Insperity, Inc. Class Action Lawsuit
- Company Name
- Insperity, Inc.
- Stock Symbol
- Class Period
- February 11, 2019 to February 11, 2020
- Southern District of New York
The Insperity, Inc. class action lawsuit charges Insperity and certain of its officers with violations of the Securities Exchange Act of 1934 and seeks to represent purchasers of Insperity common stock between February 11, 2019 and February 11, 2020, inclusive (the “Class Period”). The Insperity class action lawsuit was commenced on July 21, 2020 in the Southern District of New York and is captioned Building Trades Pension Fund of Western Pennsylvania v. Insperity, Inc., No. 20-cv-05635.
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. According to Insperity, it considers the 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.
The Insperity class action lawsuit alleges that defendants made materially false and/or misleading statements, as well as failed to disclose that: (a) Insperity 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; (b) Insperity was experiencing an adverse trend of large medical claims; (c) as a mitigating measure, Insperity would be forced to increase the cost of its employee benefit plans, causing stunted customer growth and reduced customer retention; and (d) the foregoing issues were reasonably likely to, and would, materially impact Insperity’s financial results.
On July 29, 2019, Insperity announced disappointing third quarter 2019 guidance and reduced its full-year 2019 guidance. Insperity also revealed that in the second quarter of 2019, Insperity had experienced an increase in large medical claim costs, which defendants described as an anomaly that would not impact projected cost benefit trends. On this news, the price of Insperity shares fell 25%.
Then, 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. In doing so, Insperity attributed these results to continued large medical claim costs, which defendants again attempted to describe as a mere anomaly to assuage investor concern. On this news, the price of Insperity shares fell an additional 34%.
Finally, on February 11, 2020, Insperity revealed that large medical claims had again impacted Insperity by significantly increasing operational costs. Insperity further revealed that it had restructured its contract with UnitedHealthcare to no longer have financial responsibility for any medical claims over $1 million. In addition, Insperity offered disappointingly bearish guidance for the 2020 first quarter and full year. On this news, the price of Insperity shares declined by an additional 20%.
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