Full opinion text
ORDER MOODY, District Judge. THIS CAUSE came on for consideration upon the Report and Recommendation submitted by Magistrate Judge Thomas G. Wilson (Dkt.# 118), Plaintiffs’ Objection to Report and Recommendation (Dkt.# 120), and Defendants’ response (Dkt.# 122). The Court notes that Plaintiffs have objected to, among other things, the Magistrate’s use of a map to determine the distance between two particular cities in discounting one of Plaintiffs’ contentions. Plaintiffs contend that this “consideration of matters outside the pleadings effectively converted the Defendants’ motion to dismiss into a motion for summary judgment.” (Page 3 of Plaintiffs’ Objection to Report and Recommendation). Defendants counter that it was appropriate for„ the Magistrate to take judicial notice of commonly available information of geography. It is unnecessary for this Court to resolve this dispute since the geographical information was not critical to the analysis contained in the Report and Recommendation. The Magistrate had already dispensed with Plaintiffs’ contention by determining from the Complaint and available documents, particularly document # 83, that the existence of two pharmacies in towns in Colorado with overlapping delivery routes would be inconsequential to the investing public regarding PharMerica, an entity with approximately 160 pharmacy facilities located across thirty-seven states. (Page 82, Report and Recommendation). This Court, without relying on the map mileage between the two towns in Colorado, is of the opinion that the Magistrate Judge’s Report and Recommendation should be adopted, confirmed, and approved. The Court notes that Plaintiffs have not sought the opportunity to further amend the existing Second Amended Complaint. ACCORDINGLY, it is therefore, ORDERED AND ADJUDGED: 1) The Report and Recommendation of the Magistrate Judge is adopted, confirmed, and approved in all respects (except for the reference to the mileage on page 83 thereof), and said Report and Recommendation is made a part of this order for all purposes, including appellate review. 2) The Defendants’ Motion to Dismiss (Dkt.#83) is GRANTED. The Second Amended Complaint is DISMISSED with prejudice. REPORT AND RECOMMENDATION WILSON, United States Magistrate Judge. This suit is brought as a securities class action on behalf of purchasers of the common stock of defendant PharMerica from January 7, 1998, through July 24, 1998. The suit seeks to impose liability under the Securities Exchange Act of 1934 against PharMerica and certain of its officers based on. their alleged dissemination of materially false and misleading statements about PharMerica’s business and financial condition and the purported success of its aggressive acquisition program. Such a suit must meet the heightened pleading requirements of the Private Securities Litigation Reform Act. The plaintiffs’ second amended complaint fails to meet those requirements. Accordingly, I recommend that the defendants’ motion to dismiss that complaint (Doc. 83) be granted. Moreover, I recommend that the dismissal be with prejudice since the plaintiffs have had a fair and sufficient opportunity to submit a viable complaint. I. The plaintiffs are a putative class of persons who purchased common stock in PharMerica, Inc., between January 7, 1998, and July 24, 1998. PharMerica is a corporation that was registered with the Securities and Exchange Commission (SEC) and whose common stock was actively traded on the NASDAQ market during the class period. It provided pharmacy products and services to the elderly, chronically ill, and disabled in long-term care and alternate site settings, such as skilled nursing and assisted living facilities. It also supplied mail-order pharmacy services to workers’ compensation and catastrophic care markets. The individual named defendants were purportedly officers of PharMerica during the class period. Thus, it is alleged (apparently inaccurately) that defendant Arnold Renschler was its president and chief executive officer and a member of its board of directors; defendant Robert Della Valle was the company’s executive vice president and chief executive officer; and defendant James Shelton was the company’s executive vice president and chief financial officer (Doc. 81, pp. 9-10). PharMerica was formed in December 1997, through a merger of the Pharmacy Corporation of America (PCA) and Capstone Pharmacy Services (Capstone), two corporations that provided institutional pharmacy products and services. It was perceived that changes in the institutional pharmacy industry favored the consolidation of pharmacies because, among other things, larger size equated to larger discounts from suppliers and a national market presence was purportedly beneficial in competing for contracts. Accordingly, in light of these benefits that prompted the merger of Capstone and PCA, PharMerica declared that after the merger it would employ a “growth through acquisition” strategy in order to increase its sales and improve its profitability. In furtherance of its growth strategy, PharMerica pursued the acquisition of many pharmaceutical companies during the first and second quarters of 1998. The second amended complaint (which for convenience will usually be referred to simply as “the complaint”) focuses on the press releases announcing a number of acquisitions. Thus, the complaint alleges that in a press release dated January 7, 1998, PharMeriea stated (id. at pp. 14-15): [It] ... ha[d] expanded its pharmacy network on both coasts with the acquisitions of Sweetwater Pharmacy in Spring Valley, Calif., and Hollins Manor Pharmacy in Roanoke, VA. Together, the acquisitions are expected to generate $11.2 million as a result of services provided to nearly 4,300 beds. The following day, January 8, 1998, PharMeriea announced its acquisition of the Medical Arts Pharmacy of Pittsburgh. It stated that “[t]he acquisition marks Pharmerica’s [sic ] entry into the Pittsburgh metropolitan area and is expected to generate $8.4 million as a result of services provided to nearly 1,350 beds” (id. at p. 16). On January 15, 1998, PharMeriea issued a press release publicizing its acquisition of Resident Care Pharmacy in North Carolina, saying that “[t]he acquisition is expected to generate $14.5 million as a result of services provided to approximately 3,800 beds” (id. at p. 17). On January 20, 1998, PharMeriea announced its acquisition of Express Pharmacy Services (EPS) and Tmesys, Inc., providers of mail-order pharmacy services for the workers’ compensation industry. The press release allegedly said that “[w]ith an average annual growth rate of 21% since 1993, EPS and Tmesys are expected to generate more than $30 million in revenue this year” (id. at p. 18). On February 9, 1998, PharMeriea issued a press release announcing record revenues of $195.3 million and pro forma net income of $7.2 million, or $.12 per share, for the fourth quarter ending December 31, 1997. In this regard, Renschler allegedly commented (id. at pp. 25-26): The record levels of revenues and earnings before non-recurring charges reported for the fourth quarter and twelve months of fiscal 1997 reflect the continuing strong operating trends of our Company and the successful consummation of the merger announced last year. I am pleased to report that we have achieved the milestones in connection with the merger which