Bragar Eagel & Squire, P.C. Reminds Investors That Class Action Lawsuits Have Been Filed Against X Financial, Baozun, Adamas Pharmaceuticals, and Cintas and Encourages Investors to Contact the Firm

Wednesday, 29. January 2020 15:00

NEW YORK, Jan. 29, 2020 (GLOBE NEWSWIRE) -- Bragar Eagel & Squire, P.C., a nationally recognized shareholder law firm, reminds investors that class action lawsuits have been commenced on behalf of stockholders of X Financial (NYSE: XYF), Baozun, Inc. (NASDAQ: BZUN), Adamas Pharmaceuticals, Inc. (NASDAQ: ADMS), and Cintas Corporation (NASDAQ: CTAS). Stockholders have until the deadlines below to petition the court to serve as lead plaintiff. Additional information about each case can be found at the link provided.

X Financial (NYSE: XYF)

Class Period: Securities purchased pursuant and/or traceable to the Company’s September 19, 2018 initial public stock offering (the “IPO” or the “Offering”).

Lead Plaintiff Deadline: February 7, 2020

On November 20, 2018, X Financial held its first earnings call after the IPO to discuss its financial results.  As executives explained on the call, the negative operational and financial results reported in the day’s press release had been caused by market and other problems that had long preceded the IPO.

During the November 20, 2018 earnings call, analysts questioned X Financial’s executives about the rapidly contracting preferred loans and rising delinquency rates.  In response, they conceded that low demand and “very high” delinquency rates for X Financial’s preferred loans had produced a cascading effect that decreased the Company’s overall financial results.  As these executives explained, plummeting demand and high default rates had, in turn, forced the Company to make the “big [strategy change] to . . . scale down the preferred loan business.”  Scaling down preferred loans, meanwhile, had prompted “a change in product mix resulting from a significant increase in the proportion of revenue generated by Xiaoying Card Loan.”  The pivot to depending on card loans had, in turn, caused a reduction in X Financial’s “average loan ticket size by 20% to even 25%” and also caused further increases in the Company’s overall delinquency rate, as card loans by nature represented significantly higher risks.

In subsequent financial reports, X Financial has confirmed that the problems described above started before the IPO. 

On April 25, 2019, X Financial filed its annual report for 2018 on Form 20-F.  The report contained a chart entitled “Delinquency Rate by Vintage of Xiaoying Preferred Loan,” which illustrated the dramatic increase in delinquency rates leading up to and during the IPO—including in first, second, and third quarters of 2018—and that such negative trends were accelerating.

Then, on May 21, 2019, during X Financial’s earnings call to discuss the Company’s first quarter 2019 results, defendant Tang admitted that X Financial was unlikely to achieve significant loan or revenue growth because its preferred loan business had failed “over the last year” and that the Company was shelving the entire business.

On November 22, 2019, X Financial’s ADSs closed at $1.74 per ADS.  This price represented an 81.68% decline from the $9.50 per share price at which X Financial’s ADSs had been sold to the investing public in the IPO.

The Complaint, filed on December 9, 2019, alleges that the company’s Registration Statement was negligently prepared and, as a result, contained untrue statements of material fact or omitted to state other facts necessary to make the statements made not misleading and was not prepared in accordance with the rules and regulations governing its preparation.  Specifically, the Registration Statement made false and/or misleading statements and/or failed to disclose that: (i) the Company’s total loan facilitation amount was not growing, but rather was contracting; (ii) the number of investors actively using X Financial’s platform was shrinking; (iii) demand from SMEs for the Company’s preferred loans was plummeting; (iv) the Company’s preferred loans had performed so poorly that it had begun drastically scaling back its preferred loans in the first quarter of 2018, several months before the IPO, and was in the process of phasing out such loans completely; (v) demand for the Company’s card loans was also plummeting; (vi) the revenue and loan facilitation growth provided in the Registration Statement leading up to the IPO was achieved by relaxed credit and due diligence standards, under which the Company had underwritten tens of millions of dollars’ worth of poor quality loans that suffered from a disproportionately high risk of default as compared to the Company’s earlier loan vintages; (vii) the Company was suffering from accelerated delinquency rates from poor quality loans that it had underwritten in the first, second, and third quarters of 2018, which had caused the Company’s delinquency rate to sharply rise; (viii) the Company’s product mix had significantly deteriorated; (ix) the Company’s net revenue was on track to decline by 22% during the third quarter of 2018; and (x) as a result, the Registration Statement was materially false and/or misleading and failed to state information required to be stated therein.

For more information on the X Financial class action go to: https://bespc.com/xyf

Baozun, Inc. (NASDAQ: BZUN)

Class Period: March 6, 2019 to November 20, 2019

Lead Plaintiff Deadline: February 10, 2020

On November 21, 2019, Baozun announced its 3Q19 financial results for the interim period ended September 30, 2019 and provided its 4Q19 financial guidance. Rather than the revenues of $214 million Baozun had led the investment community to expect, the Company reported revenues of just $210.3 million. Likewise, earnings per ADR of $0.14 were below the $0.15 per ADR the investment community had been led to expect. More critically, Baozun disclosed the electronics customer loss would negatively impact results for the rest of 2019 and for the first half of 2020, stating that for the 4Q19 it now only expected revenues in the range of $384 million to $391.2 million, well below the $401 million the Company had led the investment community to expect based on its prior Class Period statements.

