Investors who had stakes in Outset Medical, Inc. may be in for a stomach-churning ride as Glancy Prongay & Murray LLP (“GPM”) unleashes a class-action lawsuit against the medical technology company. The lawsuit, filed in the United States District Court for the Northern District of California, alleges securities fraud over a period between August 1, 2022, and August 7, 2024.
Missteps and Market Fallout
The turbulent journey for Outset Medical investors started on July 7, 2023, when the FDA delivered a Warning Letter to the company. The content of the letter revealed a breach in FDA regulations leading to a 5.9% drop in stock price. The rollercoaster continued on August 2, 2023, with another press release causing a 10.18% plummet. By October 12, 2023, revenue growth took a nosedive of 49.9% due to the fallout from the FDA’s warning letter.
The Final Blow
Outset Medical’s woes reached a crescendo on August 7, 2024, when the company reported lackluster financial results, failing consensus estimates and slashing revenue guidance by $39 million. The stock price took a catastrophic 68.53% plunge, marking a new low for the embattled company.
The Allegations
The heart of the class-action lawsuit lies in the allegation that Outset Medical and its executives deliberately concealed vital information from investors. The failure to disclose that their Tablo products were marketed beyond FDA-approved indications, the Company’s lack of preparedness for the required 510(k) application, and the significant risk of sales halts due to pending approvals all form part of the alleged deceit.
Legal Remedy
Investors impacted by the tumultuous events surrounding Outset Medical between August 1, 2022, and August 7, 2024, are urged to take action within 60 days of the notice to potentially become the lead plaintiff in the case. Failure to act could result in forfeiting rights as a class member in the lawsuit. Those seeking further information or legal counsel can reach out to GPM for guidance.
Conclusion
The Outset Medical saga serves as a cautionary tale for investors, reminding them of the importance of transparency and regulatory compliance in the volatile world of securities trading. As legal proceedings unfold, the fallout from this controversy may have far-reaching implications for the company and its stakeholders.
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