CHICAGO – Veradigm, a data-driven healthcare technology company, has recently acquired revenue cycle optimization platform Koha Health. The acquisition announcement coincided with law firm Robbins Geller Rudman & Dowd LLP revealing a class action lawsuit against Veradigm on behalf of its investors.
The class action lawsuit, filed on behalf of purchasers of Veradigm’s common stock between February 26, 2021, and June 13, 2023, alleges violations of the Securities Exchange Act of 1934. It accuses Veradigm and certain current and former top executives of overstating historical revenues by at least $20 million. The suit claims that the company artificially inflated revenue, recorded duplicate transactions for over two years, inflated earnings and margins, failed to maintain financial reporting controls, and deviated from generally accepted accounting principles in revenue recognition practices.
Investors have until January 22 to join the class action suit.
The law firm’s statement noted, “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%.”
“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%.”
Despite the ongoing legal challenge, Veradigm expressed optimism about its recent acquisition of Koha Health, a company offering strategic advisory services aimed at improving healthcare providers’ financial health through revenue cycle management. The Chicago-based Veradigm plans to integrate Koha’s expertise into its musculoskeletal medicine specialty offerings.
Tom Langan, President and Chief Commercial Officer at Veradigm, stated, “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.” However, the company did not reference the class action lawsuit in its official announcement regarding the acquisition.