we anticipated would be completed by year end. During the fourth quarter we acquired pharmacy operations which will add approximately $34 million in annualized revenues and expand our service coverage in several key states. With our new credit facility in place we will have additional capital resources to continue our strategic acquisition program. Our commitment is to provide superior pharmacy services to our patients while creating value for our shareholders. On February 18, 1998, PharMerica announced the acquisition of Kentucky Health Services, Inc., making PharMerica the largest institutional pharmacy services provider in Kentucky. The press release said that this acquisition was expected to generate $20.6 million in 1998 (id. at p. 28). On February 27, 1998, PharMerica announced, as “part of [its] strategic plan to improve efficiencies of scale and expand geographic reach,” its acquisition of a Michigan pharmaceutical company (id. at p. 29): Pharmeriea [sic ] ... is entering the Michigan market with the acquisition of the long-term care business formerly owned by Frank’s Pharmacy and Medical Supply in Detroit. The acquisition is expected to generate annual revenues of approximately $5.8 million. In March 1998, PharMerica publicized more acquisitions of pharmaceutical companies. Thus, on March 3, 1998, PharMer-ica issued a press release relating that it had acquired the Whitney Village Pharmacy in California. It stated that “[t]his acquisition, along with our other recent string of pharmacy transactions, continues PharMerica’s dynamic growth and adds enhanced value for our customers and investors” (id. at p. 30). The complaint alleged (incorrectly) that on “March 6,” [sic ] 1998, PharMerica announced its acquisition of Senior Dimensions Pharmacy in Minneapolis, Minnesota, and Western North Carolina Pharmacy in Waynesville, North Carolina (id. at p. 32). PharMerica stated that these pharmacies were expected to generate annual revenues of nearly $7 million and that “[t]hese acquisitions support our strategy of becoming a key player in nationwide markets” (id.). PharMerica further said that, “[b]y including these companies in our family of pharmacy services, Pharmeriea [sic] adds value for our customers and investors” (id.). Allegedly as a result of these positive press releases and financial statements, PharMerica’s stock price reached its 52-week high of $16 per share on March 13, 1998 (id. at p. 33). Financial results for the year 1997 were stated in PharMerica’s annual report filed with the SEC on March 31, 1998. That report said that PharMerica used “more centralized financial and inventory controls systems support than is typically available to small, independent pharmacy operators” and that many services, including oversight and financial and accounting functions, were performed at the corporate level (id. at p. 34). In that report, it elaborated (id.): [PharMerica] believes that, when fully realized, the synergies from the merger [between PCA and Capstone] would be approximately $25 million annually. This includes savings from the consolidation of 19 institutional pharmacies, seven of which have already occurred, more favorable pricing terms in the Company’s new primary purchasing contracts and corporate and regional overhead reductions. The Company expects to realize approximately $16 million of these synergies in 1998 and the full $25 million.. .beginning in 1999. On April 1, 1998, PharMerica announced that $325 million in notes had been placed. Defendants used this opportunity to continue to extol the supposed success of its acquisition strategy, and the “milestones” the company was achieving. With regard to the credit facility Renschler stated (id. at pp. 35-36): We are pleased with the reception to our subordinated debt offering and, as a result, we have increased our offering from $300 million to $325 million. The interest rate on this offering reflects PharMerica’s position as a leading provider of institutional pharmacy services. On April 15, 1998, PharMerica announced its acquisition of the Chamberlain Group, LLC, of Virginia. PharMerica issued a press release on May 4,1998, reporting record revenues for the first quarter ending March 31, 1998 (id. at pp. 36-37). It announced revenues of $274 million and a net income of $.13 per share, which was a 59% increase over the previous year’s results (id. at p. 37). In this connection, Renschler commented (id.): PharMerica’s strong, top-line growth, combined with improvements in operating margins, has resulted in solid first quarter financial performance and progress in achieving our strategic objectives. Thanks to our extensive merger integration planning, we have achieved all of the first quarter milestones established last year. With PharMerica’s first quarter successes, we are well-positioned to move forward with efforts to establish PharMeri-ca as the nation’s premier provider of geriatric pharmacy services. On May 15, 1998, these financial results were repeated to the SEC in PharMerica’s Form 10-Q, which also iterated (id. at p. 41): The Company believes that, when fully realized, the synergies from the merger would be approximately $25 million annually. The Company expects to realize approximately $16 million of these synergies in 1998 and the full $25 million... beginning in 1999. PharMerica further noted in the Form 10-Q, however, that it had a negative operating cash flow for the first quarter of 1998 totaling $13.6 million. Defendant Renschler sent a letter dated May 15, 1998, to the shareholders, which was filed with the SEC on May 18, 1998. The letter allegedly said (id. at pp. 39-40): Our first annual report outlines our success in combining the resources of two outstanding institutional pharmacy groups, Capstone Pharmacy Services, Inc. and Pharmacy Corporation of America (PCA). This effective integration is a key to PharMerica’s leadership position in the new competitive marketplace. Because of the progress we have made since our merger, we thought we would give you an update on these accomplishments and where we are headed. The recent first quarter also saw a great emphasis placed on taking advantage of the benefits of integration. Finally, we are happy to report that at our first senior management meeting in April, the energy and camaraderie exhibited by PharMerica managers proved that Capstone and PCA have merged easily and quickly. In June and July 1998, PharMerica announced the acquisition of three more companies. Thus, on June 8, 1998, the company issued a press release allegedly stating that it had reached an agreement in principle to acquire NIPSI in New Mexico, which operated 35 pharmacies in 15 states and served 38,000 beds (id. at p. 47). This press statement was followed on July 9, 1998, with the following announcement (id. at p. 48): PharMeriea ... is expanding its pharmacy network with the acquisition of Apothecare Pharmacy Inc. in Tampa, Fla. and Greenville Pharmacy in Portland, Conn.... The acquisitions are expected to generate $2 million of annual revenues each. On July 23, 1998, PharMeriea issued a press release announcing its earnings for the second quarter of 1998. The earnings per share were at least $.02 less than the $.14 per share the market had expected (id. at p. 50). Following this announcement, PharMeriea common stock fell approximately 40%, to close at $5.50 per share (id. at p. 51). On August 4, 