United States Court of Appeals

For the First Circuit

No. 21-1479

CITY OF MIAMI FIRE FIGHTERS' AND POLICE OFFICERS' RETIREMENT 

TRUST, individually and on behalf of all other persons similarly 

situated; INTERNATIONAL UNION OF OPERATING ENGINEERS PENSION 

FUND OF EASTERN PENNSYLVANIA AND DELAWARE, individually and on 

behalf of all other persons similarly situated,

Plaintiffs, Appellants,

v.

CVS HEALTH CORPORATION; LARRY J. MERLO; DAVID M. DENTON; 

JONATHAN C. ROBERTS; ROBERT O. KRAFT; EVA C. BORATTO,

Defendants, Appellees.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF RHODE ISLAND

[Hon. Mary S. McElroy, U.S. District Judge]

Before

Lynch, Kayatta, and Gelpí,

Circuit Judges.

Jeremy A. Lieberman, with whom Brian Calandra, Patrick V. 

Dahlstrom, Pomerantz LLP, James E. Miller, Eric L. Young, Jayne A. 

Goldstein, Miller Shah LLP, Robert D. Klausner, Stuart Kaufman, 

Klausner, Kaufman, Jensen & Levinson, Stephen Cypen, and Cypen & 

Cypen were on brief, for appellants.

Steven M. Farina, with whom George A. Borden, Amanda M. 

MacDonald, Michael J. Mestitz, Elizabeth A. Wilson, Williams & 

Connolly LLP, Robert C. Corrente, and Whelan Corrente & Flanders 

LLP were on brief, for appellees.
August 18, 2022
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KAYATTA, Circuit Judge. Two retirement funds brought 

this putative securities fraud class action against CVS Health 

Corporation arising out of difficulties CVS Health experienced in 

the wake of its acquisition of Omnicare, Inc., a company that 

provides pharmacy services to long-term care facilities. 

Plaintiffs allege that executives of CVS Health and its newly 

acquired subsidiary employed false statements and misleading 

nondisclosures to conceal from investors for more than three years 

the disintegration of Omnicare's customer base that eventually led 

to a series of write-offs totaling more than $8 billion. The 

district court dismissed plaintiffs' complaint because it failed 

to allege any actionable false statements or misleading omissions. 

On careful de novo review, we find that the district court's 

assessment was on the mark. We therefore affirm the dismissal and 

the subsequent denial of plaintiffs' attempt to revisit the 

judgment. Our reasoning follows.

I.

As this case comes to us on a motion to dismiss, we draw 

the facts from the operative Amended Class Action Complaint ("the 

complaint") and certain of CVS Health's public filings with the 

Securities Exchange Commission (SEC). See Fire & Police Pension 

Ass'n of Colo. v. Abiomed, Inc., 778 F.3d 228, 232 n.2 (1st Cir. 

2015) (considering public SEC filings among other undisputed 

records at the motion-to-dismiss stage); Watterson v. Page, 987 
- 4 -

F.2d 1, 3 (1st Cir. 1993) (noting "narrow exceptions" to the 

traditional rule barring consideration of materials outside the 

complaint, including for documents whose authenticity is not 

disputed).

A.

Headquartered in Woonsocket, Rhode Island, CVS Health is 

a publicly traded company that provides integrated pharmacy 

healthcare services and operates thousands of retail stores and 

clinics across the United States. In 2015, CVS Health acquired

Omnicare, then the leading provider of pharmaceutical services to 

long-term care (LTC) facilities.1 Plaintiffs allege that the newly 

acquired LTC business subsequently "hemorrhaged" customers due to 

CVS Health's mismanagement, including its decision to centralize 

and standardize a number of operations that Omnicare had previously 

tailored to each customer. According to the complaint, CVS Health 

misleadingly concealed these customer losses and their causes so 

as not to threaten CVS Health's ability to acquire financing for 

another large acquisition planned for 2018. The purported class 

period spans from allegedly misleading statements made in February 

1 CVS Health's subsidiary, CVS Pharmacy, Inc., entered the

agreement to acquire Omnicare in May 2015, with the acquisition 

closing that August. For ease of discussion, we refer to this 

acquisition throughout our opinion as the action of the parent 

reporting entity, CVS Health.
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2016 through the ultimate disclosure of the full extent of 

Omnicare's lost value in February 2019. 

B.

In gauging whether plaintiffs have pleaded facts 

sufficient to proceed with their claim that CVS Health misled 

investors about the difficulties encountered with the acquired 

Omnicare LTC business, we begin the fact that between 2016 and 

2019 CVS Health repeatedly and publicly wrote off chunks of the 

$8.6 billion in goodwill2 originally assigned to the Omnicare 

acquisition. The first negative disclosure concerning the LTC 

business came on November 8, 2016, when, in the third-quarter Form 

10-Q filing,3 CVS Health reported a reduced goodwill balance of 

2 "Goodwill" is an accounting term that refers to the value 

of anticipated future financial results of an asset, as initially 

measured by the difference between the price paid for the asset 

and its fair value. Under Generally Accepted Accounting 

Principles, the acquiring company must test its goodwill 

allocation at least annually, as well as in response to events or 

circumstances that would likely impair the asset's goodwill. See

City of Dearborn Heights Act 345 Police & Fire Ret. Sys. v. Align 

Tech., Inc., 856 F.3d 605, 611 (9th Cir. 2017) (citing Financial 

Accounting Standards Board Accounting Standards Codification

(ASC), Topic 350: Intangibles—Goodwill and Other, ASC 350-20-35-

28)). "Impairment is the condition that exists when the carrying 

amount of goodwill exceeds its implied fair value." Id. (quoting 

ASC 350-20-25-30).

