NEW YORK, April 06, 2021 (GLOBE NEWSWIRE) — Abraham, Fruchter & Twersky, LLP announces it has filed a class action lawsuit on behalf of purchasers of MultiPlan Corporation f/k/a Churchill Capital Corp. III (“Churchill III”) (NYSE:MPLN) securities during the period of July 12, 2020 through November 10, 2020, inclusive (the “Class Period”) and all holders of Churchill III Class A common stock entitled to vote on Churchill III’s merger with and acquisition of Polaris Parent Corp. and its consolidated subsidiaries (collectively, “MultiPlan”), which merger was consummated in October 2020 (the “Merger”). The class action, filed in the United States District Court for Eastern District of New York, is captioned Paradis v. MultiPlan Corporation, et al., No. 21-cv-01853. Plaintiff pursues claims under Sections 10(b), 14(a), and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”).
The Private Securities Litigation Reform Act of 1995 permits any investor who purchased Churchill III securities during the Class Period or that was entitled to vote on the Merger to seek appointment as lead plaintiff in this class action lawsuit. A lead plaintiff acts on behalf of all other class members in directing this class action lawsuit. The lead plaintiff can select a law firm of its choice to litigate this class action lawsuit. An investor’s ability to share in any potential future recovery of this class action lawsuit is not dependent upon serving as lead plaintiff. If you wish to serve as lead plaintiff in this class action lawsuit, you must move the Court no later than 60 days from April 6, 2021.
If you would like to discuss this class action lawsuit or obtain more information about your rights or interests, you are encouraged to contact Abraham, Fruchter & Twersky, LLP by e-mailing Jack G. Fruchter (JFruchter@aftlaw.com) or Sean M. Handron-O’Brien (SHandronobrien@aftlaw.com). You may also call and leave a message at (212) 279-5050.
This class action lawsuit alleges that, throughout the Class Period, defendants made false and/or misleading statements and/or failed to disclose that: (a) MultiPlan was losing tens of millions of dollars in sales and revenues to Naviguard, a competitor created by one of MultiPlan’s largest customers, UnitedHealthcare, which threatened up to 35% of MultiPlan’s sales and 80% of its levered cash flows by 2022; (b) sales and revenue declines in the quarters leading up to the Merger were not due to “idiosyncratic” customer behaviors as represented, but rather due to a fundamental deterioration in demand for MultiPlan’s services and increased competition, as payors developed competing services and sought alternatives to eliminating excessive healthcare costs; (c) MultiPlan was facing significant pricing pressures for its services and had been forced to materially reduce its take rate in the lead up to the Merger by insurers, who had expressed dissatisfaction with the price and quality of MultiPlan’s services and balanced billing practices, causing MultiPlan to cut its take rate by up to half in some cases; (d) as a result, MultiPlan was set to continue to suffer from revenues and earnings declines, increased competition and deteriorating pricing dynamics following the Merger; (e) consequently, MultiPlan was forced to seek continued revenue growth and to improve its competitive positioning through pricey acquisitions, including through the purchase of the healthcare technology company HST for $140 million at a premium price from a former MultiPlan executive only one month after the Merger; and (f) as such, Churchill III investors had grossly overpaid for the acquisition of MultiPlan in the Merger, and MultiPlan’s business was worth far less than represented to investors.
On November 11, 2020, only a month after the Merger, Muddy Waters published a report titled “MultiPlan: Private Equity Necrophilia Meets The Great 2020 Money Grab.” Among other things, Muddy Waters’ report revealed that MultiPlan was in the process of losing its largest client, UnitedHealthcare, which was estimated to cost MultiPlan up to 35% of its revenues and 80% of its levered free cash flow within two years. On this news, the price of Churchill III Class A common stock fell to a low of just $6.12 per share, or nearly 40% below the price at which shareholders could have redeemed their shares at the time of the shareholder vote on the Merger.
Abraham, Fruchter & Twersky, LLP (www.aftlaw.com) is a law firm based in New York and maintaining an office in California. The firm’s attorneys have extensive experience litigating on behalf of shareholders and consumers in class action litigations involving corporate misconduct. The firm has also been ranked among the leading law firms in terms of results obtained and recoveries achieved for shareholders.
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