Covetrus, Inc. (CVET) Accused of Misleading Shareholders
According to the complaint, on April 23, 2018, Henry Schein announced the spin-off and merger of the Animal Health Business of Henry Schein with Vets First Choice (“VFC”). Covetrus, Inc. (CVET) shares began trading on February 8, 2019. Throughout the class period and in the Offering Documents for the spin-merger, Henry Schein highlighted Covetrus’ strengths and touted Covetrus as a technology-enabled animal health business with a comprehensive service and technology platform and supply chain infrastructure. These benefits were reaffirmed later in Covetrus’ financial reports and the Company reassured that the integration was “on track” to hit financial targets. However, in reality, Covetrus’ strengths were overstated and the costs of the integration as well as the separation of Covetrus from Henry Schein had been much higher than represented. Then, on August 13, 2019, Covetrus shockingly reported a net loss of $0.09 per share rather than the expected increase of $0.17 per share and slashed its EBITDA guidance from estimates of $250 million to a realized $200 million. In its explanation, Covetrus confessed the undisclosed difficulties it was having in platform integration and separations costs from Henry Schein. Since this news, Covetrus’ stock has plummeted with a decline of $11.71, or 51%, per share and currently trades at around $11.50.