Opinion ID: 1267160
Heading Depth: 3
Heading Rank: 3

Heading: UHG Contract Dispute

Text: Next, Plaintiffs assert that Omnicare's positive earnings growth predictions were misleading in light of an undisclosed contract dispute with UHG, a major PDP sponsor. On February 23, 2006, Gemunder commented on the fourth-quarter 2005 results by stating that as we enter our 25th year as a public company, Omnicare's revenue and earnings growth outlook remains positive given our strong underlying fundamentals and our proven growth strategy. In an April 27, 2006, statement regarding Omnicare's first quarter 2006 results, Gemunder repeated that Omnicare's revenue and earnings growth outlook remains positive given our strong underlying fundamentals and our proven growth strategy. Plaintiffs argue that these statements were false and misleading because Gemunder did not disclose a developing dispute with UHG. UHG, a drug-plan supplier responsible for about a third of Omnicare's Part D business, had recently completed a merger with PacifiCare Health Services, Inc. PacifiCare also had a contract with Omnicare, but it was less profitable. Some time in February 2006, UHG informed Omnicare that, as a result of the merger, it would be withdrawing from its original contract and switching to the less favorable PacifiCare agreement. This change reduced Omnicare's profits for the second quarter of 2006. [2] Plaintiffs claim that Gemunder's growth predictions were misleading absent a disclosure of this development. The contract dispute was not revealed until May 18, 2006, when Omnicare filed suit against UHG. [3] In response to the filing, Omnicare's stock dropped from $54.98 to $50.57.