iRhythm Technologies, Inc. (IRTC) saw a staggering 37.9% crash over the weekend after the market closed on April 9th, 2021. As of April 12th, 2021, IRTC sits at USD$82.44. This development coincides with the unfolding of a class action lawsuit against IRTC and some of its executive management team.
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What did IRTC do Wrong?
The charges laid against IRTC center around a failure to disclose information that was relevant during the Class Period, which spans from August 4th, 2020 to January 28th, 2021. This constitutes a violation of federal securities laws. As a result, any investors who bought shares within the Class Period timeframe are entitled to join the lawsuit and be compensated.
The First Fall
December 1st of 2020 saw the Centers for Medicare and Medicaid Services (CMS) unveil its Medicare Physician Fee Schedule Final Rule for 2021. This laid out the payment policies and rates to be used by Medicare for the following year. The Rule failed to finalize the specifics of pricing reimbursement rates for many of IRTC’s items. This incident was followed by a 20% drop in the price of IRTC’s shares.
The Second Wave
On January 29th, 2021, a discrepancy was found by a Baird Research analyst. The discrepancy was between the Medicare Administrative Contractor rates published by the MPFS and those published by Novitas Solutions. On disclosure of this news, IRTC dropped by 33%.
Allegations against IRTC
The crux of the case revolves around failure to disclose information and disclosing materially false or misleading statements. The case alleges that IRTC failed to inform its investors that recent developments in CMS’ policy-making would result in IRTC’s business suffering financially. Additional information that was withheld was that reimbursement rates would be drastically reduced. Furthermore, the uncertainty associated with the absence of national pricing in the CMS rule and fee schedule was not made apparent to shareholders.
Can IRTC Recover?
Cumulatively, statements made about these contentious issues are alleged to be false and/or misleading throughout the Class Period. This has caused many investors to, understandably, jump ship while other investors are seeing this as a speedbump in the longer run that both the company and its investors can recover from. Whether IRTC manages to recoup its losses or if this proves to be the final nail in their coffin remains to be seen as the class action lawsuit unfolds.
