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According to the complaint, Xerox is a global provider of document processing services and printing machines. Included in the Services segment is the Xerox “Health Enterprise” service, which is a software management solution, designed to assist state agencies’ administration of their respective Medicaid programs.
The complaint alleges that during the Class Period, Xerox repeatedly touted the Health Enterprise business as an important growth area for the company, which would operate at low cost and high profit margin. However, the defendants’ statements pertaining to the profitability and growth prospects of the Health Enterprise business were materially false and misleading because the defendants failed to disclose that: (1) the company’s existing Health Enterprise projects were experiencing major delays and cost overruns; (2) the company would be unable to deliver Health Enterprise implementations at sustainable profits; and (3) as a result, the company’s statements about its business, operations, and prospects lacked a reasonable basis.
According to the complaint, the truth about the failing Health Enterprise business began to emerge on October 22, 2014, when Xerox issued a press release announcing financial results for the third quarter ended September 30, 2014, which included disappointing margins in the Services segment. Following this news, Xerox common stock fell $0.94 per share, or 7.5%, to close on October 22, 2014 at $11.57 per share.
Then, on April 24, 2015, Xerox issued a press release announcing financial results for the first quarter ended March 31, 2015, which included disappointing Services segment margins primarily due to “higher costs” associated with the prolonged implementation of existing Health Enterprise projects. Following this news, Xerox common stock fell $1.10 per share, or 8.75%, to close at $11.48 per share on April 24, 2015.
On October 13, 2015, Xerox issued a press release announcing that the company would be recording a $385 million pre-tax charge with its third quarter 2015 results, relating to assets and unrecoverable costs associated with its Health Enterprise implementation projects. Xerox further revealed that it would not complete its Health Enterprise projects in California and Montana. Following this news, Xerox common stock dropped $0.32 per share, or 3.17% over the following two trading sessions, to close at $9.83 per share on October 14, 2015.
Finally, on October 26, 2015, before the trading session, Xerox released third quarter 2015 financial results that missed analysts’ estimates due in part to lost revenues from the termination of the California and Montana projects. In addition, Xerox announced that its Board had authorized a strategic review of the company’s entire business portfolio. Following this news, the company’s common stock fell $0.30 per share, or 3%, to close on October 26, 2015 at $9.73 per share.
If you are a member of the class described above, you may no later than December 23, 2016 move the Court to serve as lead plaintiff of the class, if you so choose.
A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member’s claim is typical of the claims of other class members, and that the class member will adequately represent the class. Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. Any member of the purported class may move the court to serve as a lead plaintiff through counsel of their choice, or may choose to do nothing and remain an inactive class member.
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