Dentsply Sirona, Inc. (XRAY)

NEW YORK, January 3, 2019 - The Complaint alleges that during the Class Period, Defendants falsely represented the drivers of the Company's financial performance. Specifically, Defendants attributed the Company's financial performance to the Company's "innovation," "operational improvement efforts," "new products," and "continued investments in sales and marketing" and told investors that these factors helped the Company succeed despite the "highly competitive" market for its products. In reality, the Company's financial results had been buoyed by an anticompetitive scheme among the Company's three primary distributors that suppressed competition in the dental supply market and artificially inflated the price of dental supplies sold by Dentsply. Further, Defendants concealed that an exclusive distribution arrangement that Sirona had with one of its distributors, Patterson Companies, Inc. ("Patterson"), required Patterson to regularly make large minimum purchases regardless of demand and, as a result, by 2015, Patterson had been supplied with so much excess inventory that it could not be sold. This channel-stuffing rendered the Company's reported sales, financial results and guidance materially false and misleading. In addition, the Company represented that it reported its financial statements, including its goodwill, in accordance with generally accepted accounting principles, or GAAP. In reality, the Company's reported goodwill was artificially inflated and not reported in accordance with GAAP because it did not reflect the financial impact of the anticompetitive scheme. The truth about Dentsply's financial condition and business was revealed in a series of corrective disclosures. Specifically, in a series of disclosures culminating on August 7, 2018, the Company disclosed that it was subject of an investigation by the Securities and Exchange Commission, announced the surprise departure of the Company's top three executives, repeatedly downwardly revised its guidance, and reported several quarters of disappointing financial results and significant goodwill impairment charges that were attributed to, among other things, an "increase in competition" and destocking from the Company's dealer partners, including Patterson. In all, when the truth concerning the fraud and its impact on the Company's financial condition was revealed to investors, Dentsply stock declined by over 45% from its Class Period high.