Skilled Healthcare Group Inc. of Foothill Ranch’s shares shot up Wednesday after the nursing home operator said it settled a potentially crippling lawsuit for well below what a jury had originally awarded plaintiffs in the case.
The company’s shares closed up 25% to a market value of about $165 million.
Skilled said late Tuesday night that it settled a lawsuit over alleged mismanagement in 22 California nursing homes for $50 million.
In July, a Humboldt County jury awarded plaintiffs in the case $677 million—a verdict that called Skilled’s future into question.
Analysts had expected a settlement in the case and have said that both the plaintiffs and Skilled would have been hurt if Skilled had been forced into bankruptcy.
Skilled said it would borrow $50 million through its revolving credit line to cover settlement payments and agreed to provide reports and information to a monitor for two years.
The company admitted no wrongdoing in the settlement, which still has to be approved by Humboldt County Superior Court Judge Bruce Watson.