3 The SEC requires public companies to file a comprehensive 

report about their financial performance, called a Form 10-Q, at 

the end of the first three quarters of each fiscal year. 17 C.F.R. 

§ 249.308a. Full-year financials are reported annually in the 

Form 10-K, shortly after the fourth quarter concludes. See id.

§ 249.310.
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only $6.3 billion for the acquired LTC business. The filing stated

that while some reporting units "exceed[ed] their carrying values 

by significant margins," the LTC business exceeded its carrying 

value by just 7%. During a presentation to investors and analysts 

the following month, CVS Health's then-Chief Financial Officer 

(CFO) David Denton warned that "[a]s for the retail Long-Term Care 

segment, it will be a challenging year. Revenue growth is expected 

to be flat to down 1.5%." 

This downward reporting trend continued. The following 

year, on November 6, 2017, CVS Health disclosed that the fair value 

of the LTC business now exceeded its carrying value by only 

"approximately 1%." In the same 10-Q filing, CVS Health also 

explained that its cash-flow projections for the LTC unit had 

declined because of "customer reimbursement pressures, industry 

trends such as lower occupancy rates in skilled nursing facilities, 

and client retention rates." Finally, it cautioned that:

If we do not achieve our forecasts, given the 

small excess of fair value over the related 

carrying value, as well as current market 

conditions in the healthcare industry, it is 

reasonably possible that . . . the LTC 

reporting unit could be deemed to be impaired 

by a material amount. 

Six months later, on May 2, 2018, CVS Health issued 

similar warnings about the challenges facing the LTC business --

including client retention -- and the possibility of an impairment. 

Then, in the second-quarter 10-Q issued on August 8, 2018, the 
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company reported that it had conducted an interim goodwill test 

resulting in the impairment of the LTC unit's goodwill to the tune 

of $3.9 billion. Even with this write-down, CVS Health warned 

that, due to client retention rates and other specified challenges, 

"it is reasonably possible in the near term that the goodwill of 

the LTC reporting unit could be deemed to be impaired again by a 

material amount." 

As predicted, the bad news continued. In February 2019, 

CVS Health recognized a further impairment of $2.2 billion 

assessed in the fourth quarter of 2018. In so doing, the company 

identified "client retention rates" as one of several factors that 

contributed to the declining value of the business. In this 

manner, the goodwill value of the LTC business shrank from the 

initial value of $8.6 billion in May 2015 to just $431 million at 

the end of 2018. 

C.

Plaintiffs claim that this escalating disclosure of 

difficulties with the LTC business and write-downs of goodwill 

came too late. They also point to numerous statements by senior 

management that plaintiffs say misled investors by either 

affirmatively misrepresenting or omitting material facts. We 

group these alleged statements into five buckets for ease of 

discussion. 
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The first group concerns representations about the 

condition and financial performance of the LTC business. For 

example, the fiscal year 2015 Form 10-K filed in February 2016 

stated that CVS Health's "segments benefited from the Omnicare 

acquisition" and that an increase in net revenues for the 

Retail/LTC Segment -- a business reporting unit containing both 

the LTC business and CVS Health's much larger preexisting retail 

business -- "was primarily driven by the acquisition of Omnicare." 

The quarterly and annual filings for 2016 then echoed these 

sentiments in substantially similar language. The complaint 

asserts generally that this category of statements was "materially 

false and misleading," though it does not allege any revenue 

information contrary to the statements. The most specific 

descriptions of these statements instead allege that these 

statements were misleading because they gave a positive impression 

of the business without disclosing that Omnicare LTC customers 

were fleeing. 

Second, in December 2016, Denton allegedly claimed at an 

annual investor conference that CVS Health had "a leadership 

position in long-term care with Omnicare." Chief Executive Officer 

(CEO) Larry Merlo then reiterated during a second-quarter 2017 

analyst call that "Omnicare remains the leader in the market." 

The complaint generally alleges that these statements were "false 
- 9 -

and misleading" because they omitted information about customer 

exodus. 

Third, plaintiffs take issue with statements that they 

contend overstated CVS Health's understanding of its LTC

customers. The company in multiple 2017 filings said that pharmacy 

revenue in the umbrella reporting unit containing both its LTC and 

larger retail businesses "continued to benefit from [CVS Health's]

ability to attract and retain managed care customers." It also 

reiterated in nearly all quarterly and annual filings throughout 

the class period a general "Overview of Our Business" section that 

touted CVS Health's "deep understanding of [consumers', payors', 

and providers'] diverse needs through [CVS Health's] unique 

integrated model." More specifically to the LTC business, Merlo 

on investor calls in August 2016 and August 2017 stated that the 

company was "[w]orking with our LTC clients to address currently 

unmet needs of their residents," and that it had "invested the 

time and capital . . . to get the right technology and processes 

in place in order to differentiate our offering to make it more 

compelling for our clients as well as the residents at these 

facilities." The complaint alleges that these statements were 

false and misleading because defendants did not in fact understand 

their LTC customers' needs and many of these customers were fleeing 

CVS Health due to poor customer service. 
- 10 -

Fourth, plaintiffs call out a series of statements about 

CVS Health's realization of "synergies" between its existing 

retail pharmacy business and its new LTC business. For example, 

at the outset of the class period in February 2016, Merlo reported 

on an earnings call with analysts and investors that "Omnicare 

performed well and in line with our expectations as we began to 

realize some of the anticipated synergies." Merlo then reiterated 

in a May 2016 earnings call that the LTC business "benefited from 

some of the anticipated costs and sourcing synergies." The 

complaint alleges that these statements touting "synergies" were 

false and misleading because it was in fact the "synergies" 

implemented by CVS Health that caused LTC customers to leave. 

