Community Health Systems, Inc. (CYH) Accused of Misleading Investors

According to the complaint for alleged violations of the Securities Exchange Act of 1934 between February 20, 2017 and February 27, 2018, Community Health Systems, Inc. (CYH) developed an internal system to calculate and record its contractual allowances for third party reimbursements. In 2017, Community Health Systems noted that the adoption of a new accounting standard would impact its provision for bad debts. Subsequent filings affirmed previously reported financial results. However, Community Health Systems misled investors by failing to disclose that it had understated its contractual allowances and provision for bad debts. In February 2018, Community Health Systems released its 2017 annual report and announced a $591 million increase in contractual allowances and bad debt. On this news, Community Health System's stock fell over 17% to close at $5.12 per share on February 28, 2018. The stock has yet to recover and trades significantly below the class period high of $10.32 per share at $2.93 per share as of June 4, 2019.