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Oklahoma City, OK (April 13, 2020) – On April 10, 2020, a securities class action lawsuit was filed in the United States District Court for the Southern District of New York against ServiceMaster Global Holdings, Inc. (NYSE: SERV). The complaint alleges violations of federal securities laws, Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5, including allegations of issuing a series of material or false misrepresentations to the market which had the effect of artificially inflating the market price during the Class Period, which is February 26, 2019 through November 4, 2019. More specifically, the complaint was filed because Defendants repeatedly assured the market that ServiceMaster was successfully executing upon initiatives to improve the performance in the Terminix segment. In addition, Defendants stated that Terminix would reach a positive “inflection point” and was “definitely the driver” for positive trends expected in the second half of 2019. Unbeknownst to investors, however, in the past several years the Terminix segment had experienced an adverse trend of costly termite litigation, primarily related to Formosan termite activity. This negative trend, which would ultimately impact ServiceMaster’s current and future financial results, was known to Defendants throughout the Class Period, as by their own later admission they had been taking mitigating measures since 2018.
On October 22, 2019, ServiceMaster announced disappointing preliminary financial results for the third quarter 2019, having missed revenue and earnings estimates, and issued downward adjusted EBITDA guidance. The press release attributed the disappointing results to “termite damage claims arising primarily from Formosan termite activity,” primarily in Mobile, Alabama. The Company further stated that this had been a known issue, having taken mitigating measures “starting in 2018.” Finally, the Company announced the sudden departure of Matthew J. Stevenson in his role as President of Terminix Residential.
Then on November 5, 2019, before the start of trading, ServiceMaster released its third quarter 2019 financial results. In this press release discussing the “challenging quarter,” the Company revealed that it had been impacted by certain “legacy risks,” including “termite damage claims.” That same day, Defendants held an earnings call with analysts and investors to discuss ServiceMaster’s third quarter 2019 financial results. On the call, Defendants informed the market that the increase in termite litigation—which had occurred “[i]n the past few years”—had impacted termite revenue and these issues would continue throughout 2020. On this news, the price of ServiceMaster common stock fell $1.42, or 3.5 percent, to close at $39.15 on November 5, 2019. As the market continued to digest the disappointing news, ServiceMaster shares further declined by $3.41, or 9 percent, closing at $35.74 on November 6, 2019. All told, following the November 5, 2019 disclosure, ServiceMaster stock suffered a total decline of $4.83 from the November 4, 2019 closing price.
Plaintiff seeks to recover damages on behalf of all ServiceMaster Global Holdings, Inc. shareholders who purchased common stock during the Class Period and are therefore a member of the Class as described above. You may move the Court no later than Tuesday, June 9, 2020 to serve as a lead plaintiff for the entire Class. However, in order to do so, you must meet certain legal requirements pursuant to the Private Securities Litigation Reform Act of 1995.
If you wish to discuss this action, obtain further information and participate in this or any other securities litigation, or should you have any questions or concerns regarding this notice or preservation of your rights, please contact: Robin Hester at firstname.lastname@example.org