Fifth, the complaint alleges that the company's 

"boilerplate" statements of risks facing the LTC business, as 

repeated in SEC filings throughout the class period, misleadingly 

purported to alert investors to only future risks that were, in 

fact, "already occurring." These statements cautioned, for 

example, that "[t]here can be no assurance that we will be able to 

win new business or secure renewal business on terms as favorable 

to us as the present terms" and observed that "[p]otential 

difficulties that may be encountered in the [acquisition] 
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integration process include . . . [r]etaining existing customers 

and attracting new customers."4 

D.

To support their theory that the goodwill write-downs 

were too late and the foregoing statements from the company duped 

the investing public, plaintiffs rely on evidence proffered by 

their nineteen confidential witnesses (CWs), comprised of former 

CVS Health or Omnicare employees. The CWs offer a broad array of 

anecdotes concerning legacy Omnicare customers that CVS failed to 

retain in the years following the acquisition. An example conveys 

the nature of these allegations: 

[Confidential Witness 4 (CW4)] both saw 

personally and learned from contacts in the 

LTC industry that Omnicare LTC divisions in 

Illinois and Missouri, and particularly the 

St. Louis region, lost at least 50% of their 

business from 2015 to 2019. CW4 said that the 

customers who left CVS Health were largely 

poached by former Omnicare and CVS Health 

employees. 

 

4 The complaint also identified as a separate category of 

misrepresentations certain executive defendants' certifications 

that each SEC filing was complete, accurate, and compliant with 

applicable law, which plaintiffs allege were false and misleading 

because the filings in fact contained false information and did 

not therefore comply with applicable law. But these certification 

statements are only alleged to be false or misleading to the extent 

the other alleged statements within those filings were, so we need 

not discuss the certifications as a distinct category of 

misrepresentations. 
- 12 -

II.

In February 2019, plaintiffs commenced this lawsuit 

against CVS Health, its CEO Merlo, and its former CFO Denton. 

Shortly thereafter, the parties agreed that those defendants need 

not respond to the original complaint. Rather, after the 

appointment of a lead plaintiff and lead counsel, counsel served 

an amended complaint on those and several additional CVS Health 

defendants in late July 2019.5 That Amended Class Action Complaint 

is now the operative complaint. 

The complaint includes claims for violations of 

section 10(b) of the Securities Exchange Act of 1934 ("the Exchange 

Act"), codified at 15 U.S.C. § 78j(b), and its implementing SEC 

Rule 10b-5, codified at 17 C.F.R. § 240.10b-5, as well as 

section 20(a) of the Exchange Act, codified at 15 U.S.C. § 78t(a). 

Defendants moved to dismiss the complaint for failure to state a 

claim, pursuant to Federal Rule of Civil Procedure 12(b)(6). In 

plaintiffs' opposition to the motion to dismiss, they wrote: "If 

the Court grants any portion of the Motion, Plaintiffs respectfully 

request an opportunity to move for leave to amend pursuant to 

[Federal] Rule [of Civil Procedure] 15(a)(2)." The district court 

5 The other individual defendants include Jonathan Roberts 

(Executive Vice President (EVP) and Chief Operating Officer of CVS 

Health, starting in March 2017), Robert Kraft (former EVP of CVS 

Health and President of Omnicare from August 2015 to October 2017), 

and Eva Boratto (EVP and CFO of CVS Health starting in November 

2018). 
- 13 -

heard argument on the motion on September 16, 2020 and ultimately 

granted the motion in full on February 11, 2021, dismissing the 

amended complaint with prejudice after finding that it failed to 

allege any materially false or misleading statements. City of 

Mia. Fire Fighters' & Police Officers' Ret. Tr. v. CVS Health 

Corp., 519 F. Supp. 3d 80, 87–90, 94, 97–98 & n.21 (D.R.I. 2021). 

The district court did not reach defendants' alternative argument 

that the complaint failed to adequately plead the element of 

scienter. Id. at 28 n.21.

Four weeks later, plaintiffs moved the court under 

Rule 59(e) to reconsider its ruling so as to permit plaintiffs to 

amend the complaint for a second time. With this motion, they 

included a Proposed Second Amended Class Action Complaint 

containing additional allegations. Unpersuaded, the district 

court denied the motion to reconsider and the request for further 

amendment. Plaintiffs then appealed that ruling along with the 

grant of the motion to dismiss.

III.

A.

Having described the course of proceedings and the gist 

of plaintiffs' allegations, we turn now to the merits of 

plaintiffs' appeal. We begin with plaintiffs' challenge to the 

district court's order granting defendants' motion to dismiss. We 

review this challenge de novo, "accept[ing] well-pleaded factual 
- 14 -

allegations in the complaint as true and . . . view[ing] all 

reasonable inferences in the plaintiff[s'] favor." Constr. Indus. 

& Laborers Joint Pension Tr. v. Carbonite, Inc., 22 F.4th 1, 6 

(1st Cir. 2021). 

1.

At the outset, we note that the viability of plaintiffs' 

section 20(a) claim for control-person liability is contingent on 

their section 10(b) claim, and no party argues here that one claim 

ought stand should the other fall. See Mehta v. Ocular 

Therapeutix, Inc., 955 F.3d 194, 211 (1st Cir. 2020) ("A claim 

brought under section 20(a) is . . . derivative of a claim 

alleging an underlying securities law violation."). We thus 

proceed to consider the viability of the section 10(b) claim as 

dispositive of the whole complaint.

