American CareSource Holdings

Kurta Law is investigating potentially unsuitable recommendations of American CareSource Holdings stock to investors. The company disclosed significant risks in its prospectus, which is an SEC filing that describes information relevant to potential investors.

Investors may be required to seek out FINRA arbitration rather than a suit in civil court. If you have concerns about your investment in American CareSource Holdings, contact (877) 600-0098 or email info@kurtalawfirm.com today to speak to a securities attorney for free.

What is American CareSource Holdings?

According to the prospectus, American CareSource Holdings (GNOW) is a company that provides urgent and primary care services through its network of medical clinics in Alabama, Georgia, Florida, and Virginia.

The company’s stock prospectus also describes its intentions to exit its “legacy business” of offering ancillary services (i.e., medical services not directly provided by clinics) to other healthcare companies.

What are the Risks Associated with American CareSource Holdings?

Investing in American CareSource Holdings comes with some notable risks given the financial situation described in its prospectus: the company states that it has incurred losses in almost every year of operation, yielding a cumulative deficit of approximately $31.1 million by mid-September 2015, and “may never be profitable again.”

Further, the company held $10.8 million of debt to Wells Fargo as of September 30, 2015. The prospectus states that the company will require additional capital after this offering, and that future offerings could dilute the shares of initial investors.

Medical Billing Issues

Medical billing is complex, and the prospectus states that a “significant portion” of the company’s patient service revenue depends on third-party or commercial payors (e.g., employer-sponsored healthcare plans). American CareSource Holdings maintains contracts with these payors to establish terms for reimbursement, and is in competition with other healthcare providers to secure these contracts.

Further, the prospectus notes that the terms of these contracts may not be favorable for patients, potentially resulting in patients seeking out competitors’ services.

Because the medical billing process is frequently lengthy and complicated, American CareSource Holdings notes that “failure to bill timely or accurately for our services could have a negative impact on our net revenues, bad debt expense, and cash flow.” 

Compliance with State and Federal Laws

As a medical care provider, American CareSource Holdings is subject to many state and federal laws, such as HIPAA and Medicare-related regulations. Failure to comply with any of these laws and regulations could result in “civil and criminal penalties such as fines, damages, overpayment recoupment, loss of enrollment status and exclusion from government healthcare programs.”

In addition, failure to comply with state and federal laws could require the company to alter or restructure its operations, at potentially great cost.

Other Risks Associated with American CareSource Holdings

The prospectus also points out some other notable risks associated with investing in American CareSource Holdings:

• No expectation of paying dividends to stockholders
• Possible delisting from NASDAQ and potential lack of market for trading this stock
• Company may experience negative financial impact of lawsuits not fully covered by professional liability insurance
• Company experienced “significant turnover” in senior management, and current management has “limited experience” operating an urgent/primary care business line

Aegis Capital Corp. Underwriting

Investors should know that Aegis Capital Corp. served as the underwriter for this offering. Underwriters take on risk in exchange for a fee, which could motivate certain investment banks to underwrite investments that pose too much risk for the average retail investor. Additionally, brokers may have conflicts of interest when they recommend shares that are underwritten by an affiliate of their brokerage firm. 

What Can I Do If I Suffered Losses?

If you lose money on your investment in American CareSource Holdings, our experienced securities attorneys may be able to help you get a fair settlement. Kurta Law attorneys have 5-star reviews on Google and regularly take on cases of unsuitable investment recommendations. Call (877) 600-0098 or email info@kurtalawfirm.com.