1998, the company officially announced earnings of $.12 per share. Renschler allegedly stated that the following factors had contributed to the company’s reported results (id. at p. 52): (1) To realize improved efficiencies of scale, PharMeriea has shifted its emphasis to larger acquisitions, which inherently require more time to close and the planned transaction with IHS [NIPSI] did not close during the second quarter as anticipated; (2) the divestiture of non-strategic businesses has begun with the sale of PharMerica’[s] department of corrections (DOC) business, but other non-strategic businesses have not been divested as anticipated; (3) there have been operating shortfalls at a limited number of pharmacy locations, which are currently being addressed; and (4) there were delays in the consolidation of some same-site pharmacies. In connection with the earnings announcement, Renschler advised that Shelton was being replaced as chief financial officer and would assume new duties as senior vice president of corporate development. On November 9, 1998, PharMeriea announced a net loss of $127.4 million for the, third quarter of 1998 (id. at p. 52). PharMeriea stated that the results were affected by pre-tax charges related to write-downs of certain assets. Specifically, there was an impairment loss of approximately $99 million relating primarily to five pharmacies and a loss of $4.5 million from the sale of its department of corrections business (id. at pp. 52-53). There was also a pre-tax charge of $37 million to increase the company’s allowance for doubtful accounts due to a change to a “more conservative accounting method” (id. at p. 53). On November 27, 1998, the plaintiffs filed this class-action lawsuit. Their complaint was subsequently amended twice: first, as a matter of course in connection with the consolidation of a related lawsuit, and second, in response to a determination that the first amended complaint failed to satisfy the pleading requirements of the Private Securities Litigation Reform Act (Docs. 80, 82). In the second amended complaint, the plaintiffs allege generally that, during the class period from January 7, 1998, through July 24, 1998, the defendants disseminated false and misleading statements in their press releases, financial statements and reports that minimized the risks associated with the company’s aggressive acquisition strategy and the complexities in consolidating Capstone and PCA (Doc. 81, p. 5). They also contend that PharMeriea falsely portrayed the costs associated with the consolidation program and the performance of several of the acquired entities (id). The plaintiffs further allege that the defendants issued materially inflated financial results as part of their overall scheme to conceal and misrepresent the true state of the company’s business and operating condition in order to maintain the market price of its common stock at artificially inflated levels {id. at pp. 5-6). As a result, the plaintiffs assert that they suffered damages in connection with the purchase of PharMerica stock during the period from January 7, 1998, through July 24, 1998 {id. at pp. 7, 67). More specifically, the plaintiffs contend that, virtually from its inception, PharMer-ica’s growth strategy was a failure and that the defendants knew it {id. at pp. 3-5). Among other things, the plaintiffs allege that, from the outset, PharMerica knew that it (1) was experiencing serious operational problems integrating the computer systems of Capstone and PCA and its acquisitions; (2) had no reasonable basis for the projected revenues of its newly acquired pharmacies as stated in many press releases; (3) set unrealistic goals and budgets for many of its pharmacies; (4) arbitrarily increased monthly revenues; (5) had bogus or inflated accounts with nursing homes and retained as clients known credit risks; (6) failed to properly bill customers and pursue accounts receivable; and (7) was experiencing delays in divesting certain businesses and consummating announced acquisitions {id. at pp. 20-25). Furthermore, the plaintiffs assert that PharMerica materially overstated its income in order to deceive the investing public into thinking that the merger and the growth by acquisition strategy were proceeding smoothly. Thus, the plaintiffs allege that the defendants engaged in accounting manipulations by improperly deferring impairment losses, purportedly in violation of generally accepted accounting principles (GAAP) {id. at p. 44). The plaintiffs allege in particular that the defendants improperly deferred from earlier accounting periods a $103.5 million impairment loss generated by five of its pharmacies and its department of corrections business {id.). The defendants, in response to the second amended complaint, have filed a motion to dismiss the complaint for failure to state a claim for relief (Doc. 83). Specifically, they argue that the second amended complaint fails to satisfy the stringent pleading requirements of the Private Securities Litigation Reform Act. They contend further that the second amended complaint should be dismissed with prejudice because the plaintiffs have had ample opportunity to investigate their allegations of wrongdoing and draft a cognizable complaint. The motion to dismiss was referred to me for a report and recommendation (Doc. 87). Thereafter, a hearing was conducted on the motion. II. In the second amended complaint (Doc. 81), the plaintiffs allege that the defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the Act), 15 U.S.C. 78a et seq. In § 10, the Act makes it illegal for any person “[t]o use or employ, in connection with the purchase or sale of any security registered on a national securities exchange or any security not so registered, any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the [Securities and Exchange] Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors.” 15 U.S.C. 78j(b). In Rule 10b-5, the SEC made it unlawful to, among other things, “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 light of the circumstances under which they were made, not misleading.” 17 C.F.R. 240.10b-5. In order to state sufficiently a daim for securities fraud under Rule lob-5, the plaintiff must allege (1) a misstatement or omission, (2) of a material fact, (8) made with scienter, (4) upon which the plaintiff relied, (5) that proximately caused the plaintiffs injury. Bryant v. Avado Brands, Inc., 187 F.3d 1271, 1281 (11th Cir.1999). The sufficiency of claims of securities fraud, contrary to the plaintiffs’ suggestion (Doc. 89, p. 8), is not determined pursuant to the standard of Conley v. Gibson, 355 U.S. 41, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957), under which a complaint passes muster unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which could entitle him to relief. Indeed, in all events, averments of fraud must be stated with particularity. Rule 9(b), F.R.Civ.P. The plaintiffs are correct that all well-pleaded facts are accepted as true, and all reasonable inferences drawn therefrom are construed in the light most favorable to their side. Ehlert v. Singer, 245 F.3d 1313, 1315 (11th Cir.2001). In cases of alleged securities fraud, however, Congress in 1995 increased the pleading requirements through the enactment of the Private Securities Litigation Reform Act (Reform Act). 