BOSTON--(BUSINESS WIRE)--Berman Tabacco announces that it has filed a securities class action complaint in the United States District Court for the Northern District of California against Outset Medical, Inc. (“Outset” or the “Company”) (NASDAQ: OM) and certain current and former officers. This new securities class action is related to a pending case against Outset in the Northern District of California captioned Porcelli v. Outset Medical, Inc., et al., Case No. 24-CV-6124. The new class action complaint, however, alleges a longer class period and is brought on behalf of purchasers of Outset securities between September 15, 2020, and August 7, 2024, inclusive (the “Expanded Class Period”). The newly filed case is captioned Plymouth County Retirement Association v. Outset Medical, Inc., et al., Case No. 5:24-CV-07267, and alleges violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934.
Discuss Your Legal Rights and Options
If you wish to serve as Lead Plaintiff for the Class, you must file a motion to serve as Lead Plaintiff with the Court no later than October 28, 2024. Any member of the proposed class may move the Court to serve as Lead Plaintiff through counsel of their choice, or may choose to do nothing and remain a member of the proposed class.
If you purchased shares of Outset securities during the Expanded Class Period and sustained significant losses, and would like serve as Lead Plaintiff, please click here: Shareholder Contact | Berman Tabacco or contact us at 800-516-9926 or law@bermantabacco.com. A copy of the complaint is available here.
About the Lawsuit
The Complaint alleges that Outset is a medical technology company focused on kidney dialysis, the primary treatment for acute and chronic kidney failure. The Company’s flagship product is the Tablo Hemodialysis System (“Tablo”). In October 2022, Outset introduced the TabloCart with Prefiltration (“TabloCart”) as an accessory for the Tablo, intended to provide additional maneuverability and pre-filtration capabilities for poor water qualities.
On July 7, 2023, after market hours, Outset disclosed that it had received a Warning Letter from the FDA which “assert[ed] that certain materials … on the Company’s website promote continuous renal replacement therapy (CRRT), a modality outside of the current indications for the Tablo Hemodialysis System” and asserted that TabloCart “requires prior 510(k) clearance for marketing authorization.” On this news, Outset’s stock price fell $1.20, or 5.9%, to close at $19.26 per share on July 10, 2023.
On August 2, 2023, after market hours, Outset announced that it had paused the shipment of TabloCart pending the FDA’s 510(k) clearance. On this news, Outset’s stock price fell $1.97, or 10.2%, to close at $17.39 per share on August 3, 2023.
On October 12, 2023, after market hours, the Company revealed that revenue growth had been significantly impacted by the FDA’s warning letter. Specifically, the Company issued a press release announcing preliminary third quarter 2023 financial results, as well as updated financial guidance for 2023 revenue, which reflected that “[g]rowth in the quarter was dampened by a larger-than-expected impact in the field from the recent FDA warning letter.” On this news, the Company’s share price fell $3.38, or 49.9%, to close at $3.39 per share on October 13, 2023.
On August 7, 2024, after market hours, Outset released its second quarter 2024 financial results, significantly missing consensus estimates and lowering its full year 2024 revenue guidance by $39 million at the midpoint. The Company disclosed it would be forced to take “clear steps to improve our execution” including “sales team and process restructuring.” As a result, the Company revealed it would be unable to deliver on a post-approval sales ramp of TabloCart previously forecast. On this news, the Company’s share price fell $2.33, or 68.5%, to close at $1.07 per share on August 8, 2024.
The complaint alleges that throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants failed to disclose to investors that: (1) the TabloCart would require prior 510(k) clearance from the FDA for marketing authorization; (2) the Company had not obtained the required FDA clearance to market and sell the TabloCart; (3) as such, Outset would be forced to halt shipment of the TabloCart; (4) Outset had promoted continuous renal replacement therapy (or CRRT) as a modality within the FDA-approved indications for the Tablo, which was not the case; (5) Outset lacked the sales team and process to execute on the ramp of Tablo sales; (6) the Company’s internal controls were inadequate and resulted in the improper marketing of Tablo and TabloCart and that the Company’s SOX certifications were false and misleading when made; (7) the Company’s reports and financial statements did not fairly present in all material respects the financial condition, including the reliance on improper marketing, that the revenue and growth reported therein was the result of undisclosed, illicit and unsustainable improper marketing; and (8) 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.
About Berman Tabacco
Since 1982, our firm has prosecuted hundreds of securities and antitrust complex cases. The firm and its attorneys have been recognized for their work on behalf of plaintiffs, including by Chambers USA, Benchmark Litigation, which has ranked the firm as Highly Recommended and a Top Plaintiffs Firm, The Legal 500, U.S. News & World Report-Best Lawyers, The Daily Journal, Lawdragon, Who’s Who Legal, and Super Lawyers. The firm has offices in Boston, Massachusetts and San Francisco, California.
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