Elanco Animal Health Incorporated

Period: 01/10/2020 to 05/06/2020
Lead Plaintiff Deadline: 07/20/2020

SUMMARY OF CASE:

A securities class action has been filed against Elanco Animal Health Incorporated (ELAN) on behalf of persons and entities that purchased or otherwise acquired Elanco Animal Health securities between January 10, 2020 through May 6, 2020.  This case has been filed in the USDC – S.D.IN.

On May 7, 2020, before the market opened, Elanco announced its first quarter 2020 financial results, reporting revenue of $657.7 million and earnings per share of -$0.12, reflecting “a reduction of approximately $60 million in channel inventory.” The Company’s Chief Executive Officer attributed the disappointing results to “distributor performance,” among other things, and stated that Elanco planned “to tighten [its] approach across many facets of [its] distributor relationships.”

On this news, the Company’s share price fell $3.05, or over 13%, to close at $19.88 per share on May 7, 2020, on unusually heavy trading volume.

The complaint filed in this class action alleges that throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants failed to disclose to investors: (1) that, after consolidating its distributors from eight to four, the Company increased the amount of inventory, including companion animal products, held by each distributor; (2) that Elanco’s distributors were not experiencing sufficient demand to sell through the inventory; (3) that, as a result, the Company’s revenue was reasonably likely to decline; (4) that, as a result of the foregoing, Elanco would reduce its channel inventory with respect to companion animal products; and (5) that, as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects, were materially misleading and/or lacked a reasonable basis.