A class action brought against CVS Healthcare Corp. this month alleges the pharmacy company misled shareholders about its merger with Aetna Inc. and its acquisition of Omnicare.
The case, filed in Rhode Island Superior Court, accuses CVS of including “false and misleading financial records, trends and metrics” in a 2018 registration statement with the Securities and Exchange Commission. The case was brought by the City of Warren Police and Fire Retirement System, which purchased CVS stock pursuant to the merger.
CVS issued approximately 274.4 million new shares of CVS stock to former Aetna investors based on the allegedly false registration, as reported by Courthouse News. The suit also accuses CVS of disingenuously promoting its 2015 merger with Omnicare because “expected earnings were already severely deteriorating by 2018 as a result of rising costs and poor results.”
CVS made its first big foray into long-term care in 2015 when it acquired long-term care pharmacy services leader Omnicare for $12.9 billion.
In posting a $2.56 billion loss in mid 2018, CVS Health blamed its lagging fortunes partly on the “deteriorating financial health of numerous skilled nursing facility customers.”
The plaintiffs are seeking damages and court fees.
