McKesson HBOC, Inc. Sued Over Allegedly False Financial Statements

Strategic Insights -

A shareholder sued McKesson HBOC, Inc. for allegedly issuing materially false and misleading financial statements after the company's acquisition of HBO & Company in January 1999. The lawsuit, which seeks class action status, claims that HBO & Company and McKesson HBOC made false statements between April 14, 1998, and April 27, 1999, resulting in financial losses for investors who purchased the companies' stocks and options during this period.

Key Takeaways:

  • The lawsuit alleges that HBO & Company and McKesson HBOC issued false financial statements between April 14, 1998, and April 27, 1999, resulting in losses for investors.
  • The complaint claims that the companies overstated revenues by $26.2 million in the quarter ending March 31, 1999, and software sales by at least $16 million in prior quarters.
  • McKesson HBOC's common stock price plummeted from $65 3/4 on April 27, 1999, to a low of $32 per share on April 28, 1999.
  • The law firm Berman, DeValerio & Pease LLP is representing the plaintiff and seeking class action status for the lawsuit.
  • The lawsuit alleges that the companies' financial statements were in violation of Generally Accepted Accounting Principles.
  • Investors who purchased HBO & Company common stock and McKesson HBOC common stock during the specified periods may be eligible to join the class action lawsuit.

Statistics:

  • $26.2 million: the amount by which revenues for the quarter ending March 31, 1999, were allegedly overstated.
  • $16 million: the minimum amount by which software sales were allegedly overstated in prior quarters.
  • 65 3/4: the closing price of McKesson HBOC's common stock on April 27, 1999.
  • $32: the lowest price of McKesson HBOC's common stock on April 28, 1999.

Sources:

  • Berman, DeValerio & Pease LLP. (April 28, 1999). Press Release: Notice to McKesson HBOC, Inc. Shareholders From January 12, 1999 to April 27, 1999 and HBO & Company Shareholders From April 14, 1998 to January 12, 1999.
  • PR Newswire. (April 28, 1999). Berman, DeValerio & Pease LLP a Law Firm Specializing In Representing Shareholders in Class Action Lawsuits, Issues the Following Press Release.