Veradigm, a data-driven healthcare technology company, announced it acquired revenue cycle optimization platform Koha Health the same day law firm Robbins Geller Rudman & Dowd LLP announced it filed a class action lawsuit against the health technology company on behalf of its investors.
The class action lawsuit was filed against Veradigm on behalf of purchasers of the company’s common stock between February 26, 2021 and June 13, 2023.
The suit alleges Veradigm and certain of its current and former top executives violated the Securities Exchange Act of 1934, alleging the defendants overstated the company’s historical revenues by at least $20 million, artificially inflated its revenue by recording duplicate transactions for more than two years, inflated its earnings and margins, failed to maintain controls over its financial reporting, and failed to adhere to generally accepted accounting principles regarding revenue recognition practices.
Purchasers of the company’s stock have until Jan. 22 to join the class action suit.
“On February 28, 2023, Veradigm announced that it had ‘detected certain internal control failures related to revenue recognition that had occurred over the prior six quarters, resulting in a misstatement of reported revenues during those periods.’ Veradigm disclosed that the revenue misstatements caused revenue to be overstated by approximately $20 million from the third quarter of 2021 until the fourth quarter of 2022. On this news, the price of Veradigm stock fell nearly 13%,” the law firm alleged in a statement.
“Then, on June 13, 2023, Veradigm revealed that it had identified additional revenue misstatements dating back to fiscal year 2020. Veradigm further disclosed that its internal review on the nature and extent of the accounting and internal control errors would take longer than previously disclosed, and Veradigm’s independent auditors needed more time to complete their audit procedures. As a result, Veradigm would not meet the deadline to file its annual report on Form 10-K. On this news, the price of Veradigm stock fell more than 4%.”
Chicago-based Veradigm offers technology to biopharma companies, health plans and payers, and healthcare providers, including data solutions, electronic health records, patient engagement tools and revenue cycle services.
Koha Health, the company the firm announced it acquired, offers strategic advisory services focused on improving healthcare providers’ financial health through revenue cycle management.
“Today’s announcement represents an exciting opportunity for Veradigm to scale our revenue cycle services portfolio by leveraging additional capabilities and subject matter expertise to better serve the needs of the market,” Tom Langan, president and chief commercial officer at Veradigm, said in a statement.
Veradigm will add Koha’s revenue cycle management services to its musculoskeletal medicine specialty offerings.
The company did not refer to the class action suit in its announcement regarding the acquisition.