15 U.S.C. 78u-4 et seq. The Reform Act provides that, when a plaintiff alleges that a defendant made an untrue statement of a material fact or omitted a material fact necessary to make a statement not misleading, “the complaint shall specify each statement alleged to have been misleading, the reason or reasons why the statement is misleading, and, if an allegation regarding 'the statement or omission is made on information and belief, the complaint shall state with particularity all facts on which that belief is formed.” 15 U.S.C. 78u-4(b)(l). Furthermore, “the complaint shall, with respect to each act or omission ..., state with particularity facts giving rise to a strong inference that the defendant acted with the required state of mind.” 15 U.S.C. 78u-4(b)(2). The Eleventh Circuit has held that, under the Reform Act, a showing of severe recklessness generally continues to be sufficient to establish the requisite state of mind. Bryant v. Avado Brands, Inc., supra, 187 F.3d at 1283. “ ‘Severe recklessness is limited to those -highly unreasonable omissions or misrepresentations that involve not merely simple or even inexcusable negligence, but an extreme departure from the standards of ordinary care, and that present a danger of misleading buyers or sellers which is either known to the defendant or is so obvious that the defendant must have been aware of it.’ ” Bryant v. Avado Brands, Inc., supra, 187 F.3d at 1282 n. 18. The Reform Act, however, set out particular circumstances where a showing of severe recklessness would not suffice. Thus, the Reform Act created a “safe harbor” that will shield defendants from liability for certain “forward-looking” statements. 15 U.S.C. 78u-5(c); Bryant v. Avado Brands, Inc., supra, 187 F.3d at 1278-79. A forward-looking statement is defined as a statement regarding, among other things, financial projections, management’s plans and objectives for future operations, future economic performance, and assumptions relating to any of these types of statements. 15 U.S.C. 78u-5(i)(l). The safe harbor enables defendants to avoid liability with respect to forward-looking statements if the statement is identified as a material forward-looking statement and is accompanied by “meaningful cautionary statements identifying important factors that could cause actual results to differ materially from, those in the forward-looking statement.” 15 U.S.C. 78u-5(c)(1)(A); see also Harris v. Ivax Corp., 182 F.3d 799, 807 (11th Cir.1999). If the statement is accompanied by the required meaningful cautionary language, “the defendants’ state of mind is irrelevant.” Harris v. Ivax Corp., supra, 182 F.3d at 803; Theoharous v. Fong, 256 F.3d 1219, 1225 n. 6 (11th Cir.2001). Alternatively, if the material forward-looking statement is not accompanied by meaningful cautionary statements, the defendants will not be liable unless the plaintiffs prove that the forward-looking statement was made with actual knowledge that the statement was false or misleading. 15 U.S.C. 78u-5(c)(l)(B); Harris v. Ivax Corp., supra, 182 F.3d at 803. Thus, the plaintiffs in this type of circumstance must allege with particularity facts giving rise to a strong inference that the defendants made the forward-looking statements with actual knowledge that they were false or misleading. Theoharous v. Fong, supra, 256 F.3d at 1224-27. III. A. The Reform Act expressly requires a complaint in this type of case, in order to avoid dismissal, to “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)(l). This statutory requirement obviously contemplates that, upon a motion to dismiss, an analysis will be conducted on a statement-by-statement basis. Unfortunately, the parties’ memoranda do not contain an analysis of that kind, although the defendants’ reply does at least evaluate an example of an alleged false statement in a press release (Doc. 91, pp. 5-7). The plaintiffs’ approach in their memorandum is to make broad allegations of fraud and to convey the impression that something improper took place; the memorandum lacks any particularized focus upon the specific statements alleged in the complaint to be false or misleading. The defendants’ method was to characterize the false or misleading statements as falling into two categories (the “Acquisition Theory” and the “Write-Off Theory”) (Doc. 83, p. 9; Doc. 91, p. 4), despite the fact that the plaintiffs insist that “the two ‘theories’ are part of an integrated whole and cannot be considered apart from one another” (Doc. 89, p. 11) and despite the fact that these two categories do not cover all of the statements set out in the complaint as being false or misleading. In other words, the parties’ memoranda lack the detailed analysis of each alleged false or misleading statement that is envisioned by the Reform Act. The plaintiffs’ seventy page complaint describes in a thirty-seven page section in the middle of the document alleged false and misleading statements that were made on fifteen occasions between January 7, 1998, and July 9,1998 (Doc. 81, pp. 14-50). In that section, the plaintiffs attempted to comply with the Reform Act by setting forth the false and misleading statements and the reasons why the statements were false or misleading. Consequently, the general allegations of fraudulent conduct that the plaintiffs have strewn throughout the remainder of the complaint will not be considered in determining which statements are alleged to be false or misleading and why they are false or misleading. Further, within the section containing the alleged false or misleading statements, the plaintiffs have quoted from various press releases and SEC filings. Some of the quoted language is contextual or, for other reasons, cannot reasonably be viewed as a potential false or misleading statement. Accordingly, any language that is not related to the reasons given for alleging that the statement is false or misleading will be disregarded. However, within these parameters there remain numerous statements that require individual analysis. The place to start is with the allegation that the defendants made false and misleading statements regarding pharmacies that PharMerica was acquiring. While, contrary to the defendants’ approach, the alleged false and misleading statements do not relate exclusively to the acquisitions, they primarily concern that subject. The alleged false and misleading statements that relate to other matters will be considered after the statements regarding acquisitions have been fully addressed. B. The main thrust of the plaintiffs’ complaint is based upon statements concerning the defendants’ expectations about revenues from pharmacies being acquired. These statements, in general, do not support a claim of fraud because the plaintiffs failed to allege any facts showing that the expectations did not come true. In other words, the statements were not false. Further, the statements about expected revenues from acquisitions were forward-looking statements. Most of these statements are not actionable because they were accompanied by meaningful cautionary statements. In addition, the allegations regarding these forward-looking statements are insufficient since they fail to demonstrate that the statements were made with actual knowledge that they were false or misleading. 