PACS Group, Inc. Investors: January 13, 2025 Filing Deadline in Securities Class Action - Contact Lieff Cabraser

Rhea-AI Summary

PACS Group, a senior care facilities operator, faces a securities class action lawsuit with a January 13, 2025 deadline for lead plaintiff applications. The lawsuit covers investors who purchased PACS stock between April 11, 2024, and November 5, 2024, including those who bought shares during the company's IPO and SPO.

The lawsuit alleges that PACS made false statements and failed to disclose its involvement in Medicare fraud schemes, including submitting false claims that allegedly generated over 100% of the company's operating income from 2020-2023. Following a Hindenburg Research report on November 4, 2024, PACS stock fell 27.78% to $31.01. The stock dropped another 38.76% to $18.09 on November 6, 2024, after the company postponed Q3 earnings and disclosed federal investigation demands.

Positive

• None.

Negative

• Facing securities class action lawsuit for alleged fraudulent practices
• Alleged Medicare fraud scheme that generated over 100% of operating income (2020-2023)
• Stock price dropped 27.78% following Hindenburg Research report
• Additional 38.76% stock price decline after postponing Q3 earnings
• Under federal investigation regarding reimbursement and referral practices
• Accused of falsifying staffing documentation and misusing COVID-era waivers

Insights

Legal Expert

The securities class action against PACS Group represents a major legal challenge with substantial implications. The allegations of systematic Medicare fraud through false claims, unnecessary treatments and documentation falsification are particularly severe, as they suggest the company's entire business model may have been built on fraudulent practices. The claim that over 100% of operating and net income from 2020-2023 was derived from these alleged schemes is especially damaging.

The two-stage stock price decline following the Hindenburg report (27.78%) and the subsequent disclosure of federal investigation (38.76%) demonstrates significant market impact. The federal civil investigative demands suggest potential regulatory enforcement beyond just civil litigation. This combination of private securities litigation and government investigation substantially increases legal and financial exposure.

The inclusion of both Securities Act and Exchange Act claims, targeting both the IPO/SPO registration statements and ongoing disclosures, creates multiple paths for potential liability. The five-month investigation scope and 18 former employee interviews provide substantial factual foundation for the allegations, strengthening the plaintiffs' position.

Financial Analyst

The allegations present an existential threat to PACS's business model and financial stability. The stock's cumulative decline of over 66% from its pre-report levels reflects the market's severe reassessment of the company's intrinsic value. The postponement of Q3 earnings amid federal investigation suggests potential financial restatements and regulatory penalties ahead.

Most concerning is the allegation that fraudulent Medicare claims generated over 100% of operating income, implying the core business may be unprofitable without alleged improper practices. This raises fundamental questions about PACS's ability to operate profitably under legitimate business practices. The company's $2.16 billion market cap remains at risk of further deterioration as legal and regulatory processes unfold.

For investors, the combination of potential financial restatements, regulatory fines, legal settlements and business model disruption creates a perfect storm of value destruction risks. The involvement of multiple regulatory bodies and the comprehensive nature of the allegations suggest a prolonged period of uncertainty and potential liability.

SAN FRANCISCO, CA / ACCESSWIRE / December 19, 2024 / National plaintiffs law firm Lieff Cabraser Heimann & Bernstein, LLP encourages investors in PACS Group, Inc. ("PACS" or the "Company") (NYSE:PACS) who purchased or otherwise acquired PACS common stock between April 11, 2024, and November 5, 2024, inclusive (the "Class Period"), including investors who purchased PACS common stock pursuant and/or traceable to the registration statements issued in connection with PACS's April 11, 2024 initial public offering ("IPO"), and/or the Company's September 6, 2024secondary public offering ("SPO"), to contact us immediately regarding a pending securities class action against PACS. The deadline to apply to be lead plaintiff is January 13, 2025.

Class Period: April 11, 2024 - November 5, 2024

Lead Plaintiff Motion Deadline: January 13, 2025

Case information:lieffcabraser.com/securities/pacs-group

Contact us: Email or textinvestorinfo@lchb.com or call 1-800-541-7358

PACS, incorporated in California and headquartered in Farmington, Utah, is a holding company that, through its subsidiaries, operates senior care facilities, skilled nursing facilities, and assisted living facilities.

The actions allege that PACS made materially false and misleading statements and omissions throughout the Class Period, including in its IPO and SPO registration statements, and failed to disclose material adverse facts about its business, operations, and prospects, including: (1) that the Company conducted a "scheme" to submit false claims to Medicare which "drove more than 100% of PACS' operating and net income from 2020 - 2023"; (2) that PACS conducted a "scheme" to "bill thousands of unnecessary respiratory and sensory integration therapies to Medicare"; and (3) that the Company conducted a scheme to falsify documentation connected with licensure and staffing. The actions assert claims under the Securities Act of 1933 and the Securities Exchange Act of 1934.

On November 4, 2024, Hindenburg Research published a report based on its five-month investigation that included interviews with 18 former PACS employees, competitors, and an analysis of over 900 PACS facility cost reports.

The report alleged that PACS had engaged in fraudulent practices, including: (1) abusing a COVID-era waiver to classify low-acuity patients as high-acuity and inflate Medicare reimbursements; (2) billing for unnecessary or nonexistent treatments, including respiratory and sensory integration therapies; (3) falsifying staffing documentation to inflate star ratings and avoid penalties; and (4) "renting" licenses to deceive regulators by borrowing credentials from third parties and employing unlicensed administrators or assigning administrators to manage facilities beyond state-mandated limits.

On this news, the price of PACS common stock fell $11.93 per share, or 27.78%, from its closing price on November 1, 2024 to close at $31.01 per share on November 4, 2024.

On November 6, 2024, the Company announced that it would postpone its third-quarter earnings release and disclosed that 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 price of PACS common stock fell $11.45 per share, or 38.76%, from its closing price on November 5, 2024 to close at $18.09 per share on November 6, 2024.

About Lieff Cabraser

Lieff Cabraser Heimann & Bernstein, LLP, with over 125 attorneys in offices in San Francisco, New York, Nashville, and Munich, Germany, is an internationally-recognized law firm committed to advancing the rights of investors and promoting corporate responsibility. Repeatedly recognized as a "Plaintiffs' Powerhouse" by Law360, Lieff Cabraser has litigated some of the most important civil cases in the United States, and has assisted clients in recovering over $129 billion in verdicts and settlements. For over 50 years, Lieff Cabraser has remained committed to ensuring access to justice for all.

Source/Contact

Sharon Lee
Lieff Cabraser Heimann & Bernstein, LLP
415 956-1000
slee@lchb.com

SOURCE: Lieff Cabraser Heimann & Bernstein

View the original press release on accesswire.com

FAQ

What caused PACS stock to drop 27.78% on November 4, 2024?

PACS stock dropped 27.78% following the release of a Hindenburg Research report alleging Medicare fraud schemes and fraudulent business practices.

What is the deadline for the PACS Group securities class action lawsuit?

The deadline to apply as lead plaintiff in the PACS Group securities class action lawsuit is January 13, 2025.

What period does the PACS Group class action lawsuit cover?

The class action covers investors who purchased PACS stock between April 11, 2024, and November 5, 2024, including IPO and SPO participants.

What are the main allegations against PACS Group in the class action lawsuit?

The lawsuit alleges PACS made false statements and failed to disclose Medicare fraud schemes, unnecessary billing practices, and falsification of documentation related to licensure and staffing.

Why did PACS postpone its Q3 2024 earnings release?

PACS postponed its Q3 earnings release after receiving civil investigative demands from the federal government regarding the company's reimbursement and referral practices.