Estia Health will pay $11.7 million to settle a shareholder class action over what the company told investors while having difficulty with an acquisition.
After the share market closed on Monday, Estia said it agreed to settle the 2019 class action, which alleged executives did not properly inform the market between August 2015 and October 2016.
At the time, shareholders were assured the company was "on track" despite troubles integrating Kennedy Health Care, which Estia bought in late 2015.
Shares soared to $7.33 after Estia upgraded its FY16 guidance following the purchase of Kennedy.
However Estia then gave a poor FY17 outlook, and downgraded guidance, which sent the share price down by more than 45 per cent.
The company will not admit liability as part of the settlement.
Estia will report the $11.7 million settlement contribution as an expense in its first-half accounts.
Estia said the remainder of the settlement, $37.75 million, was insured.
The Federal Court must approve the settlement.
Shares closed higher by 3.57 per cent to $2.03.
