On March 28, 2018, investors sued Patterson Companies, Inc. (“Patterson” or the “Company”) in United States District Court, District of Minnesota. Plaintiffs in the federal securities class action allege that they acquired Patterson stock at artificially inflated prices between June 26, 2015 and February 28, 2018. They are now seeking compensation for financial losses incurred upon public revelation of the Company’s alleged misconduct during that time. Here’s what you need to know about the Patterson Companies class action lawsuit:
Summary of the Allegations
The Company (NASDAQ: PDCO) is a purveyor of full-service dental products with $2.4 billion in total sales.
Its history dates to 1877, when the Patterson brothers (John and Myron Fayette) purchased a Milwaukee drugstore. Soon after the acquisition, they added dental and surgical supplies to their “regular stock of medicines, extracts, toiletries, brushes, perfumes and soaps.”
With John’s permission, M.F. “acquired the dental interests of their drugstore in 1891,” and then moved the Company to St. Paul, Minnesota, John F. Patterson became president of the M.F. Patterson Dental Supply Company in 1938. By 1959, Patterson operated 40 branch locations.
In the early 21st century, the Company reached $1 billion in sales through “continued acquisitions of privately held family-run businesses like that of Guggenheim Brothers Dental Supply Co., as well as its diversification into a broader set of healthcare-driven markets, including veterinary supplies.”
Summary of Facts
Patterson and two of its former senior officers and/or directors now stand accused of deceiving investors by lying and/or withholding critical information about the Company’s business practices during the Class Period.
Specifically, they are accused of omitting truthful information about the Company’s revenue and earnings from SEC filings and related materials. By knowingly or recklessly doing so, they allegedly caused Patterson stock to trade at artificially inflated prices during the time in question.
The truth came out on February 12, 2018, when the FTC “filed an administrative complaint seeking injunctive relief against Patterson and its two largest competitors, Schein and Benco, alleging that from well before the start of the Class Period, Patterson, Schein and Benco had been engaging in a conspiracy to fix the prices of dental supply products” that they sold to group purchasing organizations (GPOs).
Then, on March 1, 2018, the Company announced a 26 percent decrease in earnings for the third quarter of FY 2018 and the resignation of its chief financial officer.
A closer look…
As alleged in the March 28 complaint, the Company repeatedly made misleading public statements during the Class Period.
For example, on a form filed with the SEC on June 24, 2015, the Company said in pertinent part: “To differentiate ourselves from our competition, we deploy a strategy of premium customer service with multiple value-added components, a highly qualified and motivated sales force, highly-trained and experienced service technicians, an extensive breadth and mix of products and services, technology solutions allowing customers to easily access our inventory, accurate and timely delivery of product, strategic location of sales offices and distribution centers, and competitive pricing.”
It issued the same statement in SEC filings on four additional occasions during the Class Period.
What the Company did not disclose, however, was that Patterson’s revenue and earnings were “fraudulently inflated by an illegal and fraudulent price-fixing scheme aimed at prohibiting sales to, and price negotiations by, GPOs that represented small and independent dental practices.”
Impact of the Alleged Fraud on Patterson’s Stock Price and Market Capitalization
|One day stock price decrease (percentage) as a result of disclosures:
The following chart illustrates the stock price during the class period:
Actions You May Take
If you have purchased shares during the Class Period, you may join the class action as a lead plaintiff, remain a passive class member, or opt out of this litigation and pursue individual claims that may not be available to the class as a whole.
NOTE: The deadline to file for lead plaintiff in this class action is May 29, 2018. You must file an application to be appointed lead plaintiff prior to this deadline in order to be considered by the Court. Typically, the plaintiff or plaintiffs with the largest losses are appointed lead plaintiff.
In order to identify your potential exposure to the alleged fraud during the time in question, you may wish to perform an analysis of your transactions in Patterson common stock using court approved loss calculation methods.
Recently Filed Cases
Listed below are recently filed securities class action cases being monitored by us, along with the class period and the deadline to file a motion to be appointed as the Lead Plaintiff in the action. Please contact us if you would like an LK report for any of these cases:
|This information is provided for general information purposes only, and should not be construed as legal advice, nor does it establish an attorney-client relationship with Levi & Korsinsky LLP. Any and all information herein is simply an opinion based on publicly available information and should not necessarily be construed as fact. For more information, please visit our website at www.zlk.com.
Levi & Korsinsky is a leading securities litigation firm with a hard-earned reputation for protecting investors’ rights and recovering losses arising from fraud, mismanagement and corporate abuse. With thirty attorneys and offices in New York, Connecticut, California and Washington D.C., the firm is able to litigate cases in various jurisdictions in the U.S., England, and in other international jurisdictions.
Levi & Korsinsky provides portfolio monitoring services for high-net worth investors and institutional clients. Our firm also assists investors in evaluating whether to opt-out of large securities class actions to pursue individual claims.
For additional information about this case or our institutional services, please contact us.