Molina Healthcare Inc. is facing a class-action complaint for allegedly making misleading statements related to its administrative infrastructure.
Molina Healthcare allegedly misled investors regarding the scalability of its existing administrative infrastructure and failed to disclose that its administrative infrastructure was not designed to handle the size and complexity of its rapid growth strategy. The company also allegedly failed to remediate systemic issues and costly disruptions with critical administrative infrastructure functions, including provider payment and utilization management, according to the complaint.
A series of partial disclosures, including the company's April 28, 2016, earnings release, allegedly revealed the truth about the company's failed growth strategy and inadequate administrative infrastructure.
On April 28, 2016, Molina Healthcare reported an earnings miss for the first quarter ended March 31, 2016, and reduced its full-year 2016 earnings guidance. On Aug. 2, 2017, the company withdrew its 2017 earnings guidance, reported a net loss for the second quarter ended June 30, 2017, and announced it would exit certain Affordable Care Act exchange markets.
The complaint was filed in the U.S. District Court for the Central District of California on behalf of Molina Healthcare shareholders who purchased or acquired the company's common shares between Oct. 31, 2014, and Aug. 2, 2017.
The complaint seeks class-action certification and demands a trial by jury. It also seeks an award of damages, reasonable costs, including attorneys fees, and equitable/injunctive or other relief.
S&P Global Market Intelligence could not immediately reach a Molina Healthcare spokesperson for comment.
