According to the law firm press release, Quorum is an independent operator and manager of general acute-care hospitals and outpatient services in the United States, with facilities in 16 states. Quorum was spun off from CHS effective April 29, 2016. Under the terms of the spin-off, CHS stockholders who held CHS common stock as of April 22, 2016, the record date, received a distribution of one share of Quorum common stock for every four shares of CHS common stock, plus cash in lieu of any fractional shares. CHS’s stockholders owned all of the outstanding common stock of Quorum upon completion of the spinoff.
The Complaint alleges that throughout the Class Period, Defendants made materially false and misleading statements regarding the Company’s business, operational and compliance policies. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (i) a number of Quorum’s hospitals were underperforming at the time of the spin-off from CHS; (ii) various other indicators of impairment existed at the time of Quorum’s spin-off from CHS; (iii) Quorum disregarded and/or failed to advise investors of the foregoing issues; and (iv) as a result of the foregoing, Quorum’s public statements were materially false and misleading at all relevant times.
On August 10, 2016, Quorum issued a press release and filed a Quarterly Report on Form 10-Q with the SEC announcing the Company’s financial and operating results for the three months ended June 30, 2016 (the “Q2 2016 10-Q”). In the press release and Q2 2016 10-Q, Quorum reported a substantial net loss and an operating loss for the quarter. Defendants blamed the large operating loss on the $250.4 million in impairment charges Quorum had taken in the quarter, including $45.4 million to reduce certain long-lived asset values in property, equipment and software; $5 million in goodwill based on management’s decision to divest certain hospitals; and $200 million related to the carryover allocation of goodwill at the time of the spin-off from CHS.
On this news, Quorum’s share price fell $4.99, or 49.8%, to close at $5.03 on August 11, 2016.
On February 14, 2017, the Court appointed Lead Plaintiffs and Counsel. Lead Plaintiffs filed an amended Complaint on April 17, 2017. Defendants filed Motions to Dismiss the amended Complaint on June 23. On April 19, 2018, the Court issued an Order denying Defendants' Motions to Dismiss. Lead Plaintiff filed a Motion for Class Certification on July 13. Lead Plaintiffs filed an amended Complaint on September 14. On March 29, 2019, the Court issued an Order granting in part Lead Plaintiff's Motion for Class Certification.
On May 17, 2019, Plaintiffs filed a Motion for Leave to amend the second amended Complaint. On August 2, the Court issued an Order denying Plaintiffs' Motion for Leave to amend.
On June 12, 2020, the parties notified the Court that they had reached an agreement on the principal terms of a Settlement. The parties entered into a Stipulation and Agreement of Settlement on July 16. The Court granted preliminary approval of the Settlement on July 27.