Investigation of Community Health Systems, Inc.

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

According to the derivative complaint, Community Health’s directors breached their fiduciary duty by misleading investors through a series of SEC reports that over-recorded net revenue and artificially inflated Community Health’s stock. On January 1, 2018, Community Health adopted a new accounting standards update (“ASU”) that altered the way Community Health recognized revenue, prompting the company to reexamine its previous financial statements. Following the review, Community Health issued a press release on February 27, 2018, revealing that it would be expecting a drop in net revenue for the final quarter and fiscal year 2017 due to previously under-reported provisions for bad accounts and contractual adjustments. On this news, Community Health’s stock fell over 17%, to close at $5.12. Today the stock trades at $2.24 and Community Health, its chairman, and its CEO have been named defendants in a securities class action lawsuit, potentially causing further harm to investors.

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