NEW YORK, Jan. 15, 2020 (GLOBE NEWSWIRE) -- Bragar Eagel & Squire, P.C., a nationally recognized shareholder law firm, reminds investors that class action lawsuits have been commenced on behalf of stockholders of HEXO Corp. (HEXO), Merit Medical Systems, Inc. (MMSI), Net 1 UEPS Technologies, Inc. (UEPS), and X Financial (XYF). Stockholders have until the deadlines below to petition the court to serve as lead plaintiff. Additional information about each case can be found at the link provided.
HEXO Corp. (HEXO)
Class Period: January 25, 2019 to November 15, 2019
Lead Plaintiff Deadline: January 27, 2020
Through a series of disclosures occurring between October 4, 2019 and November 15, 2019, the Company announced that it was producing cannabis in a section of its Niagara facility that was not properly licensed with Health Canada. As a result of these disclosures, the value of HEXO stock has consistently decreased, damaging investors.
The complaint, filed on November 26, 2019, alleges that throughout the Class Period defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, the Complaint alleges that defendants failed to disclose to investors that: (1) HEXO’s reported inventory was misstated as the Company was failing to write down or write off obsolete product that no longer had value; (2) HEXO was engaging in channel-stuffing in order to inflate its revenue figures and meet or exceed revenue guidance provided to investors; (3) HEXO was cultivating cannabis at its facility in Niagara, Ontario that was not appropriately licensed by Health Canada; and (4) that, as a result of the foregoing, defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.
For more information on the HEXO class action go to: https://bespc.com/hexo
Merit Medical Systems, Inc. (MMSI)
Class Period: February 26, 2019 to October 30, 2019
Lead Plaintiff Deadline: February 3, 2020
On July 25, 2019, Merit announced disappointing second quarter 2019 financial results and cut its fiscal 2019 sales and earnings per share outlook. Defendants attributed these reductions to a variety of factors, including “slower than anticipated conversion and uptake of acquired products.”
On this news, the Company’s stock price declined more than 25%.
Then, on October 30, 2019, the Company announced its third quarter 2019 financial results, reporting adjusted earnings per share well below consensus estimates, and slashed fiscal 2019 revenue and earnings per share guidance by 20%. Furthermore, defendants stated that, in addition to the fiscal 2019 guidance cut, “2020 guidance [was] off the table” until they had reasonable confidence in their forecasting ability, and reported significant operational issues in all aspects of Merit’s business, conceding that many of these failures were due to their “own overestimation and forecasting.”
Following these disclosures, Merit’s stock price declined more than 29%, to close at $20.66 per share on October 31, 2019.
The complaint, filed on December 3, 2019, alleges that throughout the Class Period defendants made false and misleading statements and/or failed to disclose adverse information concerning Merit’s business and prospects. Specifically, defendants failed to disclose that: (a) the integrations of Cianna and Vascular Insights, including their products, sales people, and R&D facilities, had caused operational disruptions and reduced sales and were months behind schedule; (b) sales of acquired company products had slowed substantially due to pre-acquisition pipeline fill, in particular for Vascular Insights products which, as late as July 2019, had zero orders during fiscal 2019; and (c) in light of the foregoing, the Company’s reported financial guidance for fiscal 2019 and 2020 was made without a reasonable basis. As a result of defendants’ material misrepresentations and omissions, Merit stock traded at artificially inflated prices of more than $62 per share.
For more information on the Merit Medical class action go to: https://bespc.com/mmsi
Net 1 UEPS Technologies, Inc. (UEPS)
Class Period: September 12, 2018 to November 8, 2018
Lead Plaintiff Deadline: February 3, 2020
On November 8, 2018, UEPS filed a Form 8-K with the SEC under item 4.02(a) for non-reliance on previously issued financial statements.
On this news, the price of the Company’s stock price declined $2.16, from a closing price of $7.00 per share on November 8, 2018 to a closing price of $4.84 per share on November 9, 2018, a drop of approximately 30 percent.
