NEW YORK, July 13, 2024 (GLOBE NEWSWIRE) — Bragar Eagel & Squire, PC, a nationally recognized shareholder rights law firm, reminds investors that class action lawsuits have been filed on behalf of shareholders of UnitedHealth Group Incorporated (NYSE: UNH), Vestis Corporation (NYSE: VSTS), Teladoc Health, Inc. (NYSE: TDOC) and Direct Digital Holdings, Inc. (NASDAQ: DRCT). Shareholders have until the deadlines set forth below to ask the Court to serve as lead plaintiff. For more information about each case, please see the link provided.
UnitedHealth Group Incorporated (NYSE:UNH)
Course period: March 14, 2022 – February 27, 2024 (common shares only)
Deadline for lead plaintiff: July 16, 2024
UnitedHealth is an American multinational health insurance and services company consisting of two separate and complementary companies: Optum and UnitedHealthcare. UnitedHealthcare provides health insurance to individuals, employers, and small businesses and is the largest insurance provider in the United States. Optum provides health-related services, including software solutions, payment services, and data analytics.
On January 6, 2021, UnitedHealth announced an agreement to acquire Change Healthcare (“Change”) and integrate it into its Optum business. Change is a healthcare technology company that provides data solutions designed to improve clinical decisions and simplify payment processes across the healthcare system. On February 24, 2022, the U.S. Department of Justice (“DOJ”) filed a lawsuit challenging UnitedHealth’s acquisition of Change. The DOJ alleged that the proposed acquisition would violate antitrust laws because the integration of Change and Optum would give UnitedHealth unprecedented access to information about nearly every health plan, as well as health data about every single American. Ultimately, the court in the DOJ’s lawsuit approved the acquisition, repeatedly citing UnitedHealth’s firewall policy and its commitment to prevent data sharing between UnitedHealthcare and Optum as the rationale for approving the deal.
The lawsuit alleges that throughout the Class Period, UnitedHealth repeatedly assured investors that it had taken steps to avoid anti-competitive conduct, including establishing “robust firewall processes” to prevent confidential customer information (“CSI”) from being shared following the UnitedHealthcare-Optum merger. Specifically, UnitedHealth specifically stated that Optum “invests an extraordinary amount of time, money and resources in securing (CSI) and keeping it separate from UnitedHealthcare” and that “UnitedHealth Group’s existing firewalls and data security policies prohibit employees from improperly sharing outside customers’ CSI.” As a result of these misrepresentations, UnitedHealth’s stock traded at artificially inflated prices during the Class Period.
The lawsuit further alleges that the truth came to light on February 27, 2024, when the Wall Street Journal reported that the Justice Department had reopened its antitrust investigation into UnitedHealth. This article was the first time the public learned that the Justice Department was investigating the relationships between the company’s various segments, including Optum. As a result of this revelation, UnitedHealth’s stock price fell by $27 per share, representing a loss of nearly $25 billion in shareholder value.
For more information about the UnitedHealth class action lawsuit, visit: https://bespc.com/cases/UNH
Vestis Corporation (NYSE: VST)
Course period: October 2, 2023 – May 1, 2024 (common shares only)
Deadline for lead plaintiff: July 16, 2024
Vestis, based in Roswell, Georgia, is a provider of uniforms and workplace supplies in the United States and Canada. The company was formed on September 30, 2023, through a spin-off from food service and facility management provider Aramark. Vestis began trading on the New York Stock Exchange under the ticker symbol “VSTS” on October 2, 2023, the first day of the class action lawsuit.
In the lead-up to the pre-spin class action lawsuit, Vestis’s future executives claimed that “investments are in place” to deliver “5% to 7% revenue growth” at compound annual growth rate (CAGR). They also assured investors that the company’s sales force had “peaked” and was “now achieving the levels of productivity we expect from them.” As the class action lawsuit continued, defendants emphasized the “really, really great feedback” Vestis had received for its customer service initiatives and claimed that the company’s growth would continue to accelerate in part because Vestis “provides outstanding service to our customers.”
The class action lawsuit alleges that during the Class Period, Defendants made materially false and misleading statements and failed to disclose that: (1) Aramark had historically underinvested in the business that became Vestis; (2) Vestis operated with outdated facilities and a subpar sales force; (3) Vestis’ outdated facilities and subpar sales force resulted in “service gaps” that hindered the Company’s growth and resulted in customer attrition; and (4) as a result of the foregoing, Defendants’ statements about Vestis’ business, operations and prospects were materially false and misleading statements and/or lacked a reasonable basis at all relevant times.
