NEW YORK, Nov. 12, 2021 (GLOBE NEWSWIRE) -- 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) pursuant and/or traceable to the registration statement and prospectus (collectively, the “Registration Statement”) issued in connection with the Company’s October 2020 initial public offering (“IPO” or the “Offering”) and/or (b) between October 15, 2020 and September 22, 2021, inclusive (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 that manufactures and sells hearing aids directly to consumers with mild to moderate hearing loss. Eargo advertises heavily through various media outlets, touting the availability of insurance coverage for its products as a primary selling point and offering to process insurance claims on behalf of its customers.
In October 2020, the Company conducted its IPO, in which it ultimately offered and sold over 9 million shares of Eargo common stock at a price of $18.00 per share, reaping nearly $163 million in gross proceeds.
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 that Eargo made materially false and misleading statements concerning: (i) the extent of available insurance coverage for Eargo’s products and how it purportedly drove the Company’s earnings and growth; (ii) 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; and (iii) its insurance customers as an important revenue driver.
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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Contacts
Kirby McInerney LLP
Thomas W. Elrod, Esq.
212-371-6600
https://www.kmllp.com
investigations@kmllp.com
