InnovAge operates more than a dozen healthcare centers in five states and manages the care of seniors who are eligible for both Medicare and Medicaid benefits. The lawsuit, filed Oct. 14 in Colorado federal court, alleges the company’s stock price fell dramatically in September after it disclosed that CMS had suspended enrollment at one of its centers in Sacramento, Calif.
InnovAge completed its IPO in March, selling nearly 19 million shares of stock at a price of $21 per share. The company disclosed Sept. 21 that CMS suspended enrollment at one of its centers, and its stock price fell 25 percent to close at $8.75 per share Sept. 22. Shares were trading as low as $6.61 on Sept. 22, a 69 percent decline from the IPO price, the complaint alleges.
The lawsuit alleges InnovAge violated securities laws by filing a registration statement with the Securities and Exchange Commission in February that was false and misleading. The registration statement omitted that some of the company’s facilities failed to provide adequate services, and there was “significant risk that CMS would suspend new enrollments pending an audit of the company’s services,” the complaint states.
The lawsuit claims that investors have suffered significant losses as a result of InnovAge’s alleged misrepresentations and omissions. The lawsuit is seeking damages in favor of the proposed class members.
