Baxter investors may receive additional information about the case by clicking the link "Submit Your Information" above.
As set forth in the complaint, Baxter provides a broad portfolio of essential healthcare products, including acute and chronic dialysis therapies, sterile intravenous (IV) solutions, infusion systems and devices, parenteral nutrition therapies, inhaled anesthetics, generic injectable pharmaceuticals, and surgical hemostat and sealant products.
The Class Period begins on February 21, 2019, when Baxter filed its annual report for the year ended December 31, 2018 with the United States Securities and Exchange Commission (“SEC”) on a Form 10-K. Therein, Baxter reported, inter alia, net foreign exchange income of $73 million in 2018, $50 million in 2017, and $28 million in 2016. Baxter further reported total net income of $1.624 billion in 2018, $717 million in 2017, and $4.965 billion in 2016, and net income (diluted) per share of $2.97 in 2018, $1.29 in 2017, and $9.01 in 2016.
On April 25, 2019, Baxter issued a press release announcing its first quarter 2019 financial and operational results wherein it reported, inter alia, net income of $347 million and net income (diluted) per share of $0.66 for the quarter, which was reiterated in its quarterly report filed with the SEC on a Form 10-Q on May 8, 2019.
On July 25, 2019, Baxter issued a press release announcing its second quarter 2019 financial and operational results wherein it reported, inter alia, net income of $343 million and net income (diluted) per share of $0.66 for the quarter, which Baxter reiterated in its quarterly report filed with the SEC on a Form 10-Q on July 30, 2019.
In each of the above-referenced financial reports, management represented that Baxter’s internal control over financial reporting was effective.
On October 24, 2019, Baxter revealed the truth when it announced that it “recently began an investigation into certain intra-Company transactions undertaken for the purpose of generating foreign exchange gains or losses.” According to Baxter, “[t]hese transactions used a foreign exchange rate convention historically applied by the Company that was not in accordance with generally accepted accounting principles [(“GAAP”)] and enabled intra-Company transactions to be undertaken after the related exchange rates were already known.”
Baxter further admitted that “[t]hese intra-Company transactions resulted in certain misstatements in the Company’s previously reported non-operating income related to net foreign exchange gains” and acknowledged that, “[u]pon completion of the investigation and the Company’s evaluation of the materiality of the misstatements, the Company expects to either amend its periodic reports previously filed with the SEC to include restated financial statements that correct those misstatements, or include in reports for future periods restated comparative financial statements that correct those misstatements.” Baxter further explained that “[t]he Audit Committee of the Company’s Board of Directors is overseeing this investigation with the assistance of independent, experienced external advisors,” that “Baxter voluntarily advised the staff of the [SEC] that the internal investigation is underway and intends to provide additional information to the SEC as the investigation progresses,” and that “[t]he Company does not expect to file its quarterly report on Form 10-Q for the period ended September 30, 2019 on a timely basis.”
Following this news, the price of Baxter common stock declined $8.87 per share, or 10.1%, from a close of $87.95 per share on October 23, 2019, to close at $79.08 per share on October 24, 2019.
The complaint alleges that, throughout the Class Period, defendants misrepresented and/or failed to disclose that: (1) certain intra-Company transactions, undertaken for the purpose of generating foreign exchange gains and losses, used foreign exchange rate conventions that were not in accordance with GAAP and enabled intra-Company transactions to be undertaken after the related exchange rates were already known; (2) Baxter lacked effective internal control over financial reporting; (3) as a result, Baxter’s financial statements were misstated and would likely require correction or amendment; (4) due to Baxter’s internal investigation, it would not be able to file its quarterly report for the period ending September 30, 2019, with the SEC on a Form 10-Q in a timely manner; and (5) as a result of the foregoing, defendants’ statements about Baxter’s business and operations lacked a reasonable basis.
If you are a member of the class described above, you may no later than January 24, 2020 move the Court to serve as lead plaintiff of the class, if you so choose.
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Kessler Topaz Meltzer & Check, LLP has filed a complaint in this matter (see “View Complaint” above to read full complaint). If you wish to discuss this action or have any questions concerning this notice or your rights or interests with respect to these matters, please contact Kessler Topaz Meltzer & Check, LLP toll free at 1-844-887-9500 or 1-610-667-7706, or via e-mail at firstname.lastname@example.org. If you would like additional information about the suit, please click on the link "Submit Your Information" above and fill out the form as promptly as possible.
Kessler Topaz Meltzer & Check, LLP
James Maro, Jr., Esq.
Adrienne Bell, Esq.
280 King of Prussia Road
Radnor, PA 19087