Align Technology has been hit with a securities class action lawsuit alleging the San Jose-based company behind the Invisalign System issued materially false and misleading statements. The lawsuit, filed in the Northern District of California, claims Align’s shares traded at artificially elevated levels between April 23, 2012 and October 17, 2012, because the company was not upfront to shareholders about its financial condition.
On October 17, Align announced that it “has reached a mutual agreement with Straumann to terminate their distribution agreements for iTero intra-oral scanners in Europe and North America, effective December 31, 2012.” As a result of the split, Align said it would review its goodwill and possibly take a substantial impairment charge related to its 2011 acquisition of Cadent Holdings, Inc., the manufacturer of iTero.
The lawsuit alleges that in an effort to prevent a stock decline, Align had delayed the write down in goodwill associated with the Cadent acquisition and that productive negotiations with Straumann had failed well before it was disclosed by the company.
Align also announced, in a separate press release, expected third quarter fiscal 2012 financial results that fell short of analysts’ estimates. Third-quarter preliminary adjusted net income amounted to 28 cents per share and revenue grew 8% to $136.5 million. Average analyst estimates compiled by FactSet predicted net income of 29 cents per share and a projected $140.2 million in revenue.
Additionally, Align announced a revenue and earnings outlook for the fourth quarter of 2012, which fell well below expectations. In reaction to the news, shares of Align declined 20.42%, from a close of $35.41 per share on October 17, to a close of $28.18 per share on October 18.
According to the lawsuit, shares of Align reached a high of $39.17 per share on September 13, permitting insiders to sell more than 1.5 million of their artificially inflated shares for proceeds of more than $52 million.
If you purchased shares of Align Technology between April 23, 2012 and October 17, 2012, you may file a motion with the court no later than January 28, 2013, and request that the court appoint you as lead plaintiff. A lead plaintiff is a representative party acting on behalf of other class members in directing the litigation. To be appointed lead plaintiff, the court must decide that your claim is typical of the claims of other class members and that you will adequately represent the class. Your share in any recovery will not be enhanced or diminished by your decision of whether or not to serve as a lead plaintiff. You can recover as an absent class member without moving for lead plaintiff.
