IPC The Hospitalist Company (Nasdaq: IPCM) is off more than 30% today after announcing estimated results for Q4 and fiscal 2011 on Friday, which had both net revenue and EPS coming in below previous guidance levels and analyst expectations. Such a large price drop may be seen by some as a buy opportunity, but a lingering regulatory investigation related to Medicare/Medicaid claims needs to be factored into the investment decision.
In a Jun-10 8-K, IPCM disclosed that it had received a civil investigative demand (NASDAQ:CID) from the DOJ, U.S. Attorney’s Office for the Northern District of Illinois. The CID requested information concerning claims the company submitted to Medicare and Medicaid and sought production of documents relating to operations and billings covering 1-Jan-03 through 4-Jun-10. In subsequent 10-Qs, IPCM reported that it had discussed the scope of the CID with government representatives and responded to discovery requests. After having met and with representatives of the government to discuss the scope of the CID and the production of responsive documents, the company disclosed in Jul-11 that it was informed by the DOJ that a qui tam whistleblower complaint related to this investigation was filed under court seal in the U.S. District Court for the Northern District of Illinois. IPCM was also informed that several state attorneys general were examining its Medicaid claims in coordination with the DOJ. The matter remained ongoing as of IPCM's most recent disclosure in the 10-Q filed in Oct-11 and was not mentioned in Friday's press release.
In 2010, IPCM generated approximately 95% of its net revenue from billings to third-party payors such as Medicare, Medicaid, managed care organizations, and insurance companies. Medicare alone accounted for 45% of 2010 net revenue.
Here is the link the the company's press release announcing its estimated 2011 results.