Why Accretive Health Shares Skyrocketed

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of medical billing services provider Accretive Health (NYSE: AH  ) soared 37% oday after reaching a settlement with the Minnesota attorney general's office over an ongoing lawsuit.

So what: Under the settlement, Accretive must pay $2.5 million and wind down all business operations in Minnesota within the next 90 days, but it also removes a dark cloud of uncertainty over the company. The stock has been under pressure ever since Minnesota Attorney General Lori Swanson accused Accretive of overly aggressive collection tactics in January, so the settlement should naturally give investors on the sideline plenty of confidence to jump in.

Now what: Accretive is also allowed to move on without admitting any liability and management said it doesn't expect the settlement to hurt them financially. "Our focus now is on the future, at a critical time for the health care industry, when hospitals are in clear need of the service and support we offer," CEO Mary Tolan said in a statement. "To ensure we continue to provide them with the best solutions, we constantly seek to ensure we are setting the very highest standards for our own performance and achieving the best possible outcomes for hospitals and patients." Given the huge overhang that has been lifted from the stock, Accretive might be worth looking into even after today's big rally.  

Interested in more info on Accretive? Add it to your watchlist.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days.

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10/27/2016 3:34 PM
ACHI $2.37 Up +0.05 +2.16%
Accretive Health CAPS Rating: *****