SEC Probes SPAC-Backed ATI Physical Therapy on Earnings Guidance
SEC Probes SPAC-Backed ATI Physical Therapy on Earnings Guidance
(Bloomberg) -- ATI Physical Therapy Inc., a rehabilitation services firm that merged with a blank-check company earlier this year, said it received an information request from federal securities regulators tied to an earnings forecast.
The Securities and Exchange Commission asked ATI on Nov. 5 for documents and financial information tied to the company’s July 26 earnings projection, which drastically cut earlier guidance, according to a Wednesday regulatory filing. The Bolingbrook, Illinois-based company said it’s cooperating with the request.
At the time, ATI had lowered its revenue forecast sharply and disclosed larger-than-expected staff turnover. The revision, which was disclosed in the firm’s earnings debut as a public company, jolted investors and sent the company’s shares down more than 50% in two days. The stock has yet to recover, closing at $4.08 on Wednesday.
A SEC spokesperson declined to comment. A spokesperson for ATI didn’t immediately respond to a request for comment.
ATI’s challenges highlight some of the concerns critics have raised about the boom in special purpose acquisition companies, which are shell companies that list on public exchanges to raise money to buy profitable entities. Finance professionals have warned that the flood of deals has created unsustainable company valuations and questionable disclosures. Steep stock declines like ATI’s underscore the risks investors face in investing in these companies.
Other firms that went public via the blank-check companies have also had to cut earnings guidance recently, including Beachbody Co., a fitness and nutrition retailer.
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