How Hot Stock AAC Was Brought Down By Its Very Own-A Better Tomorrow Drug Rehab
There are not many things that can instantly change the tide for a very strong stock, but as the recent drop in price for shares in AAC Holdings have shown, having your company president and several other staff indicted for murder is certainly one of them.
Here, we take a look at the story of the events at A Better Tomorrow drug and alcohol treatment center, one of seven operated by AAC’s main operational unit American Addiction Centers, which lead to its dramatic stock plummet over the past couple of weeks.
The 2010 Death That Was the Beginning of the End for AAC’s Stock
To understand this case, we need to go back to 2010, long before AAC had been offered on the New York Stock Exchange, and when it was operating under the name Forterus Inc. An unusual company formed by the marriage of rehab clinics with a company mostly concerned with investment in racehorses, Forterus was already strong in the drug and alcohol rehabilitation sector, and already had A Better Tomorrow treatment center in Murrieta as one of its facilities.
In July of that year, a coal power plant worker from Springerville, Arizona flew out to LA to begin a course of treatment at A Better Tomorrow. He was a 52 year old husband and stepfather named Gary Benefield. As well as the undisclosed addiction issue that had made Benefield seek the help of A Better Tomorrow rehab center, he was also blighted by chronic obstructive pulmonary disease and emphysema, and had recently been in hospital suffering from pneumonia.
Due to his health problems, Gary Benefield had been using an oxygen tank, which was emptied before flying to LA. When he arrived at A Better Tomorrow, he was given anti-anxiety drugs and antidepressants, but no further oxygen.
A 2012 report by the California Senate Office of Oversight and Outcomes into his case, along with several other deaths that took place within a similar two and a half year timeframe, shows that he was then left from midnight until the morning without any staff making checks on his condition. The following day, which was even more sadly Gary Benefield’s 53rd birthday, the patient was dead.
photo: TaxRebate.org.uk
The Indictment
The death of Gary Benefield took place almost exactly five years before AAC’s president, Jerrod Nathan Menz, along with three other people who worked for the company at the time, were indicted for murder by California prosecutors in July 2015. In addition to the murder charges, another member of staff from A Better Tomorrow was indicted with abuse of a dependent adult – the same kind of charge usually given for neglectful or dangerous behavior by staff in care facilities like nursing homes.
Jerrod Nathan Menz immediately stepped down from the board of AAC Holdings, a move the company stated he felt was ‘appropriate’, though he would continue to work with them. Another indicted AAC executive, Mignon Dean, remains in his role with the company, though the others had already moved on from AAC at the time of the indictment.
Menz, as well as being president, was also one of the original founders of Forterus (which went on to become AAC Holdings prior to listing on the New York Stock Exchange in October 2014), and had shares worth $200 million in the company, making him the second largest shareholder in the Brentwood, Tennessee business.
The Market’s Reaction
Following news of the indictment, AAC announced they would make no admission of liability for the death of Gary Benefield, which the coroner had concluded was a result of chronic obstructive pulmonary disease – a pre-existing condition in Benefield’s case. They also stated when they filed that they would use the weight of their resources to defend Jerrod Nathan Menz, Mignon Dean and the other indicted employees, and protect the company.
In response, the shareprice nosedived. Perhaps as a result of the scandal, or the fact that the costs involved in defending the company are difficult to predict but almost certainly material, shareholders lost confidence in what had been a hot stock very quickly, and August 4th saw the share price drop by 53%.
AAC’s story is one that truly highlights how one tragic event can completely change the shape of a company’s standing, no matter how much they had previously been seen to be ‘doing everything right’ in the eyes of the market.
Guest Author: Lolita Di
[…] How Hot Stock AAC Was Brought Down By Its Very Own-A Better Tomorrow Drug Rehab – Forterus was already strong in the drug and alcohol rehabilitation sector, and already had A Better Tomorrow treatment center in Murrieta as one of its facilities. In July of that year, a coal power plant worker from Springerville, Arizona flew out to LA … […]
[…] How Hot Stock AAC Was Brought Down By Its Very Own-A Better Tomorrow Drug Rehab – There are not many things that can instantly change the tide for a very strong stock, but as the recent drop in price for shares in AAC Holdings have shown, having your company president and several other staff indicted … […]
[…] How Hot Stock AAC Was Brought Down By Its Very Own-A Better Tomorrow Drug Rehab – Here, we take a look at the story of the events at A Better Tomorrow drug and alcohol treatment center, one of seven operated by AAC … A 2012 report by the California Senate Office of Oversight and Outcomes into his … […]
[…] How Hot Stock AAC Was Brought Down By Its Very Own-A Better Tomorrow Drug Rehab – Here, we take a look at the story of the events at A Better Tomorrow drug and alcohol treatment center, one of seven operated by AAC’s main operational unit American Addiction Centers, which lead to its dramatic … […]
[…] How Hot Stock AAC Was Brought Down By Its Very Own-A Better Tomorrow Drug Rehab – The 2010 Death That Was the Beginning of the End for AAC’s Stock To understand this case, we need to go back to 2010, long before AAC had been offered on the New York Stock Exchange … and alcohol … […]
[…] How Hot Stock AAC Was Brought Down By Its Very Own-A Better Tomorrow Drug Rehab – Here, we take a look at the story of the events at A Better Tomorrow drug and alcohol treatment center, one of seven operated by AAC’s main operational unit American Addiction Centers, which lead to its dramatic … […]
[…] How Hot Stock AAC Was Brought Down By Its Very Own-A Better Tomorrow Drug Rehab – Here, we take a look at the story of the events at A Better Tomorrow drug and alcohol treatment center, one of seven operated by AAC’s main operational unit American Addiction … Arizona flew out to LA to begin a … […]
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