Lawsuit Alleges Franklin-Based Company Misled Investors on United Relationship
A federal court has certified a securities class action against Tivity Health that accuses the Franklin-based company of misleading investors about UnitedHealthcare bringing its services in-house.
UnitedHealthcare has always been a significant client for Tivity, accounting for about 15 percent of its revenue. But in November 2017, the insurance giant announced the launch of its own fitness benefit program in 11 states. The move tanked Tivity shares more than 33 percent, undoing more than five months of gains.
Before the announcement, Tivity leadership had warned investors in SEC filings the significant risk the company poses from insurers taking their services in-house; however, never disclosed to investors knowledge that UHC had already entered the market.
According to the lawsuit, Tivity allegedly knew UHC was bringing services in-house in late 2016 but never indicated a wavering relationship or that the risks they were warning about were coming to fruition. Defendants say because of this misrepresentation, Tivity’s stock price was artificially inflated between March 6, 2017, and Nov. 6, 2017.
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