1. The first alleged false or misleading statement was made on January 7, 1998, just shortly after the December 1997 merger that created PharMerica. This claim is based upon a press release that contained the following announcement (Doc. 81, ¶ 30): Pharmerica [sic ] (formerly Capstone and Pharmacy Corporation of America) has expanded its pharmacy network on both coasts with the acquisitions of Sweetwater Pharmacy in Spring Valley, Calif., and Hollins Manor Pharmacy in Roanoke, VA. Together, the acquisitions are expected to generate $11.2 million as a result of services provided to nearly 4,300 beds. The reasons given in the complaint why these statements are false or misleading are, in their entirety (Doc. 81, ¶¶ 31, 32): 31. The Company’s January 7, 1998 statements were false and misleading because, as Defendants knew, but omitted to disclose to the investing public, the merger between Capstone and PCA was problematic from the outset. As discussed in ¶ 40 below, PharMerica was having severe problems integrating the systems of PCA and Capstone and subsequently integrating those systems with the systems of other pharmacy operations it was acquiring. For example, as specially discussed at ¶ 40(a) below, immediately upon consummation of the Capstone/PCA merger the Company began experiencing extreme difficulty in merging the computer systems of Capstone and PCA. 32. Moreover, the statements in the January 7 press release were false and misleading because, at the time defendants announced these acquisitions— both of which had been consummated in December 1997 — defendants omitted to disclose that their revenue forecast (of $11.2 million) had no reasonable basis as the Company had yet to generate any positive cash flows from these pharmacies. As reported in the Company’s Form 10-Q for the period ended March 31, 1998, the Company had negative operating cash flows in the amount of $13.6 million for the first quarter of 1998. What is completely missing from the plaintiffs’ statement of reasons is an allegation that the two pharmacies did not generate $11.2 million. Such an allegation is absolutely fundamental to demonstrating that the press release contained a false statement regarding expected revenues. All that the plaintiffs said about the revenue forecast is that at the time the statement was made the defendants had no reasonable basis for it because the pharmacies had not yet generated any cash flows for PharMerica. Of course, they had not: The pharmacies had just been acquired. Consequently, this alleged reason is vacuous. If the plaintiffs desired to show that the two pharmacies could not reasonably be expected to generate $11.2 million in revenues, the plaintiffs needed to, but did not, allege specific facts about their pre-acquisition revenue-generating histories. In all events, the allegation that the two pharmacies had not generated any cash flows for PharMerica falls miles short of an allegation that the pharmacies did not generate $11.2 million, as the press release said was expected. The complaint also gave as a reason for alleging that the revenue forecast was false or misleading the fact that PharMeri-ca’s Form 10-Q for the period ending March 31, 1998, reported a negative operating cash flow of $13.6 million for the first quarter of 1998. This allegation is clearly beside the point. It does not refer to the two pharmacies that are the subject of the press release and, thus, it plainly does not show that revenues of $11.2 million were not generated by those two pharmacies. Moreover, the defendants point out that the Form 10-Q explained that the negative cash flow resulted primarily from an increase in accounts receivable that had not yet been converted to cash (Doc. 83, p. 7). The plaintiffs also give as a reason why the press release about expected revenues was false or misleading that the merger between Capstone and PCA was problematic from the outset. Thus, they assert that PharMerica was having problems integrating PCA and Capstone systems, particularly their computer systems. However, the alleged problems with the Capstone and PCA merger do not demonstrate that it was false or misleading to say that the two pharmacies are expected to generate $11.2 million. The alleged merger problems have no apparent relationship to the revenues expected to be generated by the Sweetwater Pharmacy in Spring Valley, California, and the Hollins Manor Pharmacy in Roanoke, Virginia. Moreover, there are no allegations which attempt to explain why the alleged merger problems make the statements about the expected revenues from the two pharmacies false or misleading. This purported reason, in fact, is so meritless that it underscores the fatal weakness of the plaintiffs’ effort to show that the challenged statement was false or misleading. At this point, it is appropriate to note that the alleged merger problems are a recurring theme throughout the complaint. There is the implicit suggestion that the defendants had a general obligation to disclose those problems. That suggestion is incorrect. Rule 10b-5, as pertinent here, renders it unlawful for any person “[t]o 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 light of the circumstances under which they were made, not misleading.” 17 C.F.R. 240.10b-5(b). Thus, the rule* in addition to prohibiting affirmative false statements, requires the disclosure of facts that would make affirmative statements not misleading.. Under this requirement, it is not enough to be actionable for a defendant simply to omit information potentially of interest to investors, but rather the omission must render statements actually made misleading. In re S1 Corporation Securities Litigation, 173 F.Supp.2d 1334, 1350 n. 12 (N.D.Ga.2001) (Doc. 100, p. 25 n. 12); see Clay v. Riverwood International Corp., 157 F.3d 1259, 1268-69 (11th Cir.1998) (Rule 10b-5 elements include a showing that “defendant omitted to state facts that would be necessary to make other statements the defendant made not misleading to plaintiff’), opinion modified on other issues, 176 F.3d 1381 (11th Cir.1999); see also Basic Inc. v. Levinson, 485 U.S. 224, 239 n. 17, 108 S.Ct. 978, 99 L.Ed.2d 194 (1988)(“Silence, absent a duty to disclose, is not misleading under Rule 10b-5.”); Jensen v. Kimble, 1 F.3d 1073, 1078 (10th Cir.1993)(“As Rule 10b-5 indicates, a manipulative or deceptive omission is an omission which renders the other affirmative statements made by an individual misleading.”); Schlifke v. Seafirst Corp., 866 F.2d 935, 944 (7th Cir.1989)(“The express language of 10b-5 only proscribes omissions that render affirmative statements misleading .... ”). Consequently, the failure to disclose alleged merger problems is not actionable unless the plaintiffs can show that facts that were not disclosed render statements that were made misleading. As previously demonstrated, the plaintiffs did not show that the nondisclosure of the alleged merger problems caused the statements in the January 7, 1998, press release about expected revenues from two newly-acquired pharmacies to be misleading. And, as will be seen, the same is true for all of the other challenged statements regarding expected revenues from pharmacy acquisitions. Indeed, until the defendants’ statements relating to the merger are discussed later, the plaintiffs’ reliance upon nondisclosure of alleged merger problems is totally misplaced. In sum, notwithstanding all that the parties have written and said, the answer to whether the plaintiffs have stated a claim regarding the January 7, 1998, press release is this simple: The plaintiffs