Home Health Provider Faces Securities Suit After Proposed Acquisition

On Tuesday a case was filed in the Southern District of New York by investor Shiva Stein against LHC Group, Inc., and individual members of the company’s board. The lawsuit alleges violations of the Securities Exchange Act as a part of notifications filed regarding a proposed acquisition by United Health Group.

LHC Group is a provider of home health services, including hospice, community based services, facility based services, healthcare innovations, and home health, the complaint said. The defendants issued a press release followed by a proxy statement to solicit stockholder approval of the acquisition and merger.

The plaintiff alleges that the proxy statement omitted information, resulting in an allegedly incomplete and potentially misleading release. Specifically, the plaintiff argued that the proxy statement did not contain information about financial projects from LHC Group management that was relied up by SVB Securities in making their analyses. This included the provision of non Generally Accepted Accounting Principles (GAAP) projections, including Net Service Revenue – Organic, Net Service Revenue – M&A, Adjusted EBITDA – NCI – Organic, and Adjusted EBITDA – NCI – M&A, without providing a reconciliation to their most comparable GAAP measures in direct violation of Regulation G and consequently Section 14(a).  of the Exchange Act.

Plaintiff is suing for violations of Section 14(a) of the Exchange Act and Rule 14a-9 and 17 C.F.R. § 244.100 and seeks injunction against completing the acquisition, or if completed and rescissory damages. Plaintiff is represented by Melwani & Chan LLP.