AAC Holdings shares suffered their worst plunge ever on Tuesday after the company said its former president has been indicted indicted on a second-degree murder charge.
The indictment relates to the death of a patient in 2010 at American Addiction Centers, to which AAC is a parent company.
The indictment, returned by a grand jury, was unsealed last week.
In a filing on Monday, the company said (emphasis added):
Defending ourselves against the indictment could potentially entail costs that are material and could require significant attention from our management. If the defendants were to be convicted of the crimes alleged in the indictment, potential penalties could include fines, restitution, conditions of probation and other remedies. Given the early stage of this proceeding, we cannot estimate the amount or range of loss if the defendants were to be convicted; however, such loss could be material.
In a statement last Wednesday, the company said a civil case related to this incident had been settled confidentially "with no admission of liability." The client died of natural causes, or hypertensive cardiovascular disease according to the coroner, the company said.
The indictment was brought against three former AAC employees, AAC president Jerrod Menz, and a current employee. Menz stepped down from his role as president, as well as from the board of directors, following the news.
On Tuesday, shares of AAC fell as much as 53%, the biggest drop since AAC went public in October 2014, according to Bloomberg. Trading in the stock was briefly halted for volatility on Tuesday.
"We firmly believe that the California Department of Justice’s case is without merit," the company said in its filing, adding that it plans to "vigorously defend the Company and each individual in court."
Here's a chart showing the plunge Tuesday:
Read more: http://www.businessinsider.com/aac-holdings-share-price-august-4-2015-8#ixzz3hrh6Q173
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