to dismiss currently pending before the court, to replead their claims against
Henry Schein.
An action filed by
Tucson Medical Center et al. was previously scheduled for trial beginning on June
1, 2021 but the court has vacated
that trial date.
At this time, the only cases set for trial are the actions filed by
West Virginia
University Hospitals,
Inc. et al., which is currently scheduled for a non-jury liability trial on plaintiffs’ public
nuisance claims on
November 1, 2021, and DCH Health Care Authority, et al., which is currently scheduled for a liability jury trial on
plaintiffs’ public nuisance claims on July 18, 2022.
Of Henry Schein’s 2020 revenue of approximately $
10.1
billion from continuing operations, sales of opioids represented less than
one-tenth of 1
percent.
Opioids represent
a negligible part of our business.
We intend to defend ourselves vigorously against these actions.
On
September 30, 2019
, the
City of Hollywood Police Officers Retirement System, individually and on behalf of
all others similarly situated
, filed a putative class action complaint for violation of the federal
securities laws
against
Henry Schein, Inc., Covetrus, Inc., and Benjamin Shaw and Christine Komola (Covetrus’s then Chief
Executive Officer and Chief Financial Officer, respectively
) in the U.S. District Court for the Eastern District of
New York,
Case No. 2:19-cv-05530-FB-RLM.
The complaint seeks to certify a class consisting of all persons and
entities who, subject to certain exclusions, purchased or otherwise acquired Covetrus
common stock from February
8, 2019 through August 12, 2019.
The case relates to the Animal Health Spin-off and Merger of the Henry Schein
Animal Health Business with Vets First Choice in February 2019.
The complaint alleges violations of Sections
10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Securities and Exchange Commission
Rule 10b-5 and asserts that defendants’ statements in the offering documents and after the transaction were
materially false and misleading
because they purportedly overstated Covetrus’s capabilities as to inventory
management and supply-chain services, understated the costs of integrating
the Henry Schein Animal Health
Business and Vets
First Choice, understated Covetrus’s separation costs from Henry Schein, and understated the
impact on earnings from online competition and alternative distribution
channels and from the loss of an allegedly
large customer in North America just before the Separation and Merger.
The complaint seeks unspecified monetary
damages and a jury trial.
Pursuant to the provisions of the PSLRA, the court appointed
lead plaintiff and lead
counsel on December 23, 2019.
Lead plaintiff filed a Consolidated Class Action Complaint on February 21,
2020.
Lead plaintiff added Steve Paladino, our Chief Financial Officer, as a defendant in the action.
Lead plaintiff filed
an Amended Consolidated Class Action Complaint on May 21, 2020,
in which it added a claim that Mr. Paladino is
a “control person” of Covetrus.
We intend to defend ourselves vigorously against this action.
On
February 5, 2021
,
Jack Garnsey filed a putative shareholder derivative action on behalf of Covetrus, Inc.
U.S. District Court for the Eastern District of New York, naming as defendants
Benjamin Shaw, Christine T.
Komola, Steven Paladino, Betsy Atkins, Deborah G. Ellinger, Sandra L. Helton, Philip A. Laskaway, Mark J.
Manoff, Edward M. McNamara, Ravi Sachdev, David E. Shaw, Benjamin Wolin, and Henry Schein, Inc., with
Covetrus, Inc.
named as a nominal defendant.
The complaint alleges that
the individual defendants breached their
fiduciary duties under state law in connection with the same allegations asserted in the City of Hollywood securities
class action described above and further alleges that Henry Schein aided and abetted such breaches. The complaint
also asserts claims for contribution under the federal securities laws against Henry Schein and other defendants,
also arising out of the allegations in the City of Hollywood lawsuit.
The complaint seeks declaratory, injunctive,
and monetary relief. We intend to defend ourselves vigorously against this action.
On April 8, 2021 the Court
entered an order staying the Garnsey action until forty-five (
45
) days after a decision is issued finally resolving the
motions to dismiss in the City of Hollywood Class Action.
From time to time, we may become a party to other legal proceedings,
including, without limitation, product
liability claims, employment matters, commercial disputes, governmental
inquiries and investigations (which may
in some cases involve our entering into settlement arrangements or consent
decrees), and other matters arising out
of the ordinary course of our business.
While the results of any legal proceeding cannot be predicted with certainty,
in our opinion none of these other pending matters are currently anticipated
to have a material adverse effect on our
consolidated financial position, liquidity or results of operations.
As of March 27, 2021, we had accrued our best estimate of potential losses relating to claims that were probable to
result in liability and for which we were able to reasonably estimate a loss. This accrued amount, as well as related