Section 10(b) of the Exchange Act prohibits the use, "in 

connection with the purchase or sale of any security[,] . . . [of] 

any manipulative or deceptive device or contrivance in 

contravention of such rules and regulations as the [SEC] may

prescribe as necessary or appropriate in the public interest or 

for the protection of investors." 15 U.S.C. § 78j(b). SEC 

Rule 10b-5 is such a rule, implementing section 10(b)'s 

prohibition by making it unlawful to "make any untrue statement of 

a material fact or to omit to state a material fact necessary in 

order to make the statements made, in the light of the 
- 15 -

circumstances under which they were made, not misleading." 17 

C.F.R. § 240.10b–5(b).

Stating a claim under section 10(b) and Rule 10b-5 

requires the pleading of six elements: "(1) a material 

misrepresentation or omission; (2) scienter; (3) a connection with 

the purchase or sale of a security; (4) reliance; (5) economic 

loss; and (6) loss causation." Carbonite, 22 F.4th at 6 (quoting 

In re Biogen Inc. Sec. Litig., 857 F.3d 34, 41 (1st Cir. 2017)). 

Additionally, Federal Rule of Civil Procedure 9(b) requires 

plaintiffs claiming fraud to "state with particularity the 

circumstances constituting fraud." Complaints alleging securities 

fraud specifically are also subject to the heightened pleading 

requirements of the Private Securities Litigation Reform Act 

(PSLRA), including the mandate that plaintiffs "specify each 

statement alleged to have been misleading, [and] the reason or 

reasons why the statement is misleading." 15 U.S.C. § 78u-4(b)(1). 

Against the backdrop of these heightened pleading requirements, 

our analysis begins and ends with the first of the section 10(b) 

elements, as we agree with the district court that the complaint 

fails to allege a material misrepresentation or omission. 

For allegedly false statements to support a claim of 

securities fraud, they must be "false when made." Gross v. Summa 

Four, Inc., 93 F.3d 987, 994 (1st Cir. 1996); see also Karth v. 

Keryx Biopharms., Inc., 6 F.4th 123, 135 (1st Cir. 2021) ("[A 
- 16 -

plaintiff] may not plead 'fraud by hindsight'; i.e., a complaint 

'may not simply contrast a defendant's past optimism with less 

favorable actual results' in support of a claim of securities 

fraud." (quoting ACA Fin. Guar. Corp. v. Advest, Inc., 512 F.3d 

46, 62 (1st Cir. 2008))). Moreover, "[section] 10(b) and 

Rule 10b-5(b) do not create an affirmative duty to disclose any 

and all material information. Disclosure is required under these 

provisions only when necessary 'to make . . . statements made, in 

light of the circumstances under which they were made, not 

misleading.'" Matrixx Initiatives, Inc. v. Siracusano, 563 U.S. 

27, 44 (2011) (omission in original) (quoting 17 C.F.R. § 240.10b5(b)). Thus, a theory of securities fraud liability premised on 

nondisclosure or omission must also rest on some statement that, 

absent disclosure, misleads as to a contemporaneous material fact. 

2.

Close review of the complaint reveals that, despite its 

length, it fails to allege sufficiently specific facts about the 

state of the LTC business at particular points in time to enable 

us to conclude that any of the goodwill write-downs were too late 

or that any of defendants' alleged misstatements contradicted the 

state of that business as it then stood. Plaintiffs thus fail to 

allege that defendants made statements of fact that were false 

when made or misleadingly incomplete in light of contemporaneous 

circumstances. 
- 17 -

We start with the parties' point of agreement: the 

condition of the LTC business at either end of the class period. 

Between the May 2015 acquisition and the end of the class period 

in February 2019, the Omnicare business suffered a material 

reduction in value on the order of $8 billion. The dispute centers 

therefore on whether the complaint alleges facts demonstrating --

"with particularity," Fed. R. Civ. P. 9(b) -- that defendants 

misrepresented the existence, extent, nature, or pace of that 

reduction as it occurred. But the complaint provides us with no 

meaningful way to compare defendants' disclosures and statements 

about the LTC business with the contemporaneous state of the 

business. The district court was especially critical of the 

complaint's failure to juxtapose the proffered reports of lost 

customers with what CVS was disclosing at the time of those losses. 

See CVS Health, 519 F. Supp. 3d at 88–89, 97. In the wake of that 

criticism, one would have expected perhaps a timeline in 

plaintiffs' brief on appeal. One would have been disappointed. 

We have nevertheless reviewed the complaint's forty-six 

paragraphs alleging customer losses and have identified just six

that attempt to place losses within specific periods of time --

and even then, only in highly general terms. The following 

summarized allegations from the complaint contain references to 

the timing of a customer loss:
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1. One CW, who worked for a former "Omnicare LTC customer 

with four campuses and approximately 850 to 900 beds," 

fired CVS Health as its LTC provider and moved to a 

competitor "in 2016." 

2. Omnicare competitor Remedi SeniorCare "had been taking 

Omnicare customers who were leaving or had left CVS 

Health since 2015." 

3. "Omnicare LTC divisions in Illinois and Missouri, and 

particularly [in] the St. Louis region, lost at least 

50% of their business from 2015 to 2019." This included 

one client operating "a large number of nursing homes 

in Missouri" that withdrew its business from CVS Health 

"in 2016." 

4. Omnicare competitor Polaris Pharmacy Services "took 30% 

of the Omnicare LTC business in South Florida in 2016." 

5. "In 2015," Omnicare competitor Modern Health Pharmacy 

"took 10% to 15% of Omnicare's business in California." 

6. An Omnicare affiliate in New York called MedWorld lost 

75% of its 22,000 beds "almost immediately after the 

[Omnicare] Acquisition" with "another 15% of the 

beds . . . lost thereafter," such that, "only 18 months 
- 19 -

after the Acquisition, the MedWorld location where CW13 

worked closed." 

