NEW YORK, Feb. 07, 2024 (GLOBE NEWSWIRE) — Bragar Eagel & Squire, P.C., a nationally recognized stockholder rights law firm, announces that a class action lawsuit has been filed against iRhythm Technologies, Inc. (“iRhythm” or the “Company”) (NASDAQ: IRTC) in the United States District Court for the Northern District of California 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”). Investors have until April 8, 2024 to apply to the Court to be appointed as lead plaintiff in the lawsuit.
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iRhythm develops and manufactures heart monitoring devices designed to diagnose arrythmias. The Company’s principal product is a monitoring patch that provides electrocardiogram (“ECG”) monitoring for up to 14 days, called Zio XT. The Zio XT is intended for non-critical patients, as it does not provide real-time reporting.
In 2017, iRhythm developed Zio AT, a device the Company described as “offer[ing] the full benefits of [its] Zio XT Service, with the addition of real-time data transmission and notification of actionable clinical events.” Actionable arrhythmic events include atrial fibrillation, a condition that can cause troubling symptoms and serious medical complications, including blood clots that can lead to stroke and heart failure. The Zio AT comes with a cellular transmittal device that provides connectivity between the Zio AT and the proprietary algorithmic software that analyzes the ECG data and detects arrhythmic events for the 14-day wear period. Importantly, given its purported capabilities to provide “real-time” notifications of arrhythmic events, the Zio AT device is marketed to high-risk patients as a mobile cardiac telemetry device. These types of heart monitors that are approved for high-risk patients and provide near real-time alerts are 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 complaint 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 complaint further alleges that the truth emerged through a series of disclosures beginning on November 1, 2022, when the Company reported 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 initiated the Customer Advisory Notice on September 28, 2022, following issues raised by the 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, 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 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.
If you purchased or otherwise acquired iRhythm shares and suffered a loss, are a long-term stockholder, have information, would like to learn more about these claims, or have any questions concerning this announcement or your rights or interests with respect to these matters, please contact Brandon Walker or Marion Passmore by email at [email protected], telephone at (212) 355-4648, or by filling out this contact form. There is no cost or obligation to you.
About Bragar Eagel & Squire, P.C.:
Bragar Eagel & Squire, P.C. is a nationally recognized law firm with offices in New York, California, and South Carolina. The firm represents individual and institutional investors in commercial, securities, derivative, and other complex litigation in state and federal courts across the country. For more information about the firm, please visit www.bespc.com. Attorney advertising. Prior results do not guarantee similar outcomes.
Bragar Eagel & Squire, P.C.
Brandon Walker, Esq.
Marion Passmore, Esq.
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