- Glazing Employers and Glaziers' Union Local #27 Pension and Retirement Fund v. iRhythm Technologies, Inc. et al.
- Class Period:January 11, 2022 - May 30, 2023
- Date Filed:February 06, 2024
- Jurisdiction:U.S. District Court, Northern District of California
- Docket Number: 3:24-cv-00706
- Lead Plaintiff Deadline: April 8, 2024
Seek Plaintiff 47
A class action lawsuit has been filed against iRhythm Technologies, Inc. (“iRhythm” or the “Company”) (NASDAQ: IRTC) and certain of the Company’s current and former senior executive officers alleging violations of the Securities Exchange Act of 1934. The iRhythm lawsuit is brought on behalf of all persons and entities who purchased or otherwise acquired iRhythm common stock between January 11, 2022 and May 30, 2023, both dates inclusive (the “Class Period”), and investors have until April 8, 2024 to seek appointment as lead plaintiff of the iRhythm class action lawsuit.
iRhythm is a digital healthcare company that develops and manufactures heart monitoring devices designed to diagnose arrhythmias. One of the Company’s main products, Zio AT, is a heart monitor patch with a transmittal device that reports arrhythmic events to iRhythm’s monitoring labs, which then notify the prescribing physician of the arrhythmic event. According to the Company, this allows physicians to diagnose high-risk arrhythmic events in “near real-time.” These types of heart monitors that are approved for high-risk patients and provide near real-time alerts are called mobile cardiac telemetry monitors, also referred to as “real-time” monitors. Real-time monitors sell for a premium over monitors that do not provide real-time notifications of arrhythmic events.
The lawsuit alleges that, throughout the Class Period, Defendants falsely represented to investors that the Zio AT monitor was a real-time monitor intended for high-risk patients. Specifically, Defendants repeatedly touted the potential growth for the Zio AT as an innovative product that had only just begun to penetrate the market for real-time monitoring, which investors looked upon favorably given the premium selling price associated with devices approved for high-risk patients. As a result of these misrepresentations, the price of iRhythm common stock traded at artificially inflated prices throughout the Class Period.
The truth emerged through a series of disclosures beginning on November 1, 2022 when the Company reported their revised fourth quarter and full-year guidance, in part due to Zio AT utilization. The Company explained during a conference call with investors that “coming into the fourth quarter, (iRhythm) voluntarily issued a Customer Advisory Notice to its Zio AT customers.” Consequently, the Company lowered its Zio AT forecast for the quarter from the 40% growth target it had provided through the past three quarters to just 20%. Three days later, on November 4, 2022, the Company disclosed that it had initiated the Customer Advisory Notice on September 28, 2022, following issues raised by the U.S. Food and Drug Administration (“FDA”) during an inspection that culminated in an Inspection Observation Report on Form 483, and that the Customer Advisory Notice warned patients of a “labeling correction” related to “the device’s maximum transmission limits during wear,” as well as other critical issues that prevent the device from working as advertised. However, Defendants tried to assuage investors’ concerns and continued to tout the growth of the Zio AT.
Then, on May 4, 2023, the Company announced that on April 4, 2023, it received a Subpoena Duces Tecum from the Consumer Protection Branch, Civil Division of the U.S. Department of Justice (“DOJ”), requesting production of various documents regarding its products and services. Although the Company refrained from providing additional detail about the DOJ’s request, in a May 5, 2023 report, J.P. Morgan analysts noted that one of iRhythm’s competitors, Boston Scientific, had also disclosed that it had received a subpoena from the DOJ relating to its real-time monitoring product, which indicated to the analysts that the DOJ investigation into iRhythm was related to the Zio AT.
Finally, on May 30, 2023, iRhythm disclosed that it had received a warning letter from the FDA, which addressed a series of deficiencies tied to the marketing and capabilities of the Zio AT device. In particular, the FDA noted that iRhythm had falsely marketed the Zio AT as approved for use in high-risk patients that require real-time cardiac monitoring. In truth, according to the FDA, Zio AT is only approved for “long-term monitoring of arrhythmia events for non-critical care patients where real-time monitoring is not needed.” As a result of these disclosures, the price of iRhythm common stock declined precipitously.
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If you purchased or otherwise acquired iRhythm (NASDAQ: IRTC) common stock between January 11, 2022 and May 30, 2023, both dates inclusive, and suffered substantial losses, and you wish to serve as lead plaintiff in this lawsuit, we encourage you to submit your information to DiCello Levitt LLP via the form on this page.
You can also contact DiCello Levitt partner Brian O’Mara by calling (888) 287-9005 or at firstname.lastname@example.org.
The deadline to apply to the Court to serve as a lead plaintiff in the iRhythm lawsuit is April 8, 2024.