Two of these allegations cover such broad swaths of time 

that they effectively provide no date limitation. The second

describes a particular competitor who had been pulling an 

unspecified number of CVS customers "since 2015." The third notes 

that a regional division of Omnicare suffered customer losses "from 

2015 to 2019." For all we can discern from these capacious 

timeframes, these two losses may not have come anywhere close to 

their ultimate scale until shortly before the complaint was filed. 

And we certainly have no basis for finding that CVS Health 

experienced these losses before it took an appropriate write-down 

or made an inconsistent statement -- indeed, that some losses of 

customers occurred "since 2015" or "from 2015 to 2019" is entirely 

consistent with CVS Health's reporting.

As to the other four allegations that are tethered to 

some more precise timeframe, the complaint paints with only a 

slightly finer brush. It alleges customers left CVS only within 

particular years; i.e., one competitor poached customers "in 

2015," two others did so "in 2016," and an Omnicare affiliate 

pharmacy in New York lost most of its customers "immediately after 
- 20 -

the Acquisition" such that a particular site of that affiliate 

closed "18 months after the Acquisition."6 

Of these four losses of customers, only the first ("in 

2015") definitively occurred prior to the first disclosed goodwill 

write-down (in November 2016). But the complaint provides us with 

no reason to think that that 2015 loss by itself was both material 

and not offset by new business. Nor does the complaint offer any 

reason to regard the alleged loss of some customers in 2016 as 

anything but consistent with the general negative trend of CVS 

Health's goodwill write-offs beginning in 2016 and its statement 

in 2017 that issues with "client retention rates" contributed to 

declining revenues in the prior year. Cf. Ponsa-Rabell v. 

Santander Sec. LLC, 35 F.4th 26, 35 (1st Cir. 2022) ("[I]t is not 

a material omission to fail to point out information of which the 

market is already aware." (quoting Baron v. Smith, 380 F.3d 49, 57 

(1st Cir. 2004))). 

6 Plaintiffs' appellate brief did not facilitate our attempt 

to locate in time the complaint's allegations of customer loss, as 

the brief attributes to several alleged losses more specific time 

periods than actually pleaded. The brief claims that two specified 

sets of lost customers -- one comprising several skilled nursing 

facilities in upstate New York and a second set comprising 

customers poached by competitor Remedi -- occurred "by the end of 

2015." In fact, the complaint alleges that the New York customers 

were lost "in the aftermath of the acquisition" and that Remedi 

had been poaching customers "since 2015." Elsewhere, the brief 

claims that two specified losses (in California and New York) were 

suffered "shortly after the Acquisition" when only one of these 

was alleged as such in the complaint. 
- 21 -

Plaintiffs' concession that they "do not dispute 

anything about Defendants' accounting," which necessarily includes 

the figures included in the company's goodwill reports throughout 

the class period, reinforces the gap in their pleading. For 

accurate figures to mislead, plaintiffs would need to point us to 

some more concrete and inaccurate conclusions that those figures 

would invite, not just pockets of customer loss that may very well 

have been entirely consistent with the reported goodwill 

diminution. Nor can we simply infer that because CVS Health 

eventually wrote off the goodwill assigned to the Omnicare 

acquisition that it should have done so sooner. See In re 

Cabletron Sys., Inc., 311 F.3d 11, 37 (1st Cir. 2002) 

("[P]laintiffs may not simply seize upon disclosures made later 

and allege that they should have been made earlier." (alteration 

in original) (quoting Berliner v. Lotus Dev. Corp., 783 F. Supp. 

708, 710 (D. Mass. 1992))). 

Plaintiffs' failure to establish a reasonably clear 

timeline of customer losses inconsistent with the company's 

goodwill disclosures is representative of the complaint's 

overarching failure to allege material facts inconsistent with 

defendants' public statements. To start, plaintiffs allege that 

CVS Health misled investors in December 2016 and in the second 

quarter of 2017 by publicly invoking Omnicare's position as a 

"leader" in the LTC market. But the complaint never alleges that 
- 22 -

Omnicare was in fact not the market leader -- even by the end of 

the class period, long after these statements were made.7 

Similarly, plaintiffs point to repeated statements in filings 

starting shortly after the acquisition indicating that the 

Retail/LTC Segment's revenue gains were primarily driven by the 

Omnicare acquisition. But, again, they do not challenge any 

reported accounting metrics and do not allege that the Omnicare 

acquisition in fact failed to contribute substantial revenue. 

Plaintiffs also allege that CVS Health misleadingly 

touted its understanding of LTC customers, but they marshal a 

series of statements that do no such thing. Most of these 

statements refer not to customers of the LTC business but to a 

much broader universe of customers -- those of the umbrella 

Retail/LTC Segment or the "consumers, payors, and providers" 

serviced by the entirety of CVS Health.8 Several other statements 

7 Plaintiffs claim that several district court cases support 

their argument that "[s]tatements characterizing a business as a 

leader [are] misleading when the business is materially 

declining." But none of these cases even suggest, much less hold, 

that a claim of leadership is false or misleading merely because 

the size of the lead has materially shrunk. See Ark. Pub. Emp. 

Ret. Sys. v. GT Solar Int'l, Inc., No. 08-cv-312, 2009 WL 3255225, 

at *7–11 (D.N.H. Oct. 7, 2009); Scritchfield v. Paolo, 274 F. Supp. 