On this news, the market price of Baozun ADRs plummeted, declining by $7.60 per share, or approximately 17.5%, to close at $35.90 per share on November 21, 2019.

The complaint, filed on December 10, 2019, alleges that during the Class Period defendants made false and misleading statements and engaged in a scheme to deceive the market and a course of conduct that artificially inflated the price of Baozun ADRs and operated as a fraud or deceit on Class Period purchasers of Baozun ADRs by misrepresenting the value of the Company’s business and prospects. As Defendants’ misrepresentations and fraudulent conduct became apparent to the market, the price of Baozun ADRs fell precipitously, as the prior artificial inflation came out of the price. As a result of their purchases of Baozun ADRs during the Class Period, Plaintiff and other members of the Class suffered economic losses.

For more information on the Baozun class action go to: https://bespc.com/bzun

Adamas Pharmaceuticals, Inc. (NASDAQ: ADMS)

Class Period: August 8, 2017 to September 30, 2019

Lead Plaintiff Deadline: February 10, 2020

Adamas’s primary product is GOCOVRI, an extended-release formulation of amantadine, which has been approved by the U.S. Food and Drug Administration for the treatment of levodopa-induced dyskinesia.

On March 4, 2019, during Adamas’s Q4 2018 conference call with investors, Adamas walked back its previous prescription growth estimates for GOCOVRI, warned of a continued slow-down in GOCOVRI prescriptions, and refused to make further predictions about GOCOVRI’s ability to achieve a sizeable market share.

On this news, Adamas’s stock fell $3.99 per share, or 32.84%, to close at $8.16 per share on March 5, 2019.

On September 30, 2019, Bank of America/Merrill Lynch analyst Tazeen Ahmad lowered its rating for Adamas shares to “Underperform” noting “existing overhangs for ADMS: (1) GOCOVRI coverage: a number of national formularies exclude GOCOVRI. We expect reimbursement hurdles in MSWI space especially with generic Ampyra launch.”

On this news, Adamas shares fell a further 42.83% from $7.05 per share on September 26 to $4.03 by October 3, 2019.

The complaint, filed on December 10, 2019, alleges that throughout the Class Period defendants made materially false and misleading statements, and failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, defendants made materially false and misleading statements about: (1) managed care’s acceptance of GOCOVRI; (2) the breadth of insurer coverage for GOCOVRI prescriptions; and (3) the impact of the Company’s commercialization efforts. In addition, defendants failed to disclose: (1) that health insurers were excluding GOCOVRI from their prescription formularies or requiring patients to use “step therapy” - i.e., making patients try immediate-release amantadine prior to covering GOCOVRI; (2) that the rapid increase in physicians prescribing GOCOVRI during the Class Period was not due to its efficacy; and (3) that, as a result of the foregoing, the Company’s financial statements and defendants’ statements about Adamas’s business, operations, and prospects, were materially false and misleading at all relevant times.

For more information on the Adamas class action go to: https://bespc.com/adms-2

Cintas Corporation (NASDAQ: CTAS)

Class Period: Match 6, 2017 to November 13, 2019

Lead Plaintiff Deadline: February 10, 2020

On November 13, 2019, Spruce Point Capital Management (“Spruce Point”) issued a report alleging, based on information from FOIA requests, that “Cintas’ Fire Protection Services was charged with fraud and is causing a public safety hazard by having workers conduct fire and safety inspections without proper licenses or permits, and falsifying inspections.” Spruce Point also alleged that management may have misreported revenue and expenses for G&K Services, Inc., which the Company had acquired in 2017 for $2.1 billion.

On this news, shares of Cintas fell $3.61 per share, to close at $255.24 per share on November 13, 2019.

The complaint, filed on December 12, 2019, alleges that throughout the Class Period defendants made false and/or misleading statements and/or failed to disclose that: (1) Cintas never tracked legacy margins following the G&K acquisition; (2) the Company has systematically provided guidance with which it would outperform (a “Beat and Raise” scheme); (3) undisclosed to the investing public, the Company has breached the law multiple times; (4) as a result of publicly known and undisclosed breaches of law, the Company’s Credit Agreement may be jeopardized; and (5) as a result, defendants’ statements about its business, operations, and prospects, were materially false and misleading and/or lacked a reasonable basis at all relevant times. The lawsuit claims that when the truth was disclosed in the Spruce Point investment research report, investors suffered damages.

For more information on the Cintas class action go to: https://bespc.com/ctas-2

About Bragar Eagel & Squire, P.C.:
Bragar Eagel & Squire, P.C. is a nationally recognized law firm with offices in New York and California. The firm represents individual and institutional investors in commercial, securities, derivative, and other complex litigation in state and federal courts across the country. For more information about the firm, please visit www.bespc.com.  Attorney advertising.  Prior results do not guarantee similar outcomes. 

Contact Information:
Bragar Eagel & Squire, P.C.
Brandon Walker, Esq.
Melissa Fortunato, Esq.
(212) 355-4648
investigations@bespc.com
www.bespc.com

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