The class action lawsuit further alleges that the truth came to light before the market opened on May 2, 2024, when Vestis issued a press release announcing financial results for the second quarter of fiscal 2024, which ended March 29, 2024. Specifically, the company announced that it had generated revenue of $705 million, up 0.9% from the same quarter last year, and that it had revised its fiscal 2024 revenue guidance downward, to a range of negative 1% to 0%. During the related conference call with analysts that day, Chief Executive Officer (“CEO”) Kimberly Scott revealed the “challenges” the company was facing related to “sales productivity and deliberately modest pricing actions,” with CEO Scott explaining that the latter were necessary to “improve customer loyalty” and because “service gaps” had “increased price sensitivity.” In the same call, analysts pointed out that Vestis had announced a price reduction after previously announcing a price increase and questioned the defendants about this reversal in pricing.
On this news, Vestis stock price plummeted 45%, from a closing price of $18.47 per share on May 1, 2024, to a closing price of $10.16 per share on May 2, 2024.
For more information about the Vestis class action lawsuit, please visit: https://bespc.com/cases/VSTS
Teladoc Health, Inc. (NYSE: TDOC)
Teaching period: November 2, 2022 – February 20, 2024
Deadline for lead plaintiff: July 16, 2024
Teladoc offers online healthcare services directly. BetterHelp is Teladoc’s largest business unit and accounts for the largest share of revenue at approximately 42% of the company’s total revenue.
The Teladoc class action lawsuit alleges that throughout the Class Period, Defendants made false and/or misleading statements and/or failed to disclose that: (i) Teladoc continued to increase its marketing spending in 2023 despite public assurances that it would scale back its advertising spending; (ii) increased marketing spending on BetterHelp depressed Teladoc’s revenues, resulting in little return on those investments; (iii) Teladoc continued to increase its advertising spending on the BetterHelp business despite acknowledging that increased advertising spending would be marginally inefficient due to market saturation; and (iv) BetterHelp membership stagnated and then declined in 2023 due to market saturation largely attributable to BetterHelp’s own marketing, despite public statements that there was “plenty of room” for BetterHelp membership growth.
The Teladoc class action lawsuit further alleges that on February 20, 2024, Teladoc released its fourth quarter 2023 earnings report on Form 10-K, which showed significantly increased advertising expenses “due primarily to higher digital and media advertising expenses related to BetterHelp.” Teladoc also disclosed that BetterHelp’s revenue decreased by $1 million year-over-year and by approximately $10 million from the third to the fourth quarter of 2023; that despite these increased advertising expenses, BetterHelp lost members for two consecutive quarters; and that Teladoc’s revenue was flat year-over-year and decreased 3% sequentially – well below expectations, according to the lawsuit. As a result of this news, Teladoc’s stock price fell more than 23%, according to the Teladoc class action lawsuit.
For more information about the Teladoc class action lawsuit, visit: https://bespc.com/cases/TDOC
Direct Digital Holdings, Inc. (NASDAQ:DRCT)
Course period: April 17, 2023 – March 25, 2024 (common shares only)
Deadline for lead plaintiff: July 22, 2024
The complaint alleges that throughout the Class Period, Defendants made false and misleading statements and failed to disclose material facts, including: (1) the Company’s transition to a “cookieless” advertising environment was accelerating and would impact revenue in 2024; (2) the Company’s alternatives to third-party cookies, including planned investments in AI and machine learning to build on first-party data sources, would not be viable alternatives to third-party cookies and similar tracking technologies; (3) the Company did not have adequate solutions to respond to Google’s impending elimination of third-party cookies; and (4) based on the foregoing, Defendants lacked a reasonable basis for their positive statements about the effectiveness of Direct Digital’s platform and related financial results, growth and prospects.
For more information about the Direct Digital class action lawsuit, please visit: https://bespc.com/cases/DRCT
About Bragar Eagel & Squire, PC:
Bragar Eagel & Squire, PC is a nationally recognized law firm with offices in New York, California and South Carolina. The firm represents individual and institutional investors in commercial, securities, derivatives and other complex litigation in state and federal courts across the country. For more information about the firm, visit www.bespc.com. Attorney advertising. Past results do not guarantee similar results.
Contact information:
Bragar Eagle & Squire, PC
Brandon Walker, Esq.
Marion Passmore, Esq.
(212) 355-4648
[email protected]
www.bespc.com