2d 163, 175 (D.R.I. 2003); In re Lucent Techs., Inc. Sec. Litig., 

217 F. Supp. 2d 529, 546, 557 (D.N.J. 2002).

8 Plaintiffs' brief on appeal recasts one of these alleged 

statements concerning customer needs to make it appear as if the 

statement referred specifically to the LTC business. The complaint 

alleges that all of the class-period SEC filings stated CVS Health 

was:
- 23 -

discuss efforts taken to improve the experience of LTC customers, 

but the complaint never alleges that CVS Health failed to take 

these efforts. For example, plaintiffs point to Merlo's statement 

in August 2017 that "[w]e have invested the time and capital over 

the past two years to get the right technology and processes in 

place in order to differentiate our offering." Rather than 

alleging that the company in fact did not invest in technology and 

processes to "differentiate [its] offering," plaintiffs contend 

only that some customers chose to leave CVS Health in part because 

of new technologies and processes. That outcome plainly is not 

inconsistent with Merlo's statement that the company invested in 

those operations with different aims in mind. 

the only integrated pharmacy health care 

company with the ability to impact consumers, 

payors, and providers with innovative, 

channel-agnostic solutions to complex 

challenges managing costs and care. We have 

a deep understanding of their diverse needs 

through our unique integrated model . . . . 

This statement appears in the CVS Health filings in a section 

headed "Overview of Our Business," which summarizes the business 

of the entire CVS Health Corporation, including its "9,800 retail 

locations, more than 1,100 retail health care clinics, [and, among 

other services,] leading pharmacy benefits manager." Plaintiffs' 

brief, however, inserts a bracketed revision when quoting from the 

above statement such that it purportedly refers to "the LTC 

business's 'deep understanding of [our LTC customers'] diverse 

needs.'" The full quote above makes plain that the phrase "their 

diverse needs" refers in context to the needs of "consumers, 

payors, and providers" -- for the entire CVS Health enterprise --

rather than plaintiffs' preferred recasting.
- 24 -

As to the fifth category of alleged misrepresentations, 

plaintiffs' briefing castigates defendants' general public 

references to anticipated and realized "synergies" from the 

Omnicare acquisition. But while their CWs identify several of CVS 

Health's business operations decisions that allegedly alienated 

LTC customers by providing less personalized service, the 

complaint points to no specific instance where a defendant claimed

-- contrary to then-existing facts -- that a particular business 

operation was succeeding.9 Moreover, defendants' statements 

frequently paired the realization of synergies with cost savings, 

a potential benefit of centralized business operations as to which 

the complaint is totally silent.10 

9 We note that Merlo's February 2016 "synergies" statement 

also refers positively to corporate performance: "Omnicare 

performed well and in line with our expectations as we began to 

realize some of the anticipated synergies." To the extent 

plaintiffs' concerns are with this statement's representation 

about performance (i.e., "Omnicare performed well") rather than 

its characterization of "synergies," we have already explained why 

the complaint provides us with no basis for deeming such statements 

false or misleading when made. 

10 In addition to the complaint's failure to allege facts 

contrary to this category of statements, we are also skeptical

that statements touting anticipated or realized "synergies" from 

a corporate merger, untethered to some objective indicator, would 

be specific enough to constitute a statement of material fact. 

Such statements may fairly be characterized as "loosely optimistic 

statements that are so vague [or] so lacking in specificity . . . 

that no reasonable investor could find them important to the total 

mix of information available." Shaw v. Digit. Equip. Corp., 82 

F.3d 1194, 1217 (1st Cir. 1996).
- 25 -

To be sure, statements need not be literally false to 

give rise to liability under section 10(b). Statements that are 

literally true may nonetheless omit information necessary to 

prevent them from steering investors toward inaccurate 

conclusions. See SEC v. Johnston, 986 F.3d 63, 72 (1st Cir. 2021) 

("[Statements] can also be misleading if they are half-truths, 

painting a materially false picture in what they say because of 

what they omit."). But those conclusions must still be inaccurate 

as of the time the statements were made. See 17 C.F.R. 

§ 240.10b-5(b) (prohibiting the omission of facts necessary to 

prevent statements from being misleading "in the light of the 

circumstances under which the[] [statements] were made"); Ganem v. 

InVivo Therapeutics Holdings Corp., 845 F.3d 447, 455–56 (1st Cir. 

2017) (finding plaintiff's omission theory insufficient where the 

complaint failed to allege facts "necessary . . . for the 

statements to have been misleading when made"). While plaintiffs 

generally allege in the alternative that all of the alleged 

misrepresentations discussed above also omitted material facts

concerning LTC customer loss, we simply cannot infer from this 

complaint that any of the alleged statements were misleadingly 

incomplete for largely the same reasons we cannot infer their 

falsity -- the complaint provides too little basis for comparing 

any material conclusions implied by the statements against the 

contemporaneous state of the LTC business. 
- 26 -

This observation also captures the final category of 

statements, which are only alleged as misleadingly incomplete, 

rather than directly false: CVS Health's "boilerplate risk 

factors" that warned of the possibility that the company would not 

realize benefits from its acquisitions because of, among other 

risks, difficulties with retaining customers. We have recognized 

that warnings or disclosures in the securities context that frame

risks as merely hypothetical may be misleading when they resemble 

the "Grand Canyon" metaphor, in that "one cannot tell a hiker that 

a mere ditch lies up ahead, if the speaker knows the hiker is 

actually approaching the precipice of the Grand Canyon." Karth, 

6 F.4th at 137. However, we have also clarified that, in the 

context of a section 10(b) claim, a speaker warning of a 

hypothetical risk only acquires a duty to disclose further known 

information about the extent of that risk when "the alleged risk 

had a 'near certainty' of causing 'financial disaster' to the 

company" or where the warned-of risk "had already begun to 

materialize." Id. at 137–38 (quoting Hill v. Gozani, 638 F.3d 40,

59–60 (1st Cir. 2011)). 

