ServiceMaster Global Holdings, Inc. (SERV) Accused of Misleading Shareholders
On October 22, 2019, ServiceMaster announced disappointing preliminary financial results for the third quarter 2019, having missed revenue and earnings estimates. The Company also reported net income of $25 million versus $71 million during the third quarter of the prior year and gave adjusted EBITDA guidance of $415 to $425 million, down from $435 to $445 million. ServiceMaster attributed the disappointing results to “termite damage claims arising primarily from Formosan termite activity” and admitted that this had been a “known issue” since early 2018. Then in November 2019, ServiceMaster disclosed that increased claims would continue to impact the Company through 2020 and that in addition to the “$2 million increase damage claims expense,” ServiceMaster “expect a year-over-year increase from damage claims of approximately $4 million in the fourth quarter.” On this news, ServiceMaster’s stock price fell almost 12% to close at $35.74 per share.