In a recent court filing, Juliet Wells has lodged a Verified Stockholder Derivative Complaint against Veradigm, Inc., alleging breaches of fiduciary duty, unjust enrichment, and violations of federal securities laws by the company's current and former officers and directors. The complaint was filed on May 30, 2024, in the U.S. District Court for the Northern District of Illinois.
According to the filing, Wells accuses several key figures at Veradigm—formerly known as Allscripts Healthcare Solutions—of misleading investors about the company's financial health. These individuals include Richard J. Poulton, Elizabeth A. Altman, P. Gregory Garrison, Jonathan J. Judge, Dave B. Stevens, Carol J. Zierhoffer, Leah Jones, and Paul M. Black. The plaintiff asserts that these defendants were involved in significant revenue misstatements that overstated Veradigm's earnings by approximately $40 million over fiscal years 2021 and 2022.
The complaint outlines how Veradigm initially disclosed internal control failures related to revenue recognition in February 2023 during its year-end audit procedures. These failures led to a misstatement of reported revenues due to duplicate sales transactions recorded from Q3 2021 through Q4 2022. Consequently, Veradigm reduced its fiscal 2023 revenue guidance by $15 million and its non-GAAP earnings per share guidance by $0.10 per share.
Subsequent disclosures revealed that the extent of these misstatements was more severe than initially reported. By March 22, 2023, Veradigm had revised its estimate of historical revenue misstatements to approximately $40 million for fiscal years 2021 and 2022 combined. The company admitted that none of its quarterly filings for those periods could be relied upon and would need restating.
Further complications arose when Veradigm failed to file its fiscal 2022 Annual Report on Form 10-K or its Q1 2023 Quarterly Report on Form 10-Q with the SEC by the stipulated deadlines due to ongoing accounting reviews. This failure led Nasdaq to issue multiple notices of non-compliance with listing requirements throughout mid-2023.
The plaintiff argues that these actions have severely harmed Veradigm by exposing it to potential securities litigation and damaging its reputation in capital markets. Additionally, Wells claims that insider trading occurred during this period; specifically highlighting that Black sold $12.8 million worth of his shares between March 15, 2021, and June 10, 2022; while Poulton sold $3.7 million worth between May 4, 2021 and February 16, 2023.
Wells seeks several forms of relief from the court: a declaration allowing her to maintain this action on behalf of Veradigm; damages sustained by the company due to defendants' breaches; an order directing corporate governance reforms at Veradigm; restitution from defendants including disgorgement of profits obtained through wrongful conduct; as well as costs associated with pursuing this action including attorneys' fees.
Representing Juliet Wells are Matthew T Heffner & Matthew T Hurst from Heffner Hurst LLP based in Chicago IL alongside Robert B Weiser & James M Ficaro from The Weiser Law Firm PC located in West Conshohocken PA.
Judge presiding over this case is yet unknown but identified under Case ID:24-cv-4453