Wageworks Inc (NYSE: WAGE) stock plunged 16.60% on September 13th, 2018 after SunTrust Banks lowered their price target on the stock to $56.00. SunTrust Banks currently has a buy rating on the stock.
Further, WageWorks Inc.’s investigation into claims that information was withheld from auditors led the company’s shares to fall nearly 17% Thursday. The stock slightly recovered today by over 1.6% (as of 11:13 AM GMT-4 ; Source: Google finance)
Meanwhile, the company has announced the appointment of Stuart C. Harvey Jr. as Executive Chairman of the Board of Directors. He replaces Joseph L. Jackson, who resigned as Executive Chairman of the Company and Class III director on September 6, 2018. WageWorks also announced that Mariann Byerwalter resigned as a Class II director, effective September 6, 2018, due to family reasons. WAGE has opened an investigation into claims the audit committee withheld information from outside auditor KPMG. The audit committee had investigated alleged financial irregularities in the 2016 and 2017 filings. The committee closed the investigation in May saying “no illegal acts occurred.” But KPMG had raised issues with lead outside director John Larson about missing information withheld by a former’ manager’s counsel. WageWorks top management was replaced earlier this year after the financial irregularities were discovered. WageWorks will have to adjust its results for the relevant years. In a new filing, WageWorks says the company is cooperating in an investigation by the SEC, which WageWorks voluntarily notified.
Moreover, the company’s review of the necessary adjustments to the Company’s financial statements for FY16 is expected to result in an estimated aggregate decrease in revenue (which was previously reported as $364.7 million) in the approximate range of $6.5 million to $9.5 million, an estimated aggregate decrease in net income (which was previously reported as $20.2 million) in the approximate range of $3.5 million to $5.5 million, and an estimated aggregate decrease in the non-GAAP financial measure adjusted EBITDA (which was previously reported as $108.0 million) in the approximate range of $6.0 million to $9.0 million. Although the Company’s review of 2017 is ongoing, to date, the company has not identified any adjustments to its financial statements that would be expected to cause revenue for FY17 to differ materially from the Company’s previous guidance.
Additionally, the Company currently expects full year 2018 year-over-year revenue growth of 1% to 4% and adjusted EBITDA margin of 28% to 32%, excluding the impact of costs associated with the restatement efforts and any accounting adjustments. Full year 2018 revenue growth is expected to be driven by strong growth in the HSA product offering, partially offset by lower revenue from FSA and COBRA products.
On the other hand, the NYSE agreed to provide the Company with an extension to continue its listing on the NYSE through March 19, 2019, subject to reassessment on an ongoing basis.