Healthcare Business News

Accretive faces delisting as deadline looms for reporting delayed results

By Beth Kutscher
Posted: March 12, 2014 - 1:45 pm ET

Accretive Health, a Chicago-based revenue-cycle management company, is facing a delisting next week from the New York Stock Exchange because it does not expect to meet the deadline for filing its delayed financial reports.

In February 2013, the company said that it would delay releasing its 2012 financial results as it restates prior reports to correct errors. The mistakes, the company said, relate to the timing of when it recognizes revenue from its contracts. That process is taking longer than expected, the company said today.

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Its restated 2011 financial statements are still being audited, so the company won't be able to meet the stock exchange's March 19 deadline to maintain its listing. Its shares will continue to trade through the OTC Markets Group.

Accretive, which was trading as high as $30 in mid-2011, now trades under $10 per share.

The beleaguered company has faced a host of challenges over the past couple of years, and in January implemented a restructuring process that will allow it to cut costs and increase efficiency. That process could result in up to 170 job cuts.

The plans call for focusing on a number of areas, including making a greater investment in information technology, simplifying the way it measures results for clients and boosting its business development efforts to bring in new customers.

The company said it had $228 million in cash on hand and no debt as of Dec. 31.

Accretive's troubles began in 2012 when it came under fire in Minnesota for alleged patient privacy violations and aggressive bill collection practices. It settled that suit for $2.5 million in 2012 and also paid $14 million to resolve a shareholder lawsuit last October that accused Accretive's management team of making false statements about its business health.

And in January, the Federal Trade Commission settled with Accretive over the 2011 breach of 23,500 patient records on a laptop stolen from an employee's car. That settlement requires the company to create a comprehensive information security program that will be evaluated by a third party every two years.

The company has also replaced a number of senior executives. In April, Stephen Schuckenbrock, former president of Dell Services, took over as CEO, replacing co-founder Mary Tolan. It also has appointed a new chief operating officer and chief financial officer.

Follow Beth Kutscher on Twitter: @MHbkutscher

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