Plaintiffs assert that the LTC business's loss of 

goodwill value due to customer flight was just such a "near 

certainty" -- throughout the entire class period -- because these 

losses had already begun to materialize as of the first such risk 

statement made in the February 2016 Form 10-K that kicked off the 
- 27 -

class period. But, again, and as we recently noted in another 

case rejecting a Grand Canyon comparison, "[w]hether or not this 

assertion is true we cannot determine because the . . . plaintiffs 

simply do not plead sufficient allegations allowing us to do so." 

Ponsa-Rabell, 35 F.4th at 36. As we have already explained, the 

complaint fails to provide the information necessary to infer that 

there was any material net loss of customers that was not timely 

reflected in the 2016 write-off. A fortiori, it hardly suffices 

to allege in conclusory terms that the failure of the acquisition 

was a "near certainty." Our caselaw on this variety of omission 

theory "does not require a company to be omniscient, even if the 

company looks foolish in hindsight for not properly predicting 

whatever harm befell it." Karth, 6 F.4th at 138.

In sum, as it is plaintiffs' burden to plead specific 

facts "showing that the statements presented to the public were 

false or misleading at the time they were made," Suna v. Bailey 

Corp., 107 F.3d 64, 69 (1st Cir. 1997), their failure to do so 

means they have failed to allege the necessary element of a 

misrepresentation or omission of material fact. See Gross, 93 

F.3d at 993 ("Though Gross adamantly contends that the statement 

is false, the amended complaint provides little in the way of 

specific facts to support this contention."). Accordingly, we 

agree with the district court that the complaint fails to allege 

a violation of section 10(b) or Rule 10b-5. 
- 28 -

B.

We turn our attention, finally, to plaintiffs' efforts 

to be allowed a third bite of the apple in the form of a second 

amended complaint. By the time defendants filed their motion to 

dismiss, plaintiffs had once amended their complaint already, so 

they no longer had a right to amend the pleading again without the 

agreement of defendants or leave of the court. See Fed. R. Civ. 

P. 15(a)(1). Such leave, though, would have been "freely given" 

had plaintiffs asked and "justice so require[d]." Id. In short, 

when plaintiffs received the motion to dismiss spelling out what 

defendants claimed to be gaps in the amended complaint, plaintiffs

could have sought leave to amend their pleading yet again. Whether 

the court would have allowed the motion, we do not know, because

plaintiffs never filed it. 

Instead, plaintiffs simply included in their memorandum 

opposing the motion to dismiss a brief note asking for a

conditional opportunity to move for leave to amend, "if the Court 

grants any portion of the [m]otion [to dismiss]." No motion or 

argument was advanced in support of this request. Nor was any 

proposed amendment filed. The district court treated this 

"contingent" request as holding "no legal significance." City of 

Mia. Fire Fighters' & Police Officers' Ret. Tr. v. CVS Health 

Corp., 541 F. Supp. 3d 231, 233 (D.R.I. 2021). We see no reason 

to treat it otherwise. See Abiomed, 778 F.3d at 247 ("No proper 
- 29 -

request [to amend] was made to the district court, only a mention 

in a footnote in their opposition to dismissal."); Fisher v. 

Kadant, Inc., 589 F.3d 505, 509 (1st Cir. 2009) (reiterating that 

a contingent request to amend a complaint contained in an 

opposition to a motion to dismiss "does not constitute a motion to 

amend a complaint" (quoting Gray v. Evercore Restructuring L.L.C.,

544 F.3d 320, 327 (1st Cir. 2008))). It therefore stands to 

reason, a fortiori, that plaintiffs' conditional request cannot 

"transmogrify [a] post-judgment motion for reconsideration into a 

Rule 15(a) motion." Fisher, 589 F.3d at 511. 

When the district court then dismissed the first amended

complaint, it did so with prejudice. That approach is disfavored,

at least when dealing with a complaint that has not been previously 

amended, but is nevertheless allowed within the discretion of the 

district court. See In re Genzyme Corp. Sec. Litig., 754 F.3d 31, 

47 (1st Cir. 2014). 

Once judgment was entered, Rule 15 was no longer on the 

table. Rather, plaintiffs first needed to get the judgment set 

aside. See id. at 46. Toward that end, they filed their 

unsuccessful Rule 59(e) motion to reconsider the court's order 

dismissing their complaint. A district court may grant such a 

motion "where the movant shows a manifest error of law," "newly 

discovered evidence," or "an error not of reasoning but 

apprehension." Ruiz Rivera v. Pfizer Pharms., LLC, 521 F.3d 76, 
- 30 -

81 (1st Cir. 2008) (first quoting Kansky v. Coca-Cola Bottling Co. 

of New England, 492 F.3d 54, 60 (1st Cir. 2007), and then quoting 

Sandoval Diaz v. Sandoval Orozco, No. 01-1022, 2005 WL 1501672, at 

*2 (D.P.R. June 24, 2005)). "The granting of a motion for 

reconsideration is 'an extraordinary remedy which should be used 

sparingly.'" Palmer v. Champion Mortg., 465 F.3d 24, 30 (1st Cir. 

2006) (quoting 11 Charles Alan Wright et al., Federal Practice and 

Procedure § 2810.1 (2d ed. 1995)). We review challenges to the 

denial of a Rule 59(e) motion for manifest abuse of discretion. 

Ruiz Rivera, 521 F.3d at 81. 

Plaintiffs rely on a claim of newly discovered evidence. 

A party asking a court to reconsider its judgment on this basis 

must show "that [it] could not in the exercise of reasonable 

diligence have obtained [the] new evidence earlier." In re Biogen, 

857 F.3d at 46. So, we focus on what plaintiffs knew or reasonably 

could have learned "before the district court entered its order of 

dismissal." Id.; see also Advest, 512 F.3d at 57 ("The plaintiffs 

argue . . . they were entitled to wait and see if their amended 

complaint was rejected by the district court before being put to 

the costs of filing a second amended complaint. . . . Plaintiffs 

have it exactly backwards."). 

