The Complaint brought forth claims for violations of the Securities Exchange Act of 1934 against BioScrip, Inc. (“BioScrip” or the “Company”), and certain of its senior executives. The Complaint alleged that Defendants made false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects on behalf of all persons or entities that purchased or otherwise acquired BioScrip common stock during the Class Period.
BioScrip is a home-healthcare and pharmaceuticals company. The drug, Exjade, was one of BioScrip’s main sources of revenue, and Bioscrip’s pharmacy benefit management (“PBM”) business segment accounted for nearly 20% of its revenue.
Specifically, the Complaint alleged that BioScrip perpetrated two deceptive schemes. Pursuant to the first–the “Exjade Scheme”–Defendants allegedly made materially false and misleading statements and failed to disclose material facts about the government’s investigation into, and BioScrip’s alleged participation in, a kickback scheme relating to Exjade. The Company’s participation in the scheme may have violated state and federal laws and jeopardized its ability to participate in Medicare, Medicaid and other government-funded programs. These programs accounted for one-quarter to one-third of BioScrip’s annual revenue. In the second scheme–the “PBM Scheme”–the Company allegedly concealed the fact that its PBM business segment was collapsing throughout 2013. The Complaint alleged that both the government investigation and the dying business segment put the Company at risk, but the Company refused to disclose the existence of either issue to investors until it was absolutely necessary. When the truth was finally revealed, the price of BioScrip’s common stock declined precipitously, damaging investors who had purchased the stock at artificially inflated prices.
On February 19, 2014, Plaintiffs filed their Consolidated Class Action Complaint. After the Defendants’ Motions to Dismiss was fully briefed, on March 31, 2015, the Court issued an order that largely denied the Defendants’ motions.
In September 2015, the Parties participated in a mediation, and continued negotiation efforts until October 2015, when they reached an agreement in principle to settle the Action. On December 18, 2015, the parties agreed to a $10,900,000 settlement for the benefit of Class. The Court preliminarily approved the settlement on February 11, 2016, and on June 16, 2016 entered final judgment finding the settlement to be fair, adequate and reasonable.