AAC Holdings shares suffered their worst plunge ever on Tuesday after the company said its former president has been indicted for murder.
The indictment relates to the death of a patient in 2010 at American Addiction Centres, to which AAC is a parent company.
In a statement last Wednesday, the company said a civil case had been settled confidentially “with no admission of liability.” The client died of natural causes, or hypertensive cardiovascular disease according to the coroner, the company said.
But the case has been unsealed in a California court. AAC’s former president Jerrod Menz (who stepped down last week), a former board member, a current employee, and three former employees are among those that the indictment has been brought against.
On Tuesday, the stock plunged by up to 53%, the worst ever since AAC went public in October 2014, according to Bloomberg.
In a quarterly filing on Monday, the company said (emphasis added): “
Defending ourselves against the indictment could potentially entail costs that are material and could require significant attention from our management. If the defendants were to be convicted of the crimes alleged in the indictment, potential penalties could include fines, restitution, conditions of probation and other remedies. Given the early stage of this proceeding, we cannot estimate the amount or range of loss if the defendants were to be convicted; however, such loss could be material.”
Trading of the shares was briefly halted for volatility on Tuesday. The stock is now down 46% year-to-date, and 10% since the IPO.
“We firmly believe that the California Department of Justice’s case is without merit,” the company said. “We will vigorously defend the Company and each individual in court.”
Here’s a chart showing the plunge Tuesday: