NEW YORK, Nov. 25, 2024 (GLOBE NEWSWIRE) -- Bragar Eagel & Squire, P.C., a nationally recognized stockholder rights law firm, announces that a class action lawsuit has been filed against PACS Group, Inc. (“PACS Group” or the “Company”) (NYSE: PACS) in the United States District Court for the Southern District of New York on behalf of all persons and entities who purchased or otherwise acquired PACS Group (a) common stock pursuant and/or traceable to the registration statement and prospectus (collectively, the “Registration Statement”) issued in connection with the Company’s April 11, 2024 initial public offering (“IPO” or the “Offering”); and/or (b) securities between April 11, 2024 and November 5, 2024, both dates inclusive (the “Class Period”). Investors have until January 13, 2025 to apply to the Court to be appointed as lead plaintiff in the lawsuit.
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On April 11, 2024, PACS Group conducted its IPO, selling 21,428,572 shares of common stock at a price of $21.00 per share, and received net proceeds of approximately $450 million.
On November 4, 2024, Hindenburg Research published a report based on a 5-month investigation that included interviews with 18 former PACS Group employees, competitors, and an analysis of more than 900 PACS facility cost reports. The report alleged the Company had “abused a COVID-era waiver” in a “scheme” that involved falsely submitting false Medicare claims which “drove more than 100% of PACS’ operating and net income from 2020 – 2023, enabling PACS to IPO in early 2024 with the illusion of legitimate growth and profitability.” The report further alleged the Company engaged in a scheme to maintain revenue by “bill[ing] thousands of unnecessary respiratory and sensory integration therapies to Medicare Part B regardless of clinical need or outcomes.” The report also alleged a widespread practice of falsifying documentation, including by engaging in a “scheme whereby PACS attempts to fool regulators by ‘renting’ licenses from third parties to ‘hang’ on buildings” and then “either employs unlicensed administrators or has administrators manage multiple buildings in excess of state mandated limits.” Similarly, the report alleges the Company engaged in a scheme related to licensure and staffing of nurses, whereby “PACS secretly lists uncertified nurse aides (NAs) as certified in the system, in an apparent scheme to cheat staffing ratios” and “retroactively add fake RN hours” in order “to meet minimum staffing requirements, boost star ratings, and avoid costly penalties.”
On this news, the Company’s share price fell $11.93 or 27.78%, to close at $31.01 per share on November 4, 2024, on unusually heavy trading volume.
Then, on November 6, 2024, before the market opened, the Company announced that it would postpone its fiscal third quarter 2024 earnings release. The Company further disclosed it had “received civil investigative demands from the federal government regarding the Company’s reimbursement and referral practices that may or may not be related to this week’s third-party report.”
On this news, the Company’s share price fell $11.45 or 38.76%, to close at $18.09 per share on November 6, 2024, on unusually heavy trading volume. By the commencement of this action, PACS Group stock has traded as low as $18.09 per share, a more than 13.9% decline from the $21 per share IPO price.
The complaint filed in this class action alleges that in the Registration Statement and throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants failed to disclose to investors: (1) that the Company engaged in a “scheme” to submit false Medicare claims which “drove more than 100% of PACS’ operating and net income from 2020 – 2023”; (2) that the Company engaged in a “scheme” to “bill thousands of unnecessary respiratory and sensory integration therapies to Medicare”; (3) that the Company engaged in a scheme to falsify documentation related to licensure and staffing; and (4) that, as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.
If you purchased or otherwise acquired PACS Group shares and suffered a loss, are a long-term stockholder, have information, would like to learn more about these claims, or have any questions concerning this announcement or your rights or interests with respect to these matters, please contact Brandon Walker or Marion Passmore by email at investigations@bespc.com, telephone at (212) 355-4648, or by filling out this contact form. There is no cost or obligation to you.
About Bragar Eagel & Squire, P.C.:
Bragar Eagel & Squire, P.C. is a nationally recognized law firm with offices in New York, California, and South Carolina. The firm represents individual and institutional investors in commercial, securities, derivative, and other complex litigation in state and federal courts across the country. For more information about the firm, please visit www.bespc.com. Attorney advertising. Prior results do not guarantee similar outcomes.
Contact Information:
Bragar Eagel & Squire, P.C.
Brandon Walker, Esq.
Marion Passmore, Esq.
(212) 355-4648
investigations@bespc.com
www.bespc.com