The complaint, filed on December 5, 2019, alleges that throughout the Class Period UEPS made false and/or misleading statements and/or failed to disclose that: (1) the Company lacked effective internal control over financial reporting; (2) the Company had misclassified its investment in Cell C Proprietary Limited; (3) the Company’s financial statements for the fiscal year 2018 were overstating its income; and (4) as a result of the foregoing, the Company's financial statements were materially false and misleading at all relevant times.
For more information on the Net 1 UEPS class action go to: https://bespc.com/ueps
X Financial (XYF)
Class Period: Securities purchased pursuant and/or traceable to the Company’s September 19, 2018 initial public stock offering (the “IPO” or the “Offering”).
Lead Plaintiff Deadline: February 7, 2020
On November 20, 2018, X Financial held its first earnings call after the IPO to discuss its financial results. As executives explained on the call, the negative operational and financial results reported in the day’s press release had been caused by market and other problems that had long preceded the IPO.
During the November 20, 2018 earnings call, analysts questioned X Financial’s executives about the rapidly contracting preferred loans and rising delinquency rates. In response, they conceded that low demand and “very high” delinquency rates for X Financial’s preferred loans had produced a cascading effect that decreased the Company’s overall financial results. As these executives explained, plummeting demand and high default rates had, in turn, forced the Company to make the “big [strategy change] to . . . scale down the preferred loan business.” Scaling down preferred loans, meanwhile, had prompted “a change in product mix resulting from a significant increase in the proportion of revenue generated by Xiaoying Card Loan.” The pivot to depending on card loans had, in turn, caused a reduction in X Financial’s “average loan ticket size by 20% to even 25%” and also caused further increases in the Company’s overall delinquency rate, as card loans by nature represented significantly higher risks.
In subsequent financial reports, X Financial has confirmed that the problems described above started before the IPO.
On April 25, 2019, X Financial filed its annual report for 2018 on Form 20-F. The report contained a chart entitled “Delinquency Rate by Vintage of Xiaoying Preferred Loan,” which illustrated the dramatic increase in delinquency rates leading up to and during the IPO—including in first, second, and third quarters of 2018—and that such negative trends were accelerating.
Then, on May 21, 2019, during X Financial’s earnings call to discuss the Company’s first quarter 2019 results, defendant Tang admitted that X Financial was unlikely to achieve significant loan or revenue growth because its preferred loan business had failed “over the last year” and that the Company was shelving the entire business.
On November 22, 2019, X Financial’s ADSs closed at $1.74 per ADS. This price represented an 81.68% decline from the $9.50 per share price at which X Financial’s ADSs had been sold to the investing public in the IPO.
The Complaint, filed on December 9, 2019, alleges that the company’s Registration Statement was negligently prepared and, as a result, contained untrue statements of material fact or omitted to state other facts necessary to make the statements made not misleading and was not prepared in accordance with the rules and regulations governing its preparation. Specifically, the Registration Statement made false and/or misleading statements and/or failed to disclose that: (i) the Company’s total loan facilitation amount was not growing, but rather was contracting; (ii) the number of investors actively using X Financial’s platform was shrinking; (iii) demand from SMEs for the Company’s preferred loans was plummeting; (iv) the Company’s preferred loans had performed so poorly that it had begun drastically scaling back its preferred loans in the first quarter of 2018, several months before the IPO, and was in the process of phasing out such loans completely; (v) demand for the Company’s card loans was also plummeting; (vi) the revenue and loan facilitation growth provided in the Registration Statement leading up to the IPO was achieved by relaxed credit and due diligence standards, under which the Company had underwritten tens of millions of dollars’ worth of poor quality loans that suffered from a disproportionately high risk of default as compared to the Company’s earlier loan vintages; (vii) the Company was suffering from accelerated delinquency rates from poor quality loans that it had underwritten in the first, second, and third quarters of 2018, which had caused the Company’s delinquency rate to sharply rise; (viii) the Company’s product mix had significantly deteriorated; (ix) the Company’s net revenue was on track to decline by 22% during the third quarter of 2018; and (x) as a result, the Registration Statement was materially false and/or misleading and failed to state information required to be stated therein.
For more information on the X Financial class action go to: https://bespc.com/xyf
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