On September 14, 2016, Pomerantz LLP was appointed Lead Counsel in a class action lawsuit against Halyard Health, Inc. ("Halyard" or the "Company"), Kimberly-Clark Corporation ("Kimberly-Clark") (NYSE: KMB) and certain of the companies' officers. The class action, filed in United States District Court, Southern District of New York, and docketed under 16-cv-05093, is on behalf of a class consisting of all persons other than Defendants who: (1) purchased or otherwise acquired Kimberly-Clark securities on or after February 25, 2013 and subsequently received Halyard securities pursuant to Kimberly-Clark's spin-off of Halyard, effective as of October 31, 2014; and/or (2) purchased or otherwise acquired Halyard securities between October 21, 2014 and April 29, 2016, both dates inclusive (collectively, 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.
Halyard provides health and healthcare supplies and solutions worldwide. The Company operates through two segments, Surgical and Infection Prevention (S&IP), and Medical Devices. Halyard markets its products directly to hospitals and other healthcare providers, as well as through third-party distribution channels.
Prior to October 2014, Halyard was the Health Care operating segment of Kimberly-Clark, a manufacturer of personal care, consumer tissue, and professional products. Kimberly-Clark's common stock trades on the New York Stock Exchange under the ticker symbol "KMB." On October 7, 2014, Kimberly-Clark announced the details for the completion of the spin-off of its Health Care segment as Halyard Health, Inc., advising its shareholders that they would receive one share of Halyard Health common stock for every eight shares of Kimberly-Clark common stock held as of the close of trading on October 23, 2014, the record date for the spin-off.
In late 2013, an outbreak of the Ebola virus began in Guinea, subsequently spreading to Liberia, Sierra Leone, and other West African nations. In August 2014, after meeting with health ministers from eleven countries, the World Health Organization designated the outbreak as a Public Health Emergency of International Concern, a rarely-used designation that invokes legal measures on disease prevention, surveillance, control, and response by 194 signatory countries. On September 30, 2014, the United States Centers for Disease Control and Prevention declared the first case of Ebola virus in the United States.
As awareness of the Ebola epidemic grew, demand surged for the personal protective equipment—i.e., eye shields, face masks and disposable gowns—made by Kimberly-Clark's Health Care segment and subsequently by Halyard, including the Company's MICROCOOL surgical gowns.
The Complaint alleges that throughout the Class Period, Defendants made materially false and misleading statements regarding the Company's business, operational and compliance policies. Specifically, Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (i) the Company's MICROCOOL surgical gowns consistently failed effectiveness tests and failed to meet industry standards; (ii) Kimberly-Clark and Halyard had knowingly provided defective MICROCOOL surgical gowns to U.S. workers during the Ebola crisis; and (iii) as a result of the foregoing, Defendants' public statements were materially false and misleading at all relevant times.
On May 1, 2016, 60 Minutes reported that Kimberly-Clark and Halyard had knowingly provided defective surgical gowns to U.S. workers at the height of the Ebola crisis. A Company insider claimed that Halyard's MICROCOOL surgical gowns were prone to leaks and did not consistently meet the industry safety standards for the treatment of Ebola, but that Kimberly-Clark and Halyard had nonetheless "aggressively" marketed the MICROCOOL gowns to hospitals during the epidemic.
On this news, Halyard stock fell $1.21, or 4.3%, to close at $26.95 on May 2, 2016.