NEW YORK, Nov. 17, 2023 (GLOBE NEWSWIRE) — Gainey McKenna & Egleston announces that a securities class action lawsuit has been filed in the United States District Court for the Central District of California on behalf of all persons or entities who purchased or otherwise acquired The Beauty Health Company (“Beauty Health” or the “Company”) (NASDAQ: SKIN) securities between May 10, 2022 and November 13, 2023, inclusive (the “Class Period”). The lawsuit seeks to recover damages for the Company’s investors under the federal securities laws.
The Complaint in the class action alleges that on August 9, 2023, before the market opened, Beauty Health announced that second quarter 2023 gross margin was “unfavorably impacted” by a mix shift “toward lower-margin refurbished devices . . . as U.S. providers awaited Syndeo enhancements in the third quarter 2023 to improve user experience.” The Complaint also alleges that the Company also announced the “involuntary separation without cause” of Chief Financial Officer (“CFO”) Liyuan Woo.
The Complaint further alleges that on this news, the Company’s shares fell $0.41, or 5.4%, to close at $7.12 per share on August 9, 2023, on unusually heavy trading volume.
The Complaint also alleges that on November 13, 2023, after the market closed, Beauty Health announced its financial results for the third quarter of 2023. The Complaint alleges that the Company disclosed that “[t]he quarter was overshadowed by lower-than-expected U.S. revenue and $63.1 million in restructuring charges related to device upgrades of early generation Syndeo devices.” Additionally, the Complaint alleges that as a result, “the Company is revising its fiscal year 2023 net sales guidance to a range of $385 to $400 million, its fiscal year adjusted EBITDA margin guidance to a range of 5% to 6% and is suspending its long-term 2025 financial outlook.” The Complaint further alleges that the Company disclosed that Andrew Stanleick would depart the Company as President & Chief Executive Officer (“CEO”) and relinquish his Board seat, effective November 19, 2023.
The Complaint additionally alleges that on this news, the Company’s share price fell $2.51, or 64.36%, to close at $1.39 per share on November 14, 2023, on unusually heavy trading volume.
The Complaint further alleges that throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, the Complaint alleges that Defendants failed to disclose to investors: (1) that Syndeo 1.0 and 2.0 devices had issues leading to “frequent treatment interruptions;” (2) that, as a result, the Company incurred significant costs to develop enhancements; (3) that, despite the enhancements, providers continued to experience issues with the Syndeo devices; (4) that, as a result, the Company would no longer market Syndeo 1.0 and 2.0 devices and incur significant inventory write downs; (5) that, as a result, the Company’s profitability would be adversely impacted; and (6) that, as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.
Investors who purchased or otherwise acquired shares of Beauty Health should contact the Firm prior to the January 16, 2024 lead plaintiff motion deadline. A lead plaintiff is a representative party acting on behalf of other class members in directing the litigation. If you wish to discuss your rights or interests regarding this class action, please contact Thomas J. McKenna, Esq. or Gregory M. Egleston, Esq. of Gainey McKenna & Egleston at (212) 983-1300, or via e-mail at tjmckenna@gme-law.com or gegleston@gme-law.com.
Please visit our website at http://www.gme-law.com for more information about the firm.
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