The share price of Primary Health Care Limited (ASX: PRY) has dropped lower by almost 4% in morning trade after the healthcare company announced that its managing director and CEO Peter Gregg is being taken to court by the Australian Securities and Investments Commission (ASIC).
According to the release, ASIC alleges two contraventions of Section 1307(1) of the Corporations Act during his time as an officer of Leighton Holdings Limited, now known as Cimic Group Ltd (ASX: CIM).
Section 1307 of the Corporations Act relates to the falsification of company books. Mr Gregg has informed Primary that he denies the allegations.
Unfortunately for shareholders I expect this news could weigh on its shares until the matter is resolved. Which is a real shame as the healthcare company's shares have been on a tear in the last 12 months and have risen by over 65%.
With chronic conditions rising and hospital costs increasing, Primary Health Care is well placed for growth with its medical, pathology, and diagnostic imaging centres.
But with these allegations hanging over its CEO, it's not a company that I would want to be invested in right now. The Primary board plans to meet today and will continue to review the implications of this development for the company and its shareholders.
Instead of Primary Health Care, I would be more inclined to invest in fellow healthcare shares Ramsay Health Care Limited (ASX: RHC) or Healthscope Ltd (ASX: HSO). Both are experiencing similar tailwinds and look set for strong long-term growth without the drama of a courtroom battle with ASIC.
