NEW YORK, Jan. 18, 2020 /PRNewswire/ -- Pomerantz LLP announce that a class action lawsuit has been filed against HEXO Corporation ("HEXO" or the "Company") (NYSE: HEXO) and certain of its officers. The class action, filed in United States District Court, for the Southern District of New York, and docketed under 20-cv-00196, is on behalf of a class consisting of investors who purchased or otherwise acquired HEXO securities between January 25, 2019 and November 15, 2019, inclusive (the "Class Period"), seeking to recover damages caused by Defendants' violations of the federal securities laws and to pursue remedies under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the "Exchange Act") and Rule 10b-5 promulgated thereunder, against the Company and certain of its top officials.
If you are a shareholder who purchased HEXO securities during the class period, you have until January 27, 2020 to ask the Court to appoint you as Lead Plaintiff for the class. A copy of the Complaint can be obtained at www.pomerantzlaw.com. To discuss this action, contact Robert S. Willoughby at [email protected] or 888.476.6529 (or 888.4-POMLAW), toll-free, Ext. 9980. Those who inquire by e-mail are encouraged to include their mailing address, telephone number, and number of shares purchased.
HEXO is purportedly a licensed producer and distributor of branded cannabis products. The Company caters to both the medical and recreational (adult-use) cannabis markets with its Hydropothecary (medical) and HEXO (adult-use) brands.
The Complaint alleges that throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company's business, operations, and prospects. Specifically, Defendants failed to disclose to investors that: (i) HEXO's reported inventory was misstated as the Company was failing to write down or write off obsolete product that no longer had value; (ii) HEXO was engaging in channel-stuffing to inflate its revenue figures and meet or exceed revenue guidance provided to investors; (iii) HEXO was cultivating cannabis at its facility in Niagara, Ontario that was not appropriately licensed by Health Canada; and (iv) as a result of the foregoing, Defendants' positive statements about the Company's business, operations, and prospects were materially misleading and/or lacked a reasonable basis.
Investors learned the truth through a series of disclosures beginning on October 4, 2019, when HEXO announced the abrupt and immediate resignation of its then Chief Financial Officer, Defendant Michael Monahan, after just a few months into the job. Days later, on October 10, 2019, HEXO provided preliminary fourth quarter ("Q4") 2019 revenue results that were nearly 50% lower than previous guidance and withdrew previously announced fiscal year 2020 guidance of up to CAD$400 million in revenue.
Then, on October 29, 2019, the Company announced wider than expected losses in Q4 2019, including recording an impairment loss on inventory of nearly CAD$17 million. Finally, on November 15, 2019, the Company admitted to growing cannabis in an unlicensed area of its Niagara facility, which the Company knew about since as late as July 2019, but failed to disclose to investors.
HEXO has lost hundreds of millions of dollars in market capitalization as a result of these disclosures.
The Pomerantz Firm, with offices in New York, Chicago, Los Angeles, and Paris is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, the Pomerantz Firm pioneered the field of securities class actions. Today, more than 80 years later, the Pomerantz Firm continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members. See www.pomerantzlaw.com.
Robert S. Willoughby
SOURCE Pomerantz LLP