CVS Health Corporation (NYSE: CVS) Investor Securities Class Action Lawsuit 08/15/2019

If you acquired shares of CVS Health Corporation (NYSE: CVS) in connection with CVS’s acquisition of Aetna on November 28, 2018, you have certain options and for certain investors are short and strict deadlines running. Deadline: October 14, 2019. NYSE: CVS investors should contact the Shareholders Foundation, Inc.

To have your information reviewed for options and to recieve notifications about this case, please use this form. You may also send an email to mail@shareholdersfoundation.com, or call us at (858) 779-1554.
Company Name(s): 
CVS Health Corporation
Case Name: 
CVS Health Corporation Shareholder Class Action Lawsuit 08/15/2019
Case Status: 
Lawsuit Filed
Affected Securities
NYSE: CVS
Lawsuit Overview
Type of Lawsuit: 
Shareholder Class Action
Date Filed: 
08/15/2019
Court of Filing: 
U.S. District Court for the District of Rhode Island
Deadline To File for Lead: 
10/14/2019
Summary: 

An investor in shares of CVS Health Corporation (NYSE: CVS) filed a lawsuit in the U.S. District Court for the District of Rhode Island over alleged violations of Federal Securities Laws by CVS Health Corporation in connection with certain allegedly false and misleading statements made in connection with CVS’s acquisition of Aetna on November 28, 2018.

On May 20, 2015, CVS Pharmacy, Inc., a wholly owned subsidiary of CVS Health Corporation, entered into a merger agreement to acquire Omnicare, Inc., a provider of pharmaceuticals and related pharmacy services to long-term care (“LTC”) facilities and a provider of specialty pharmacy and commercialization services for the bio-pharmaceutical industry.

On December 3, 2017, CVS Health and Aetna announced the execution of a merger agreement under which CVS Health will acquire all outstanding shares of Aetna for a combination of cash and stock. Under the terms of the merger agreement, Aetna shareholders will receive $145.00 per share in cash and 0.8378 CVS Health shares for each Aetna share. Based on a closing price of $75.12 per NYSE:CVS share on December 1, 2017 investors in NYSE:AET shares will receive a value of approximately $207.94 per NYSE:AET shares.

In connection with the acquisition of Aetna, CVS Health Corporation filed with the SEC a Registration Statement, which was declared effective on February 9, 2018, and a joint proxy statement/prospectus on Form 424B3 (collectively the “Offering Documents”).

In March 2018, CVS Health Corporation 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 would 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).
Then, in August 2018, CVS Health Corporation disclosed it was “clearly disappointed with [the] performance in the Omnicare business” and that, since the third quarter of 2017, CVS Health Corporation had been “closely monitoring the performance of the [Omnicare] business for potential indicators of impairment.”

On November 28, 2018, the defendants announced that the Acquisition was formally closed, with Aetna shareholders receiving CVS Health Corporation stock valued at $80 per share.

In late February 2019, CVS Health Corporation 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 Health Corporation cited “operational challenges” as a basis for this second massive charge.

According to the complaint the plaintiff alleges that 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 Health Corporation shares was materially inflated.

Furthermore, the plaintiff alleges that the Offering Documents that were filed in connection with CVS’s acquisition of Aetna on November 28, 2018 contained materially false and/or misleading statements about CVS Health Corporation’s compliance with Generally Accepted Accounting Principles (“GAAP”). In particular, the plaintiff claims that CVS Health Corporation falsely represented 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.