(CN) - Allscripts Health Care Solutions Inc. faces a shareholder class action for allegedly misrepresenting the progress of its merger with Eclypsis Corp.
Lead plaintiff Bristol County Retirement System claims company officials withheld information and deceived the investing public and artificially inflated its stock price.
"Specifically, defendants made misleading statements regarding the company's progress in integrating AMHS' and Eclipsys' disparate systems and its ability to translate its fragmented product lines into revenues," the complaint states.
The Delaware company provides healthcare-related information technology services and has its principal offices in Chicago. The complaint names current CEO Glen E. Tullman and CFO William J. Davis CFO as defendants.
The company's chairman and CFO werdly e allegeaware of the problem but concealed it from shareholders and that there was in-fighting among various senior level management members following the merger.
When Allscripts announced its First Quarter 2012 financial results on April 26 it delivered an unsettling blow to its investors. It then followed it up with additional bad news that the company's CFO had quit and its Chairman of the Board had been fired.
"Allscripts filed a Form 8-K with the SEC previewing its operating results for the three months ending March 31, 2012. The Company reported non-GAAP diluted EPS of $0.12 - sharply below the trend implied by the Company's guidance of full-year EPS of between $1.06 and $1.12 for 2012 issued on February 16," the complaint states.
The company held a conference call Q & A session later that day with traders and corporate officials hoping to mitigate the problems. It was at this time, according to the complaint that, the CEO finally let the cat out of the bag and revealed just how dire the situation is for investors.
"Our overall results were primarily driven by lower than expected sales and an unfavorable sales mix. This directly impacted both revenue and profit," the complaint states. "In reaction to this news ... Allscripts' share price fell by $5.72 per share, or 35.70 percent, to close at $10.30 per share on volume more than 30 times greater than the average during the Class Period and six times greater than that of any other day during the Class Period."
The company reported that its total revenues climbed from $548.44 million prior to May 31, 2009 to $1.44 billion as of Dec. 31, 2011.
The complaint was filed in the Northern District of Illinois. Bristol County Retirement System is represented by John Tangren of Wolf Haldenstein Adler Freeman & Herz LLC in Chicago and Christopher J. Keller, Michael W. Stocker and Rachel A. Avan of Labaton Sucharow LLP in New York.