Shares of American Renal Associates Holdings (NYSE:ARA), a provider of dialysis services in the U.S., are sinking like a stone today after the company announced that its chief financial officer has resigned and that some of its financial statements need to be restated. The stock was down about 36% as of 11:14 a.m. EDT on Thursday.
Here are the key details of today's announcement:
- CFO Jason Boucher has resigned. Mark Herbers has been named interim CFO.
- The board of directors has concluded that the company's financial statements for the fiscal years 2014, 2015, 2016, and 2017 should "no longer be relied upon" and need to be restated.
- The company's Audit Committee continues to review the documents but has already identified a number of errors related to operating income and income before taxes. The company overreported and underreported these numbers by as much as $26 million in previous years.
The company also stressed that these are just preliminary findings and that they might change in time. The annual report for 2018 will be restated and released as soon as possible.
Shares are being thrashed in response to the news.
Investors rely on accurate financial statements to make decisions, so today's news shouldn't be taken lightly.
Personally, I wouldn't touch American Renal's stock right now, no matter how "cheap" it may appear. There are simply too many unknowns. That's why my plan is to watch this story unfold from the safety of the sidelines and focus on other healthcare stocks that look far more compelling.