have not alleged that the two pharmacies did not generate the expected $11.2 million. Without such an allegation, the plaintiffs cannot show that the press release contained a false or misleading statement regarding expected revenues. In order to establish that the statement about expected revenues was false or misleading, the plaintiffs would have to demonstrate that the defendants did not genuinely and reasonably believe it at the time it was made. In re Donald J. Trump Casino Securities Litigation, 7 F.3d 357, 368 (3rd Cir.1993), cert. denied, 510 U.S. 1178, 114 S.Ct. 1219, 127 L.Ed.2d 565. There are no allegations in this case that render it conceivable that the plaintiffs could make such a showing without proving that the revenue expectations were not attained. Consequently, the failure to allege that the revenue forecast was not achieved is enough to defeat the contention that the statement about expected revenues in the January 7, 1998, press release (and all similar press releases) was false or misleading. ■ Furthermore, the former Fifth Circuit has said that “[a]n opinion or prediction is actionable if there is a gross disparity between prediction and fact.” First Virginia Bankshares v. Benson, 559 F.2d 1307, 1314 (5th Cir.1977), cert. denied, 435 U.S. 952, 98 S.Ct. 1580, 55 L.Ed.2d 802. Obviously, a gross disparity with the revenue forecast cannot be shown without an allegation that the revenue expectations were not reached. This confirms that, in the absence of such an allegation, the statement about expected revenues in the January 7, 1998, press release (as well as in similar press releases) is not actionable. The defendants point out, moreover, that there are other reasons why the claim based upon the January 7, 1998, press release should be dismissed. Specifically, they establish that the challenged statement in that press release falls within the protection of the Reform Act’s safe-harbor provisions. The statement that the two acquired pharmacies “are expected to generate $11.2 million” is undoubtedly a forward-looking statement. The Reform Act defines such statements to include “a statement containing a projection of revenues.” 15 U.S.C. 78u-5(i)(l)(A). A statement that the two acquisitions are expected to generate $11.2 million falls squarely within that definition. Consequently, under the Reform Act, the statement is not actionable if it is “identified as a forward-looking statement, and is accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those in the forward-looking statement.” 15 U.S.C. 78u-5(c)(1)(A)(i); Harris v. Ivax Corp., supra, 182 F.3d at 803. The January 7, 1998, press release contained the following statement (Doc. 83, Ex. E, pp. 1-2): This release involves forward-looking statements with respect to acquisition prospects, development of preferred provider relationships and other plans and expectations on the part of the company. The accuracy of these statements involves a number of risks and uncertainties, including but not limited to the availability of acquisition prospects and financing for such prospects, changing economic and market conditions that would impact such prospects or financing related thereto, changes in governmental reimbursement regulations and laws which could impair or hinder the entering into of strategic alliances of preferred provider agreements, as well as other risk factors detailed in the company’s Securities and Exchange Commission findings [sic ], to which recipients of this release are referred for additional information concerning the company and its prospects. With respect to the SEC filings to which the press release intended to refer, the defendants rely upon the statement that the “successful implementation of its growth strategy depends upon its ability to identify, consummate and integrate acquisitions ...” (Doc. 83, Ex. A, p. 19; Ex. B, p. 191). These cautionary statements are clearly general, and may even be fairly characterized as “boilerplate,” as the plaintiffs contend. On the other hand, a cautionary statement does not have to list all factors that might cause actual results to differ from those in the forward-looking statement, and does not necessarily have to identify the specific factor that led to different results. Harris v. Ivax Corp., supra, 182 F.3d at 807. In this case, the investing public was warned that “[t]he accuracy of these statements [about expected revenues] involves a number of risks and uncertainties ...” (Doc. 83, Ex. E, p. 17). It was further told by SEC filings that successful growth depended upon the ability to integrate the acquisitions (id. at Ex. B, p. 191). It is hard to perceive what else the investing public needed to be told to be meaningfully cautioned that the projected revenues of $11.2 million might not be reached. Importantly, the plaintiffs in their memorandum do not identify any risk factors that should have been stated in the cautionary language, but were not, in order to warn more meaningfully the investing public about uncertainties regarding the expected revenues. In this circumstance, therefore, the general cautionary statements provided by the defendants were sufficiently meaningful to bring the statements within the Reform Act’s safe harbor. Accordingly, for this reason also, liability cannot be based upon the January 7, 1998, press release. Furthermore, even if the cautionary statements were inadequate, the plaintiffs’ claim is defeated by the other prong of the safe-harbor provisions. Under the Reform Act, a forward-looking statement that is not accompanied by a meaningful cautionary statement cannot be the basis for liability if the plaintiff fails to prove that the statement was made with actual knowledge that it was false or misleading. 15 U.S.C. 78u-5(c)(l)(B). Moreover, the Reform Act requires that the complaint, with respect to each act or omission, “state with particularity facts giving rise to a strong inference that the defendant acted with the required state of mind.” 15 U.S.C. 78u-4(b)(2). Consequently, with respect to a forward-looking statement, the plaintiffs must allege facts creating a strong inference that the statement was made with actual knowledge that it was false or misleading. With respect to the statement in the January 7,1998, press release that the two “acquisitions are expected to generate $11.2 million,” the plaintiffs clearly fail to satisfy the heightened pleading requirement. Of course, as indicated, the plaintiffs did not allege that, in fact, the expectation was not met. They did allege that, at the time the statement was made, the defendants omitted to disclose that the revenue forecast had no reasonable basis because PharMerica had not yet generated any revenues from the two pharmacies. This is not only a conclusory allegation that falls short of asserting actual knowledge, but it fails to set forth particular facts creating a strong inference that, when the defendants made the statement, they knew it was false. Although the plaintiffs set forth additional scienter assertions in a section of the complaint, there is no mention in that section of the January 7, 1998, press release (Doc. 81, pp. 53-57). Consequently, that press release cannot be the basis for liability for the additional reason that the complaint fails sufficiently to allege the required state of mind. 2. The plaintiffs have challenged as false or misleading a press release on