NEW YORK, NY / ACCESSWIRE / October 7, 2019 / Bronstein, Gewirtz & Grossman, LLC notifies investors that a class action lawsuit has been filed against CVS Health Corporation ("CVS" or the "Company") (CVS) and certain of its officers, on behalf of shareholders who acquired CVS shares in exchange for their Aetna shares in connection with CVS's acquisition of Aetna on November 28, 2018. Such investors are encouraged to join this case by visiting the firm's site: www.bgandg.com/cvs.
This class action seeks to recover damages against Defendants for alleged violations of the federal securities laws under the Securities Exchange Act of 1933.
CVS provides retail pharmacy and pharmacy benefit manager services nationwide. On May 20, 2015, CVS Pharmacy, Inc., a wholly owned subsidiary of CVS, entered into a merger agreement to acquire Omnicare, Inc., a provider of pharmaceuticals and other pharmacy services to long-term care facilities ("LTC") (e.g., assisted living, skilled nursing, and senior centers) and a provider of specialty pharmacy and commercialization services for the bio-pharmaceutical industry.
In connection with the acquisition of Aetna (the "Acquisition"), defendants filed with the SEC a Registration Statement on Form S-4, which was declared effective on February 9, 2018, and a joint proxy statement/prospectus on Form 424B3 (collectively the "Offering Documents"). The complaint alleges that the Offering Documents contained materially false and/or misleading statements about CVS's compliance with Generally Accepted Accounting Principles ("GAAP"). Specifically, CVS misrepresented in the Offering Documents that it had properly accounted for its $6+ billion goodwill asset, as reported in the "LTC unit," associated with CVS's 2015 acquisition of LTC pharmacies of Omnicare.
In March 2018, CVS raised $40 billion in debt securities to help fund the cash component to be paid to Aetna shareholders. The balance of consideration due to Aetna shareholders was to be paid in shares of CVS stock. On March 13, 2018, Aetna shareholders approved the Acquisition (including the provisions whereby Aetna shareholders would exchange their Aetna shares for CVS shares). The complaint alleges Aetna shareholders approved the Acquisition not knowing that CVS's reporting of its goodwill asset was not GAAP-compliant, that the Omnicare-related goodwill was materially impaired, and that the price of CVS shares was materially inflated.
In August 2018. after Aetna shareholders had approved the Acquisition, CVS disclosed it was "clearly disappointed with [the] performance in the Omnicare business" and that, since the third quarter of 2017, CVS had been "closely monitoring the performance of the [Omnicare] business for potential indicators of impairment." As a result of that "disappointment" and "close monitoring" since 2017 that triggered belated "updated" forecasts, CVS announced a goodwill impairment charge of $3.9 billion to be recognized in the second quarter of 2018.
On November 28, 2018, the defendants announced that the Acquisition was formally closed, with Aetna shareholders receiving CVS stock valued at $80 per share.
In February 2019, CVS announced a second multi-billion-dollar impairment charge to its Omnicare-related goodwill, this time a $2.2 billion impairment to be recognized in the fourth quarter of 2018. CVS cited "operational challenges" as a basis for this second massive charge. On this news, the price of CVS shares fell to the mid-$50 range. Currently CVS stock is trading below $59 per share, representing a more than 27% decline from the approximately $80 per share the stock was trading at when exchanged for Aetna shares in the Acquisition.
If you wish to review a copy of the Complaint you can visit the firm's site: www.bgandg.com/cvs or you may contact Peretz Bronstein, Esq. or his Investor Relations Analyst, Yael Hurwitz of Bronstein, Gewirtz & Grossman, LLC at 212-697-6484. If you suffered a loss in CVS you have until October 14, 2019 to request that the Court appoint you as lead plaintiff. A lead plaintiff acts on behalf of all other class members in directing the litigation. The lead plaintiff can select a law firm of its choice. Your ability to share in any recovery doesn't require that you serve as a lead plaintiff.
Bronstein, Gewirtz & Grossman, LLC is a corporate litigation boutique. Our primary expertise is the aggressive pursuit of litigation claims on behalf of our clients. In addition to representing institutions and other investor plaintiffs in class action security litigation, the firm's expertise includes general corporate and commercial litigation, as well as securities arbitration. Attorney advertising. Prior results do not guarantee similar outcomes.
Bronstein, Gewirtz & Grossman, LLC
Peretz Bronstein or Yael Hurwitz
212-697-6484 | email@example.com
SOURCE: Bronstein, Gewirtz & Grossman, LLC
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