An investor in shares of Covetrus, Inc. (NASDAQ: CVET) filed a lawsuit in the U.S. District Court for the Eastern District of New York over alleged violations of Federal Securities Laws by Covetrus, Inc. in connection with certain allegedly false and misleading statements made between February 8, 2019 and August 12, 2019.

Portland, ME based Covetrus, Inc. operates as an animal-health technology and services company. It operates through two segments, Supply Chain, and Technology and Value-Added Services. Covetrus, Inc was formed through a spin-off and merger of the Animal Health Business of Henry Schein with Vets First Choice (“VFC”), a privately-held company, to create what the Company described to investors as the “only global animal health technology and services company.”

Covetrus, Inc. reported that its annual Total Revenue rose from over $3.57 billion in 2017 to over $3.77 billion in 2018 and that its Net Income increased from $64.35 million in 2017 to $100.86 million in 2018.
On August 13, 2019, before the market opened, Covetrus, Inc shocked investors by reporting a net loss of $0.09 per share for the second quarter of 2019 compared to consensus analyst estimates of $0.17 in net income per share. Covetrus, Inc also slashed its 2019 EBITDA guidance to just $200 million, down substantially from its prior EBITDA guidance of approximately $250 million issued in February and May 2019, only a few months prior. In doing so, The plaintiff says Covetrus, Inc admitted that itwould have to spend tens of millions of dollars more in infrastructure spending and redundant costs, and that Covetrus, Inc also admitted previously undisclosed difficulties integrating the platforms and disclosed increased spending to eliminate obligations to Henry Schein as part of the spin-off agreement.

Shares of Covetrus, Inc. (NASDAQ: CVET) declined to as low as $11.46 per share on September 26, 2019.

According to the complaint the plaintiff alleges on behalf of purchasers of Covetrus, Inc. (NASDAQ: CVET) common shares between February 8, 2019 and August 12, 2019, that the defendants violated Federal Securities Laws. More specifically, the plaintiff claims that between February 8, 2019 and August 12, 2019, the Defendants’ representations to investors overstated Covetrus’ capabilities with regard to inventory management and supply chain services, understated the costs of the integration of Henry Schein’s Animal Health Business and VFC, including the timing and nature of those costs, understated Covetrus’ separation costs from Henry Schein, and understated the impact on earnings from online competition and alternative distribution channels as well as the impact of the loss of a large customer in North America just prior to the Company’s separation from Henry Schein.