January 8, 1998, announcing the acquisition of Medical Arts Pharmacy of Pittsburgh. The complaint quotes the following portion of that press release (Doc. 81, p. 16): The acquisition marks Pharmerica’s [sic ] entry into the Pittsburgh metropolitan area and is expected to generate $8.4 million as a result of services provided to nearly 1,350 beds. This acquisition is one of a series that reflects Pharmerica’s [sic] goal of expanding our geographic reach in order to meet the needs of major markets across the country. PharMerica’s cutting-edge technologies enable its consulting pharmacists to capitalize on best practices nationwide..... PharMerica’s videoconferencing capabilities connect a nationwide network of PharMerica employees, allowing quicker, more efficient sharing of new information about medications and health care standards. The complaint gave only the following reasons for asserting that the statements were false or misleading (id. at pp. 16-17): The statements contained in the Company’s January 8, 1998 press release were false and misleading for the reasons set out in ¶¶ 31-32 above. Moreover, as was true of the January 7 statement regarding revenue, defendants had no reasonable basis for their statement that this acquisition was expected to generate $8.4 million. The Company, which purportedly consummated the Pittsburgh acquisition in December 1997, already was beginning to experience difficulties in integrating this pharmacy, and others, with the Company. In fact, as of January 8, 1998, the Company had yet to generate any positive cash flows from these pharmacies and as ultimately reported in the Company’s Form 10-Q for the period ended March 31, 1998, the Company had negative operating cash flows in the amount of $13.6 million for the first quarter of 1998. The only portion of the press release that the plaintiffs attack is the expected revenues of $8.4 million. The challenge to this statement is deficient for the same reasons-that the challenge to the January 7,1998, press release failed. First (and dispositively), the plaintiffs do not allege that the Pittsburgh pharmacy did not generate $8.4 million. Therefore, as previously explained, supra, pp. 1230-31, they have not alleged a false or misleading statement. The plaintiffs allege that PharMerica was beginning to experience difficulties in integrating thé Pittsburgh pharmacy with the company. This conclusory assertion is not supported by any facts explaining what those difficulties were and what bearing they had on the Pittsburgh pharmacy’s expected revenues. ’ This allegation therefore does not remedy the absence of an allegation that the expectation of $8.4 million in revenues was not attained. Further, the statement is plainly forward-looking and thus covered by the safe harbor. The press release contained the same language as the prior press release identifying the statement as forward-looking and pointing out that “[t]he accuracy of the statements involves a number of risks and uncertainties” (Doc. 83, Ex. E, p. 4). Although, as indicated previously, the cautionary language was general, it would appear to be sufficiently meaningful, particularly in the ábsence of any identification by the plaintiffs in their memorandum of a risk factor that should have been identified, but was not. Accordingly, the cautionary-language prong of the safe-harbor provisions would defeat liability based upon the January 8, 1998, press release. In addition, the plaintiffs have not alleged facts creating a strong inference that the statement about revenue expectation in the press release was made with actual knowledge that it was false or misleading. The statement of reasons quoted above does not contain any such particularized allegations. Further, there are no allegations in the scienter section of the complaint about the January 8, 1998, press release (Doc. 81, pp. 53-57). Accordingly, that press release is not actionable because the complaint lacks allegations demonstrating that it contained a false or misleading statement that was made with actual knowledge that it was false or misleading. 3. The plaintiffs assert that a January 15, 1998, press release announcing the acquisition of a North Carolina pharmacy contains false or misleading statements. The complaint quoted the following language from that press release (Doc. 81, p. 17): The acquisition is expected to generate $14.5 million as a result of services provided to approximately 3,800 beds. This and our other recent acquisitions fulfill our strategic goal of acquiring quality pharmacies in key geographic markets. The plaintiffs gave these reasons in the complaint for asserting that this press release contained false or misleading statements (id. at pp. 17-18): The statements contained in the Company’s January 15, 1998 press release were false and misleading for the reasons set out in ¶¶ 31-32 above; namely that defendants had no reasonable basis for their statement that this acquisition was expected to generate $14.5 million; the merger between PCA and Capstone was already proving to be problematic; the Company already was beginning to experience difficulties in integrating this pharmacy, and its others, with the Company; and, the Company had yet to generate any positive cash flows from these pharmacies, ultimately reporting in the Company’s Form 10-Q for the period ended March 31, 1998 that the Company had negative operating cash flows in the amount of $13.6 million for the first quarter of 1998. These reasons challenge only the statement that the acquisition was expected to generate $14.5 million. The complaint contains no allegation that the pharmacy did not generate $14.5 million. The reasons given for asserting that the press release is false or misleading are merely a serial listing of those reasons that have already been considered and found insufficient. Notably, there are no specific facts alleged about the North Carolina pharmacy. Thus, the plaintiffs have failed to allege facts showing that the statement in the January 15, 1998, press release about the expected revenues was false or misleading. Furthermore, the statement in the press release about expected revenues was clearly a forward-looking statement and it was accompanied by the same cautionary language contained in the earlier press releases (Doc. 83, Ex. E, p. 6). While, as noted, the cautionary language was general, the plaintiffs have again failed to identify any specific risk factor that should have been identified, but was not. Thus, under the safe-harbor provisions, the statement about expected revenues does not appear to be actionable. In addition, the plaintiffs have not alleged any facts either in the statement of reasons or in the scienter section that would create a strong inference that the defendants made the statement about expected revenues with actual knowledge that it was false or misleading. Therefore, the statement cannot be a basis for liability due to the alternative prong of the safe-harbor provisions. 