Express Scripts Holding Co.

Robbins Arroyo LLP: Express Scripts Holdings Company (ESRX) Misled Shareholders According to a Recently Filed Class Action

Shareholder rights law firm Robbins Arroyo LLP announces that a class action complaint was filed against Express Scripts Holding Company (NASDAQ: ESRX) in the U.S. District Court for the Southern District of New York. The plaintiff brings the complaint on behalf of all purchasers of Express Scripts securities between February 24, 2015 and March 21, 2016 (the “class period”), for alleged violations of the Securities Exchange Act of 1934 by certain officers and directors. Express Scripts is the largest independent pharmacy benefit manager (“BPM”) in the U.S., whose role is to administer the prescription drug component of its customers’ health insurance plans.

Express Scripts Accused of Misrepresenting Its Relationship with Anthem to the Detriment of its Shareholders

According to the complaint, Anthem is Express Scripts most important client, representing approximately 14% of Express Scripts’ annual revenues. During the class period, Express Scripts repeatedly assured investors that its relationship with Anthem was strong and that it was providing Anthem and its customers with high quality service. In addition, Express Scripts addressed its ongoing negotiations with Anthem – pursuant to the “repricing provision” of the contract – stating that it was committed to reaching a mutually beneficial agreement and continuing its successful working relationship with its most important client. The complaint alleges that these statements caused Express Scripts stock to trade at artificially inflated prices, and were in fact false because during the class period Express Scripts’ relationship with Anthem seriously deteriorated, creating a significant risk that it would lose Anthem’s business.

On January 12, 2016, Anthem publicly threatened to terminate its relationship with Express Scripts unless it agreed to renegotiate its agreement with Anthem to deliver more than $3 billion in annual savings to Anthem. Anthem’s statement made clear that Anthem and Express Scripts had engaged in contentious pricing negotiations for some time, and made clear that if Express Scripts remained unwilling to engage in good-faith negotiations regarding drug pricing, Anthem would terminate its relationship with Express Scripts and seek out a competing PBM. These disclosures caused the price of Express Scripts shares to fall $5.89 per share, or 7%, wiping out $3.9 billion in shareholder value. The company’s stock price remained inflated, however, because Defendants offered false and misleading explanations for, and continued to conceal, the true extent of the Company’s deteriorating relationship with Anthem.

On March 21, 2016, Anthem sued Express Scripts alleging that Express Scripts breached its contract with Anthem by failing to negotiate drug pricing terms in good faith. The lawsuit revealed a conflict between Express Scripts and Anthem dating back to at least February 2015, including allegations that Express Scripts was experiencing severe operational problems that interfered with its ability to adequately serve Anthem and exposed Anthem to increased regulatory scrutiny. These disclosures caused Express Scripts stock to further decline.

Express Scripts Shareholders Have Legal Options

Concerned shareholders who would like more information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, or you can complete the form below and we will contact you directly.

 

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