The Proposed Second Amended Class Action Complaint 

(PSAC) plaintiffs included with their Rule 59(e) motion identified 

twenty-five new CWs, seventeen of whom were drawn entirely from 
- 31 -

another complaint against CVS Health filed in September 2020, and 

eight of whom were identified by plaintiffs' investigators. The 

district court did not clearly err in finding that the allegations 

that were lifted directly from the September complaint were easily 

discoverable through due diligence well before the dismissal order 

the following February. As to the remaining set of eight new CWs, 

plaintiffs point to only two in arguing that this evidence could 

not have been discovered before the dismissal. Those two CWs were 

still employed by CVS Health "when Plaintiffs were preparing the 

Complaint," with one employed there until October 2020, "after 

motion to dismiss briefing and oral argument were completed." 

Thus, even plaintiffs' presumptively best examples of latediscovered evidence were nonetheless available to them at least 

three months before the court dismissed their complaint. Of 

course, plaintiffs in suits of this type may have good grounds for 

seeking a reasonable period of time within which to gather and 

synthesize newly available information. But in that event, they 

should notify the court of their supplemental investigation so 

that the court can consider delaying its ruling in anticipation of 

the filing of an amended complaint. See In re Biogen, 857 F.3d at 

46 ("[T]he plaintiffs could have alerted the court to their 

intentions earlier, but did not."). Plaintiffs here gave no such 

notice, so the "argument that the district court abused its 

discretion by failing to account for the time the plaintiffs needed 
- 32 -

to vet the evidence . . . has no force." Id. As the district 

court below noted:

Even if they did not at that time know of the 

full extent of the testimony they could obtain 

from these eight confidential witnesses, they 

could have moved to amend and requested leave 

for an extension of time in which to submit 

the proposed amended complaint. Instead, for 

five months, they simply waited and hoped for 

a favorable decision. 

CVS Health, 541 F. Supp. 3d at 234.

Finally, plaintiffs argue that the combined effects of 

our precedent as applied by the district court lead to a "manifest 

injustice" to the detriment of meritorious claimants. Of course, 

the same could be said when any significant deadline or procedural 

rule is enforced. Moreover, whether the proposed amendment would 

have itself withstood a motion to dismiss is hardly clear. Even 

in plaintiffs' briefs on appeal, they point to no new allegations 

in the PSAC that would connect defendants' public statements with 

contradictory contemporaneous facts or would demonstrate that the 

further anecdotal losses described by the new CWs materially 

exceeded the losses recognized by CVS Health itself in the 

pertinent time frames. So this is not a case in which a manifestly 

meritorious claim has been lost due to any delay by counsel. 

There are also off-setting, prudential considerations. 

As we have previously noted, "allowing plaintiffs to hedge their 

bets by adding a cursory contingent request in an opposition to a 
- 33 -

motion to dismiss would encourage plaintiffs to test the mettle of 

successive complaints and freely amend under Rule 15(a) if their 

original strategic choices prove inadvisable." Fisher, 589 F.3d

at 510; see also Advest, 512 F.3d at 57 (explaining that honoring 

this combination of conditional and post-judgment requests "would 

lead to delays, inefficiencies, and wasted work"). Thus, entirely 

apart from any leniency in granting proper motions to amend a 

complaint under Rule 15, "[p]laintiffs may not, having the needed 

information, deliberately wait in the wings . . . with another 

amendment to a complaint should the court hold the first amended 

complaint was insufficient." Advest, 512 F.3d at 57.

For largely the same reasons, plaintiffs miss the mark 

in their last-ditch argument that the district court's denial of 

leave to amend here would permit dismissing PSLRA complaints with 

prejudice and without leave to amend in every case. First, we do 

not know how the district court would have treated a properly filed 

motion to amend here because plaintiffs did not file one. See CVS 

Health, 541 F. Supp. 3d at 233 (noting, for example, that 

plaintiffs here failed to attach an amended complaint to their 

conditional request for leave to amend, as required by local rule). 

Second, there is no basis for contending that in this case the 

grounds for the dismissal were somehow a surprise. To the 

contrary, they were the focus of defendants' briefing. See

Abiomed, 778 F.3d at 247 ("[P]laintiffs were put on notice of the 
- 34 -

deficiencies in the complaint by the motion to dismiss. If they 

had something relevant to add, they should have moved to add it 

then. . . . We wish to discourage this practice of seeking leave 

to amend after the case has been dismissed."). Third, we reiterate 

that plaintiffs' basis for seeking leave to amend was an ongoing 

investigation about which, prior to dismissal, they never informed 

the court. Fourth, the dismissal came twenty-four months after 

plaintiffs commenced this action and seventeen months after 

defendants filed their motion to dismiss explaining why they 

contended that the complaint was deficient -- certainly long enough 

to allow the district court to assume that the table was set for 

a final disposition. Accordingly, our ruling today does nothing 

to discourage district courts in their discretion from staying 

rulings to allow for reasonable due diligence, from temporarily 

postponing the entry of judgment after granting a Rule 12(b)(6) 

motion, see 1 Steven S. Gensler & Lumen N. Mulligan, Federal Rules 

of Civil Procedure, Rules and Commentary, Rule 15 ("[l]eave to 

amend after dismissal of complaint but before final judgment"), or 

from granting motions to reconsider dismissal when due diligence 

uncovers new evidence that was previously unavailable. 

In sum, the district court did not abuse its discretion 

or commit a legal error when it denied plaintiffs' Rule 59(e) 

motion. 
- 35 -

IV.

For the foregoing reasons, the district court's orders 

dismissing plaintiffs' complaint and denying the motion to 

reconsider are affirmed.