Dentsply Sirona, Inc. (XRAY) Accused of Misrepresenting Its Financial Prospects in its Offering Documents

According to the complaint, Dentsply's registration statement failed to inform investors of risks that had materialized at the time of the Dentsply International Inc. February 2016 acquisition of and merger with Sirona. First, Dentsply's reported sales, net income, and goodwill were already artificially inflated by outsized sales and profit margins derived from an illicit price-gouging scheme among its largest distributors, Patterson Companies, Inc. ("Patterson") and Henry Schein, Inc. Second, discovery of this scheme would risk that these distributors would cancel Dentsply's exclusive distribution contracts. On August 9, 2017, Dentsply reported an over $1 billion net loss resulting from a massive goodwill impairment charge, resulting in Dentsply losing its exclusive distribution contract with Patterson, which had recently been sued for anticompetitive price-gouging. Dentsply also disclosed that it was being investigated by the SEC regarding the company's accounting and disclosures related to transactions with a distributor. Dentsply is currently trading at around $42 per share, which represents a decline of over 30% since the acquisition.

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