Home Health Care Co. Almost Family Facing Securities Case Over Proposed Merger with LHC Group
Last Updated on May 8, 2018
Stein v. Almost Family, Inc. et al
Filed: March 5, 2018 ◆§ 1:18cv126
The plaintiff claims Almost Family submitted a 'materially incomplete and misleading' registration statement to to prop up support for the LHC merger.
A proposed class action lawsuit filed in January 2018 against Almost Family, Inc. and its board of directors over alleged violations of the Securities Exchange Act of 1934 has been removed to the Western District of Kentucky. Initially filed in Delaware, the complaint stems from a proposed merger between Almost Family, a home health care services outfit, and LHC Group, Inc. The plaintiff alleges the defendants, in an attempt to convince Almost Family shareholders to vote in favor of the merger, authorized the filing of a “materially incomplete and misleading” registration statement with the Securities and Exchange Commission.
The case charges that the stock Almost Family shareholders would stand to receive and the process through which the deal would be consummated is “fundamentally unfair” to members of the proposed class. According to the lawsuit, the registration statement—“acting as a joint proxy” —allegedly includes inaccurate details pertaining to financial projections prepared by Almost Family’s board, the same projections reportedly utilized by the company’s financial advisor (non-party Guggenheim Securities) in conducting its analyses in support of the merger.
“The Merger Consideration undervalues the Company’s shares in light of its recent financial performance and prospects for future growth. Specifically, on November 7, 2017, Almost Family reported extremely promising earnings for the third quarter of 2017. Despite the adverse effects of Hurricanes Irma and Harvey, the Company was able to report Net Service Revenues of approximately $194.3 million, which was up 21.1% from the same quarter in the year prior, and approximately $596.3 million for its year-to-date Net Service Revenues, which was up 26.9% from the same period in 2016.”
Despite such results and the company’s ostensible solid positioning for financial growth, the defendants announced Almost Family would engage in a “merger of equals,” from which the plaintiff claims shareholders would not be adequately compensated.
The complaint attempts to put a rush on the court to consider the allegations.
“The special meeting of Almost Family stockholders to vote on the Proposed Transaction will be scheduled imminently,” the 21-page complaint reads. “It is imperative that the material information that has been omitted from the Proxy is disclosed to [the plaintiff] prior to the forthcoming stockholder vote so that she can properly exercise her corporate suffrage rights.”
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