NEW YORK--(BUSINESS WIRE)--The law firm of Kirby McInerney LLP reminds investors that a class action lawsuit has been filed in the U.S. District Court for the Northern District of California on behalf of those who acquired Eargo, Inc. (“Eargo” or the “Company”) (NASDAQ: EAR) securities from February 25, 2021 through September 22, 2021 (the “Class Period”). Investors have until December 6, 2021 to apply to the Court to be appointed as lead plaintiff in the lawsuit.
Eargo is a medical device company. It claims that its hearing aids “are the first and only virtually invisible, rechargeable, completely-in-canal, FDA-regulated, exempt Class I and Class II devices for the treatment of hearing loss.”
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 declined by $8.00 per share, or approximately 24.5%, from $32.70 to close at $24.70 per share on August 13, 2021.
On September 22, 2021, after the market closed, 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 also acknowledged 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.” Eargo also added that it “is withdrawing its financial guidance for the fiscal year ending December 31, 2021.” On this news, the Company’s share price declined by $14.81 per share, or approximately 68.3%, from $21.67 per share to close at $6.86 per share on September 23, 2021.
The lawsuit alleges 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: (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; and (4) as a result, Defendants’ statements about its business, operations, and prospects were materially false and misleading and/or lacked reasonable basis at all relevant times.
If you purchased or otherwise acquired Eargo securities, have information, or would like to learn more about these claims, please contact Thomas W. Elrod of Kirby McInerney LLP at 212-371-6600, by email at investigations@kmllp.com, or by filling out this contact form, to discuss your rights or interests with respect to these matters without any cost to you.
Kirby McInerney LLP is a New York-based plaintiffs’ law firm concentrating in securities, antitrust, whistleblower, and consumer litigation. The firm’s efforts on behalf of shareholders in securities litigation have resulted in recoveries totaling billions of dollars. Additional information about the firm can be found at Kirby McInerney LLP’s website: http://www.kmllp.com.
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