CVET Stock Alert: Berger Montague Investigates Class Action Claims Against Covetrus, Inc. (NASDAQ: CVET)
October 3, 2019. PHILADELPHIA – Berger Montague announces that a class action lawsuit has been filed against Covetrus, Inc. (“Covetrus” or the “Company”) (“CVET”) and several of its executives on behalf of those who purchased Covetrus common stock between February 8, 2019, and August 12, 2019, inclusive (the “Class Period”).
If you wish to discuss the claims against Covetrus or have any questions concerning your rights or interests, please contact Barbara A. Podell, Esq. at (215) 875-4690 or Michael Dell’Angelo, Esq. at (215) 875-3080 or visit www.bergermontague.com. If you purchased or acquired Covetrus common stock during the Class Period and suffered damages, you may, no later than November 29, 2019, request that the Court appoint you lead plaintiff of the proposed Class. You do not need to be a lead plaintiff to share in any possible recovery to the Class.
Covetrus was formed through a spin-off and merger of Henry Schein’s Animal Health Business and Vets First Choice (“VFC”), a privately-held company, to create what Covetrus described to investors as the “only global animal health technology and services company.” Henry Schein announced the spin-off and merger on April 23, 2018. On February 8, 2019, Covetrus shares began trading on the NASDAQ Global Market at $42.96 per share.
A class action was filed in the Eastern District of New York on behalf of all persons or entities that purchased Covetrus common stock from February 8, 2019, through August 12, 2019. The Complaint alleges that throughout the Class Period, Defendants made a series of false and misleading statements and omissions concerning the Company’s infrastructure and capabilities, as well as the true costs of becoming independent from Henry Schein.
- Overstated Covetrus’ capabilities with regard to inventory management and supply chain services;
- Understated the costs of the integration of Henry Schein’s Animal Health Business and VFC, including the timing and nature of those costs;
- Understated Covetrus’ separation costs from Henry Schein; and
- Understated the impact on earnings from online competition and alternative distribution channels, as well as the impact of the loss of a large customer in North America just prior to the Company’s separation from Henry Schein.
On August 13, 2019, before the market opened, Covetrus shocked investors by reporting a net loss of $0.09 per share for the second quarter of 2019 when the market had been expecting a net income of $0.17 per share. Covetrus also slashed its 2019 EBITDA guidance from its recently stated estimates in February and May by as much as $250 million, to disclose EBITDA guidance of just $200 million. In doing so, Covetrus admitted that the Company would have to spend tens of millions of dollars more in infrastructure spending. The Company also admitted previously undisclosed difficulties integrating the platforms and disclosed increased spending to eliminate obligations to Henry Schein as part of the spin-off. Defendants belatedly acknowledged that they were finally “at a point where we have detailed plans and understanding of the level of infrastructure investment we need to make and how these costs break out.” Finally, Covetrus also disclosed on August 13, 2019, that the “loss of a customer weighed heavily on organic growth in Q2 by 3%.”
In response to these disclosures, Covetrus stock plummeted 40%, falling from $23.19 per share on August 12, 2019, to close at $13.89 per share on August 13, 2019. The following day, the shares dropped another 11% to close at $12.35 per share.
Berger Montague, with offices in Philadelphia, Minneapolis, Washington, D.C., and San Diego, is a full-service national plaintiffs’ class action law firm specializing in securities, antitrust, and other complex litigation on behalf of institutional and individual investors. Berger Montague is one of the most highly regarded plaintiffs’ litigation firms in the country, with nearly 50 years of experience and numerous record-setting recoveries.