- Company Name
- ABIOMED, Inc.
- Stock Symbol
- Class Period
- January 31, 2019 to July 31, 2019
- Motion Deadline
- October 5, 2019
- Southern District of New York
The complaint charges ABIOMED and certain of its officers with violations of the Securities Exchange Act of 1934. ABIOMED engages in the research, development, and sale of medical devices to assist or replace the pumping function of a failing heart and provides continuum of care to heart failure patients. The Company sells its products through direct sales and clinical support personnel in the United States, Canada, Europe, and Asia.
The complaint alleges that throughout the Class Period, defendants made materially false and misleading statements and/or failed to disclose adverse information regarding the Company’s business and prospects. Specifically, defendants failed to disclose that ABIOMED’s revenue growth was in decline and that the Company did not have a sufficient plan in place to stem the declining revenue growth and was unlikely to be able to restore its revenue growth over the next several fiscal quarters. Consequently, it was reasonably likely that ABIOMED would have to revise its full-year 2020 guidance in a way that would fall short of the Company’s prior projections and market expectations. As a result of this information being withheld from the market, ABIOMED securities traded at artificially inflated prices during the Class Period, with its stock price reaching highs of more than $365 per share.
Then on August 1, 2019, before the market opened, ABIOMED announced its financial and operating results for the first quarter of fiscal 2020, reporting the Company’s third consecutive quarter of slowing revenue growth, with “first-quarter fiscal 2020 revenue of $207.7 million, an increase of 15.4% compared to revenue of $180.0 million for the same period of fiscal 2019.” This represented a decrease from the 54% increase in revenue growth reported in the second quarter of 2019, the 37% increase reported in the third quarter of 2019, and the 19% increase reported in the fourth quarter of 2019. Commenting on the Company’s disappointing financial results, the Company’s Chairman, President, and CEO, Michael R. Minogue, revealed that the Company’s “new training programs, organizational changes in distribution, and . . . external initiatives . . . will require time to drive more growth in the future.” The Company also slashed its previously issued full-year 2020 guidance from total revenues in the range of $900 to $945 million to a range of $885 to $925 million, which fell roughly $22 million short of market expectations.
Following the Company’s disclosure of its first quarter 2020 financial results and revised guidance, Investor’s Business Daily published an article, entitled “This Medtech's CEO Promised to ‘Correct the Course’ — That Didn't Happen,” raising concerns with Minogue’s prior public statements. On this news, the price of ABIOMED stock fell $73.69 per share, or more than 26%, to close at $204.87 per share on August 1, 2019.