4. The plaintiffs contend that a press release of January 20,1998, contained false and misleading statements about the acquisition of Express Pharmacy Services (EPS) and Tmesys, Inc. The only language quoted from the January 20, 1998, press release is the following (Doc. 81, p. 18): Other acquisitions announced this month include pharmacies in North Carolina, Virginia, Pennsylvania and California. With an average annual growth rate of 21% since 1993, EPS and Tmesys are expected to generate more than $30 million in revenue this year. Since, as the prior press releases establish, the first sentence is. obviously not actionable, the false or misleading statements are limited to the second sentence. Moreover, there is no allegation that it was false or misleading to say that the two organizations had an annual growth rate of 21% since 1993. Accordingly, the alleged false or misleading statement is limited to the expectation that EPS and Tmesys would generate $30 million in revenues in 1998. The plaintiffs purport to provide seven pages of reasons why the statement in the January 20, 1998, press release was false or misleading (Doc. 81, pp. 18-25). However, EPS and Tmesys are not even mentioned in those seven pages.. Rather, the complaint at that point alleges at length various operational problems encountered by PharMerica. Thus, the complaint asserts that (1) “[t]here were significant and pervasive problems associated with merging the computer systems of Capstone and PCA” (id. at p. 20); (2) “[t]he Company was unable to properly bill customers for healthcare products provided and also did not adequately pursue the accounts once due” (id. at p. 21); (3) “[t]he Company had set unrealistic, unattainable goals and budgets for many of its pharmacies” (id. at p. 22); (4) “[t]he reported revenue on monthly reports were [sic ] arbitrarily increased” (id.); (5) “[s]ome of PharMeriea’s accounts ... were bogus” (id.); (6) “PharMerica was having severe problems integrating its systems with the systems of the acquired pharmacy operations” (id. at p. 23); and (7) “PharMerica was having severe problems with inventory controls and efficiency” (id. at p. 24). These allegations, for the most part, had nothing to do with the acquisition of pharmacies, and, in all events, they are devoid of any connection with EPS and Tmesys. As previously indicated, supra, pp. 1229-30, the defendants did not have a general duty to disclose these alleged operational problems. Rather, the problems only needed to be disclosed if that was necessary to make affirmative statements not misleading. Plainly, a statement that EPS and Tmesys are expected to generate $30 million in revenues has no connection with the alleged difficulties attendant to the PCA-Capstone merger. Consequently, the January 20, 1998, press release did not give rise to a duty to disclose problems relating to the merger. As noted, the lengthy allegations did include the assertion that “PharMerica was having severe problems integrating its systems with the systems of the acquired pharmacy operations” (Doc. 81, p. 23). However, with respect to this assertion, all that the plaintiffs alleged was the following (id.): For example, the Company was having problems assimilating the human resource departments of its acquired pharmacies. Former employees who had left the Company were still receiving paychecks and receiving benefits weeks after they had left the Company. Further, the Company was experiencing extensive problems integrating employee medical and 401K benefits plans from acquired pharmacies into PharMerica’s employee medical and 401K benefit plans. These alleged problems have no apparent bearing on the statement that EPS and Tmesys were expected to generate $30 million in revenues. Accordingly, the problems (assuming they were even material) did not have to be disclosed in order to make the statement about the expected revenues not misleading. Despite the seven pages of allegations about the operational problems, what the plaintiffs did not allege is that EPS and Tmesys did not achieve $30 million in revenues in 1998. In other words, they failed to allege that the forward-looking statement did not come true. Without this allegation, the January 20, 1998, press release cannot support the plaintiffs’ claim because it does not contain a false statement. See, supra, p. 1230-31. In addition, the safe-harbor provisions preclude liability for the press release. The statement regarding expected revenues is clearly forward-looking. The press release, accordingly, notes that it “involves forward-looking statements with respect to acquisition prospects, ... and expectations on the part of the company” (Doc. 83, Ex. E, p. 9). It contains the same general cautionary language as the prior press releases. That language is sufficiently meaningful in view of the plaintiffs’ failure to identify any particular risk factor that should have been specified but was not. Furthermore, even in the absence of meaningful cautionary language, the statement of revenue expectations in the January 20, 1998, press release would not be actionable under the safe-harbor provisions because the plaintiffs have not adequately alleged that it was made with actual knowledge that it was false. Despite the seven pages of alleged reasons, the plaintiffs merely repeat the patently insufficient assertion that the defendants must have known it was false since the company had not yet received any positive cash flow and subsequently reported for the first quarter of 1998 an overall negative cash flow of $13.6 million. As previously explained, these assertions do not show that the defendants had actual knowledge that projected revenues of $30 million for EPS and Tmesys would not be realized. Significantly, there are no allegations in the seven pages of purported reasons, or in the scienter section, addressing EPS and Tmesys and demonstrating why the defendants knew that the forecast for those two organizations would not be achieved. Especially since the plaintiffs have not even alleged that EPS and Tmesys did not have revenues of $30 million in 1998, they have clearly failed to allege the requisite mental state with respect to the asserted falsity of the statement about those expected revenues. 5. The plaintiffs challenge in a press release of February 9, 1998, the statement that “[djuring the fourth quarter we acquired pharmacy operations which will add approximately $34 million in annualized revenues and expand our service coverage in several key states” (Doc. 81, p. ,26). The plaintiffs, however, do not allege any specific facts showing that this statement about acquired pharmacies was false or misleading. Thus, no facts are set forth showing that revenues of approximately $34 million were not achieved in 1998 by pharmacies acquired during the fourth quarter of 1997, or that the service coverage was not expanded in several key states. Thus, this statement in the February 9, 1998, press release cannot support a claim because the plaintiffs have failed to show that it was false or misleading. Moreover, the statement about expected revenues is forward-looking and protected by the safe-harbor provisions. The press release contains virtually the same cautionary language (Doc. 57, Ex. F), which, although general, appears meaningful in light of the plaintiffs’ failure to identify a particular risk factor that should have been included. In all events, the plaintiffs have not alleged any facts either in the supporting reasons or the scienter section that would raise any inference, much less a strong one, that the defendants made the statement about expected revenues with actual knowledge that it was false or misleading. 6. A press release on February 18, 1998, announced the acquisition of Kentucky Health Services, Inc., with expected reve