including the Company’s ultimate bankruptcy.  These corrective disclosures wiped out hundreds of millions of dollars in shareholder value.

On September 12, 2018, the Court denied in substantial part Defendants’ motions to dismiss, sustaining all of Plaintiffs’ Exchange Act claims as well as a significant portion of their Securities Act claims – and dismissing only certain Securities Act claims based on two early registered offerings in 2014 and 2015. On September 25, 2018, Plaintiffs filed an amended complaint to conform their claims to the court’s motion to dismiss opinion by removing the minor dismissed claims.

On December 7, 2018, Plaintiffs moved for class certification. Plaintiffs’ motion was fully briefed as of May 6, 2019.

On January 31, 2019, Plaintiffs moved to amend the complaint to add additional claims (alleging insider trading), additional false statements, and to specify certain entities affiliated with Adeptus’s private equity sponsor as named defendants. On February 14, 2019, Defendants consented to Plaintiffs’ motion to amend. On March 4, 2019, Defendants moved to dismiss the amended claims, which was fully briefed on May 8, 2019.

On November 26, 2019, the parties signed a stipulation and agreement of settlement resolving all claims for $44 million in cash, and Plaintiffs filed a motion for preliminary approval of the settlement.

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