Lead Plaintiff Deadline: 09/21/2020
SUMMARY OF CASE:
A securities class action has been filed against Insperity, Inc. (NSP) on behalf of all persons or entities who purchased or otherwise acquired Insperity common stock between February 11, 2019 through February 11, 2020. This case has been filed in the USDC – S.D.N.Y.
Insperity provides human resource services and employee benefits to small and medium-sized business customers, including group health insurance plans. A majority of these plans are provided by UnitedHealthcare Insurance Company (“UnitedHealthcare”). According to Insperity, it considers its UnitedHealthcare offering to be one of “the most significant elements of [its] employee benefits package.” Under its contract with UnitedHealthcare, Insperity is liable for plan costs (primarily medical claims from its customers’ employees) that exceed the fixed premiums paid and owed to UnitedHealthcare. Therefore, Insperity’s ability to properly estimate and report its medical claims expense is important to its investors.
The Complaint alleges that, throughout the Class Period, Defendants failed to disclose, and would continue to omit, the following adverse facts pertaining to the Company’s business, operations, and financial condition, which were known to or recklessly disregarded by Defendants: (i) the Company had failed to negotiate appropriate rates with its customers for employee benefit plans and did not adequately disclose the risk of large medical claims from these plans; (ii) Insperity was experiencing an adverse trend of large medical claims; (iii) as a mitigating measure, the Company would be forced to increase the cost of its employee benefit plans, causing stunted customer growth and reduced customer retention; and (iv) the foregoing issues were reasonably likely to, and would, materially impact Insperity’s financial results.
The truth about Insperity’s deceptive business practices was revealed through a series of disclosures. First, on July 29, 2019, Insperity released its second quarter 2019 financial results. Despite delivering year-over-year growth and meeting analysts’ estimates, the Company offered disappointing third quarter 2019 guidance and reduced its full-year 2019 guidance. Further, Defendants revealed that in the second quarter 2019, Insperity had experienced an increase in large medical claim costs, which Defendants described as an anomaly which would not impact projected cost benefit trends. On this news, Insperity shares fell $35.74 per share, or 25 percent.
Second, on November 4, 2019, Insperity released its third quarter 2019 financial results, which substantially missed analysts’ estimates and were materially down year-over-year. In addition, Insperity materially reduced its full-year 2019 guidance. Defendants attributed these results to continued large medical claim costs, which they again attempted to describe as a mere anomaly to assuage investor concern. On this news, Insperity shares fell by $36.29 per share, or 34 percent.
Finally, on February 11, 2020, after the close of trading, Insperity released its fourth quarter and full-year 2019 financial results. On this date, Insperity revealed that, for the third quarter in a row, large medical claims had again impacted the Company. Further, the Company stated that it had restructured its contract with UnitedHealthcare to no longer have financial responsibility for any medical claims over $1 million. Insperity also offered disappointingly bearish guidance for the first quarter and full-year 2020. On this news, Insperity shares declined by $17.44 per share, or 20 percent.