SAN DIEGO--(BUSINESS WIRE)--The Class: Shareholder rights law firm Robbins LLP informs investors that a shareholder filed a class action on behalf of all persons and entities that purchased CareDx, Inc. (NASDAQ: CDNA) common stock between February 24, 2021 and May 5, 2022, for violations of the Securities Exchange Act of 1934. CareDx is a diagnostics company that provides services and products to the organ transplant recipient community, including diagnostic testing services, products, and digital healthcare software for transplant patients and care providers.
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What is this Case About: CareDx, Inc. (CDNA) is Being Investigated by Multiple Government Agencies for Improper and Illegal Schemes Designed to Inflate Revenue
According to the complaint, during the class period, defendants touted growing revenue and strong demand in the Company's testing services segment, calling it a "growth driver" for which "demand continued unabated." Defendants also emphasized the success of the Company's RemoTraC service – a remote, home-based, blood-drawing service that the Company launched in response to the COVID-19 pandemic – which gave the Company the ability to "drive margins" for testing services.
However, throughout the class period, defendants had engaged in a variety of improper and illegal schemes to inflate testing services revenue, including: (i) pushing protocols for surveillance of organ rejection through inaccurate marketing materials and in violation of Medicare standards; (ii) offering extravagant inducements or kickbacks to physicians and other providers; and (iii) improperly bundling expensive testing services with other blood tests as part of the RemoTraC service.
On October 28, 2021, CareDx filed its quarterly report for the third quarter of 2021 with the SEC, revealing for the first time it was the subject of at least three government investigations, including by the Department of Justice, SEC, and an unnamed state regulatory agency. In response to this disclosure, the Company's share price fell more than 27%, to close at $51.00 per share on October 29, 2021.
Then, on April 15, 2022, the Company’s former Head of Community Nephrology filed a complaint in California Superior Court that provided extensive detail about: (1) defendants’ misconduct, including the use of RemoTraC to improperly bundle the Company’s most expensive testing services, including AlloSure, with other blood tests, that led to the government investigations; (2) defendants’ knowledge of the misconduct throughout the class period; and (3) their attempts to conceal the misconduct. In response to these revelations, the price of CareDx stock fell an additional 8% to close trading the next trading day, April 18, 2022, at $32.55 per share.
Investors further learned the impact of Defendants’ misconduct and the resulting government investigations on CareDx’s business prospects after the markets closed on May 5, 2022. In connection with the announcement of the Company’s results for the first quarter of 2022, defendants reported testing service revenue that fell well short of analysts’ expectations, and yet another decline in average sales price in which the Company’s average price declined by approximately 4.9% versus the last quarter of 2021, or what one analyst described as “another big deterioration in price.” In response to these disclosures, the price of CareDx stock declined another 18.5% the following trading day, from a closing price of $31.66 per share on May 5, 2022, to a closing price of $25.87 per share on May 6, 2022.
Next Steps: If you acquired shares of CareDx, Inc. (CDNA) common stock between February 24, 2021, and May 5, 2022, you have until July 22, 2022, to ask the court to appoint you lead plaintiff for the class. A lead plaintiff is a representative party acting on behalf of other class members in directing the litigation. You do not have to participate in the case to be eligible for a recovery.
All representation is on a contingency fee basis. Shareholders pay no fees or expenses.
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About Robbins LLP: A recognized leader in shareholder rights litigation, the attorneys and staff of Robbins LLP have been dedicated to helping shareholders recover losses, improve corporate governance structures, and hold company executives accountable for their wrongdoing since 2002. To be notified if a class action against CareDx, Inc. settles or to receive free alerts when corporate executives engage in wrongdoing, sign up for Stock Watch today.
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