Total Renal Faces Lawsuit Over Earnings

A Pennsylvania retirement plan has filed a class-action suit against Total Renal Care Holdings Inc., the dialysis provider whose stock fell a stunning 58% last week after earnings were lower than management had indicated. In its suit, filed in U.S. District Court for the Central District of California, Tozour Energy Systems Retirement Plan of King of Prussia, Pa., alleged that company officials deliberately misled investors in order to raise $345 million in the stock market last fall. The suit alleged that up until earnings were released Thursday, Total Renal Care President Victor Chaltiel and Chief Financial Officer John E. King assured investors that earnings would meet projections, and that a lawsuit arising from a dispute over Medicare payments would soon be settled. The company also said that its efforts to integrate another dialysis company it had acquired were going well. But earnings came in at 30 cents a share instead of the expected 37 cents. And company officials, who reportedly insisted in a conference call to investors and Wall Street analysts that they did not know about the impending shortfall, in part blamed problems with the integration of the newly purchased company, Renal Treatment Centers. As a result, the company’s already deflated stock price collapsed. Total Renal Care declined to comment. Total Renal’s shares fell 69 cents to close at $9.31 on the NYSE.