Managing COVID-19: Whether to Announce Preliminary Financial Results and Adjust Guidance

The COVID-19 pandemic and its economic consequences have spurred a tremendous amount of market volatility, and many public companies can expect questions from shareholders and analysts regarding the effect of these factors on companies’ current and future operations and liquidity. The uncertainty of the pandemic’s duration and impact on the economy may lead some companies to stay silent until the next regularly scheduled earnings announcement. However, some companies may consider announcing preliminary financial results in advance of their regularly scheduled earnings release date, either to reassure the market and shareholders as to the operating performance and financial position of the company, or to alert shareholders about the likelihood that actual results will fall short of previously disclosed guidance. Further, companies that have disclosed guidance, and particularly quarterly guidance, may also consider whether it is appropriate to withdraw or update such guidance given the unprecedented economic dislocation brought about by the COVID-19 pandemic. This client alert discusses key considerations for companies navigating these issues.