Outset Medical (Nasdaq: OM) is facing a shareholder lawsuit in federal court, a month after it announced a shipping hold on its Tablo hemodialysis system for home use.
The company said on June 13 that it was holding off shipments amid a pending FDA review and clearance of a 510(k) submitted for changes made since the Tablo system’s original March 2020 clearance. The shipment hold news caused OM shares to lose more than a third of their value the next day. The company’s stock is down by nearly two-thirds over the past year, presently trading at around $16 per share.
Lawyers at Saxena White P.A. filed a lawsuit on July 8 in U.S. District Court in Northern California on behalf of the Plaintiff Plymouth County Retirement Association in Massachusetts and other Outset Medical shareholders. The lawsuit claims that the company and its top executives made false and misleading positive statements leading up to the shipment hold announcement.
Other law firms have issued news releases seeking shareholders to join potential class action lawsuits.
In a statement that a spokesperson shared with MassDevice, Outset Medical declined to comment about active litigation, other than to say that it intends to vigorously defend itself.
David Kaplan and Wolfram Worms of Saxena White point to Outset Medical’s annual report that it filed in February. The annual report disclosed that the company had to submit a “catch-up” 510(k) application to the FDA to cover design changes — but it did not mention that it could lead to a shipment hold, according to the complaint.
During the company’s Q1 earnings announcement in May, Outset Medical executives expressed enough optimism in its outlook that they upped the lower end of its 2022 revenue guidance range to $144–150 million from a previous $142–150.
The complaint alleges that between Outset Medical’s IPO in September 2020 and the June 13 announcement, misstatements and omissions from the company and its management “had the cause and effect of creating in the market an unrealistically positive assessment of the company and its business, thus causing the company’s common stock to be overvalued and artificially inflated or maintained at all relevant times.”