NEW YORK, Dec. 04, 2021 (GLOBE NEWSWIRE) -- Faruqi & Faruqi, LLP, a leading national securities law firm, is investigating potential claims against Eargo, Inc. (“Eargo” or the “Company”) (NASDAQ: EAR) and reminds investors of the December 6, 2021 deadline to seek the role of lead plaintiff in a federal securities class action that has been filed against the Company.
If you suffered losses exceeding $500,000 investing in Eargo stock or options between October 15, 2020 and September 22, 2021 and would like to discuss your legal rights, call Faruqi & Faruqi partner Josh Wilson directly at 877-247-4292 or 212-983-9330 (Ext. 1310). You may also click here for additional information: www.faruqilaw.com/EAR.
There is no cost or obligation to you.
Faruqi & Faruqi is a leading minority and Woman-owned national securities law firm with offices in New York, Pennsylvania, California and Georgia.
As detailed below, the lawsuit focuses on whether the Company and its executives violated federal securities laws by making false and/or misleading statements and/or failing to disclose that: (1) that Eargo had improperly sought reimbursements from certain third-party payors; (2) that the foregoing was reasonably likely to lead to regulatory scrutiny; (3) that, as a result and because the reimbursements at issue involved the Company’s largest third-party payor, Eargo’s financial results would be adversely impacted; (4) Eargo made numerous false and misleading representations concerning the extent of available insurance coverage for Eargo's products and how that coverage purportedly drove the Company's earnings and growth; (5) the Company touted its advertising as a key source of growth among insurance customers, including ads directly targeting federal employees and retirees, which purportedly grew Eargo's customer base at a low marginal cost (6) that, as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.
On August 12, 2021, after the market closed, Eargo revealed that claims submitted to the Company’s largest third-party payor, which accounted for 80% of Eargo’s accounts receivable, had not been paid since March 1, 2021.
On this news, the Company’s share price fell $8.00, or over 24%, to close at $24.70 per share on August 13, 2021, on unusually heavy trading volume.
On September 22, 2021, after market hours, Eargo disclosed that “it is the target of a criminal investigation by the U.S. Department of Justice (the ‘DOJ’) related to insurance reimbursement claims the Company has submitted on behalf of its customers covered by federal employee health plans.” The Company further stated that “[a]s previously disclosed, the Company has been the subject of an ongoing claims audit by an insurance company that is the Company’s largest third-party payor. The Company has been informed by the insurance company that the DOJ is now the principal contact related to the subject matter of the audit.” Finally, the Company announced that it “is withdrawing its financial guidance for the fiscal year ending December 31, 2021.”
On this news, Eargo’s shares fell approximately 60% during after-hours trading on September 22, 2021 and pre-market trading September 23, 2021, damaging investors.
The court-appointed lead plaintiff is the investor with the largest financial interest in the relief sought by the class who is adequate and typical of class members who directs and oversees the litigation on behalf of the putative class. Any member of the putative class may move the Court to serve as lead plaintiff through counsel of their choice, or may choose to do nothing and remain an absent class member. Your ability to share in any recovery is not affected by the decision to serve as a lead plaintiff or not.
Faruqi & Faruqi, LLP also encourages anyone with information regarding Eargo’s conduct to contact the firm, including whistleblowers, former employees, shareholders and others.
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