Estia Health (ASX:EHE) share price dips on class action settlement

The Estia Health (ASX: EHE) share price dipped and then recovered today after news it has received approval to settle a class action lawsuit.
The post Estia Health (ASX:EHE) share price dips on class action settlement appeared first on The Motley Fool Australia. –


Estia Health Ltd (ASX: EHE) received Federal Court approval this afternoon to settle a class action brought against it.

The Estia Health share price dipped sharply immediately after the news was announced to the ASX, but has since returned to its prior trading level of $2.50, up 2%.

Estia Health is one of Australia’s largest residential aged care providers delivering care to more than 8,000 older Australians each year.

Let’s have a closer look at the settlement and class action brought against the company.

Class action

The class action against Estia has been ongoing since July 2019. Filed to the Federal Court by law firm Phi Finney McDonald, it relates to alleged breaches of the company’s disclosure obligations in 2015 and 2016.

The lawsuit concerned shareholders who had bought shares in the company or acquired long exposure to Estia shares by entering into equity swap confirmations between August 2016 and October 2016.

At the time, the Australian Financial Review reported the class action alleged Estia didn’t disclose difficulties it was experiencing around the time it published its 2016 financial year results. It also alleged the company gave misleading guidance for the 2017 financial year. 

In February 2021, Estia advised the market it had reached an agreement to settle the class action, conditional on whether the settlement would receive Federal Court approval.

Today, Estia said that the cost of the settlement is $38.5 million, of which it has contributed $12.35 million. The remaining balance is to be paid by Estia’s insurers.

The company advised it was unable to say whether the class action would have a material impact on its financial position or performance.

Estia Health share price snapshot

The Estia Health share price has been a strong performer on the ASX lately. Currently, it’s up 41% year to date and has lifted 72% over the last 12 months.

The company has a market capitalisation of around $640 million, with approximately 261 million shares outstanding.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

See The 5 Stocks

*Returns as of February 15th 2021

More reading

The post Estia Health (ASX:EHE) share price dips on class action settlement appeared first on The Motley Fool Australia.

Important Notice
Trade The US Market With ZERO Brokerage* + FREE Access To Trading Ideas & Value Analysis Tools. Click Here!