According to a press release dated April 16, 2008, the complaint charges Walgreen and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Walgreen operates a chain of drugstores in the United States.
Specifically, the complaint alleges that during the Class Period, Walgreen was experiencing a steady decline in the growth of its core business -- filling retail drug prescriptions. Throughout the Class Period, defendants failed to disclose declining growth rates for the Company’s generic prescription business and misled investors concerning the sustainability of Walgreen’s profits and sales. According to the complaint, unbeknownst to Walgreen’s public shareholders, underlying the erosion of Walgreen’s earnings was a material contract dispute with one of the nation’s largest third-party providers of prescription drug benefits – CVS Caremark (“Caremark”). During 2007, Walgreen disputed Caremark’s reimbursement rates for a number of prescription drug plans located primarily in the upper Midwestern U.S., which were negatively impacting the Company’s earnings.
On October 1, 2007, prior to the market opening, Walgreen issued a press release announcing its financial results for its fourth fiscal quarter and fiscal year 2006. For the fourth quarter, the Company reported net income of $0.40 per share – far below analysts’ earnings expectations of $0.47 per share. In response to the announcement, the price of Walgreen stock declined from $47.00 per share to $39.96 per share, on extremely heavy trading volume.
Then, on November 29, 2007, Walgreen announced that “[a]fter many months” of dispute with Caremark over the reimbursement rates for four prescription plans, Walgreen withdrew as a pharmacy provider from the plans. Following this announcement, shares of Walgreen common stock declined to a new three-year low of $36.59 per share at the close of trading on November 30, 2007.
On August 20, 2008, Judge Joan B. Gottschall granted in a minute entry the motion filed by Teamsters Affiliates Pension Plan, International Brotherhood of Teamsters General Fund and Retirement and Protection Plan for appointment as lead plaintiff and for approval of selection of lead and liaison counsel.
On September 24, 2009, an order on Defendants' Motion to Dismiss Corrected Amended Complaint was granted and subsequently a judgment was also made thereby terminating the case.
On September 29, 2010, the Court issued a Memorandum Opinion and Order granting the defendants’ request that the complaint be dismissed with prejudice.