Shareholder Class Action Filed Against HCA Holdings, Inc. by the Law Firm of Kessler Topaz Meltzer & Check, LLP

RADNOR, Pa., Nov. 16, 2011 /PRNewswire/ -- The following statement was issued today by the law firm of Kessler Topaz Meltzer & Check, LLP:

Notice is hereby given that a class action lawsuit was filed in the United States District Court for the Middle District of Tennessee on behalf of purchasers of the common stock of HCA Holdings ("HCA" or the "Company") (NYSE: HCA), who purchased or otherwise acquired HCA common stock pursuant or traceable to the Company's March 9, 2011 Initial Public Offering (the "IPO" or the "Offering").  If you are a member of this class, you can view a copy of the Complaint or join this class action online at http://www.ktmc.com/cases_details.php?id=54.

Members of the class may, not later than December 27, 2011, move the Court to serve as lead plaintiff of the class.  A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation.  In order to be appointed lead plaintiff, the Court must determine that the class member's claim is typical of the claims of other class members, and that the class member will adequately represent the class.  Your ability to share in any recovery is not, however, affected by the decision of whether or not to serve as a lead plaintiff.  Any member of the purported class may move the court to serve as lead plaintiff through counsel of their choice, or may choose to do nothing and remain an absent class member.  

The Complaint charges HCA, certain of its officers and directors, certain underwriters and HCA's auditor with violations of the Securities Act of 1933.  HCA is the largest non-governmental hospital operator in the U.S. and a leading comprehensive, integrated provider of health care and related services.  The Company provides these services through a network of acute care hospitals, outpatient facilities, clinics and other patient care delivery settings. 

On or about March 9, 2011 the Company conducted its IPO.  In connection with the IPO, the defendants issued Offering Materials.  The IPO was a financial success for the Company and its underwriters, as they raised $4.3539 billion by selling over 145 million shares of the Company's common stock to investors at a price of $30.00 per share.

The Complaint alleges that the Offering Materials contained material misstatements and omissions.  Specifically, the defendants failed to disclose or indicate the following: (1) that HCA had improperly accounted for prior business combinations; (2) that as a result, HCA's historical financial results were misstated; (3) that the Company's financial statements were not prepared in accordance with Generally Accepted Accounting Principles ("GAAP"); (4) that the Company would not be able to maintain its revenue growth rate, since past results distorted and were not indicative of present and future operations; (5) that the Company lacked adequate internal and financial controls; and (6) that, as a result of the foregoing, the Offering Materials were materially misleading when issued.

Four months after the IPO, the Company shocked investors when it announced disappointing financial results for the second quarter of 2011.  For the quarter, HCA reported revenue of $8.063 billion and net income of $229 million, or $0.43 per diluted share.  HCA stated that its lower than anticipated revenue growth and earnings was the result of a shift in service mix from more complex surgical cases to less acute medical cases.

Upon the release of this news, shares of the Company's stock declined $6.64 per share, or over 19 percent, to close on July 25, 2011 at $27.97 per share, on unusually heavy trading volume.

Then, on October 1, 2011, Barron's published an article that called into question the Company's accounting practices going as far back as 2006.  In particular, the article focused on two transactions: one in November 2006 and another in November 2010.  According to the article, HCA should have accounted for each of these transactions as an acquisition using the purchase accounting method set forth in Statement of Financial Accounting Standards ("SFAS") No. 141, Business Combinations.  However, instead of using this method, HCA used the equivalent of a pooling-of-interests method, even though such a method was eliminated by the Financial Accounting Standards Board in 2001 (as a way to improve the quality of information provided to investors and users of financial statements).  HCA thus overstated its reported earnings by avoiding significant charges, including substantial depreciation and amortization charges.  The article illustrated how, had HCA correctly taken such charges, its 2010 pretax earnings would have been "slashed" by $790 million, from $2.2 billion to $1.44 billion — a 35% reduction.  Similarly, had HCA correctly taken such charges in 2011, "instead of the $984 million of pretax earnings that HCA Holdings reported for 2011's first six months, the pro forma total would have been $369 million ($984 million minus $615 million — half of $1.23 billion), a whopping 60% less than the reported figure."  

Upon the release of this news, shares of the Company's stock fell $1.35 per share, or over 6 percent, to close on October 3, 2011 at $18.81 per share, on unusually heavy trading volume.  This closing price on October 3, 2011 represented a cumulative loss of $11.19 per share, or over 37 percent of the value of the Company's shares at the time of its IPO just months prior.

If you wish to discuss this action or have any questions concerning this notice or your rights or interests with respect to these matters, please contact Kessler Topaz Meltzer & Check, LLP (Darren J. Check, Esq. or David M. Promisloff, Esq.) toll free at 1-888-299-7706 or 1-610-667-7706, or via e-mail at [email protected].  For additional information about this lawsuit, or to join the class action online, please visit http://www.ktmc.com/cases_details.php?id=54.

Plaintiff seeks to recover damages on behalf of class members and is represented by the law firm of Kessler Topaz Meltzer & Check, which prosecutes class actions in both state and federal courts throughout the country.  Kessler Topaz Meltzer & Check is a driving force behind corporate governance reform, and has recovered billions of dollars on behalf of institutional and individual investors from the United States and around the world.

For more information about Kessler Topaz Meltzer & Check, or for additional information about participating in this action, please visit www.ktmc.com.

CONTACT: Kessler Topaz Meltzer & Check, LLP
Darren J. Check, Esq.
David M. Promisloff, Esq.
280 King of Prussia Road
Radnor, PA 19087
1-888-299-7706 (toll free) or 1-610-667-7706
Or by e-mail at [email protected]

SOURCE Kessler Topaz Meltzer & Check, LLP