A Michigan-based medical infusion company with an office in Lenexa is changing its leadership as it faces a lawsuit brought by shareholders who claim they lost money because of the company’s accounting errors.
InfuSystem, which sells equipment for intravenous procedures to 1,700 sites throughout the United States and Canada, elected two new members to its board of directors at a shareholder meeting in Lenexa last week.
The additions of Darrell Montgomery and Christopher Sansone to the seven-member board comes amid other leadership changes. The publicly traded company announced last month that it was parting ways with president and CEO Eric Steen, who had led the company since 2013. In a June 7 filing with the Securities and Exchange Commission, the company described the severing of Steen’s employment as an “involuntary termination.”
A spokeswoman for InfuSystem said Gregg Lehman, the executive chairman of the board of directors, would not comment on the changes.
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Lehman thanked Steen for his contributions in a written statement released when his departure was announced.
“With the appropriate vision and leadership, we will be able to continue to grow this business, and drive shareholder value, in the years to come,” Lehman said. “While it is difficult to make changes, it is a sign of the vitality of the InfuSystem organization to move forward and break new ground that can lead to even greater rewards.”
InfuSystem, which has about 200 employees, is facing a federal securities class-action lawsuit in the U.S. District Court of the Central District of California.
The suit was brought on behalf of anyone who bought stock in InfuSystem between May 12, 2015, and Nov. 7, 2016. It says that the company announced in an SEC filing Nov. 7 that its financial statements during that period painted an overly rosy fiscal picture. Specifically, the company told the SEC that the statements “contained an error related to an overstatement of estimated accounts receivable collections, which in turn overstated revenues and pre-tax income by a corresponding amount.”
The company said it has since restated its financial statements.
According to the lawsuit, InfuSystem’s stock dropped from $2.60 per share to $1.60 per share upon news of the error.
“As a result of Defendants’ wrongful acts and omissions, and the precipitous decline in the market value of the Company’s securities Plaintiff and other Class members have suffered significant losses and damages,” the suit states.
The Rosen Law Firm in Los Angeles, which is handling the suit, believes that there may be hundreds or even thousands of investors affected, according to the complaint.
In his statement announcing Steen’s departure, Lehman said the outpatient infusion market is adjusting to new Medicare reimbursement rules handed down by the federal government last year.
Since Steen left, Lehman has headed a new five-member “Office of the President” that is leading the company as it searches for a permanent CEO. In a June 19 SEC filing, Lehman said the company had turned down a $2.00-per-share buyout offer from a Seattle-based investment firm called 22NW Fund.
Lehman called the offer “inadequate” and asked investors for more time, saying the company had made “substantial progress” in improving its cash collections, finance and information technology.
“We firmly believe that these initiatives, if given adequate time, will improve the company’s operations and deliver substantial value to shareholders from the current levels,” Lehman said.