iRhythm Technologies, Inc. Class Action Lawsuit
- Company Name
- iRhythm Technologies, Inc.
- Stock Symbol
- Class Period
- August 4, 2020 to January 28, 2021
- Northern District of California
The iRhythm Technologies, Inc. class action lawsuit charges iRhythm and certain of its executives with violations of the Securities Exchange Act of 1934 and seeks to represent purchasers or acquirers of iRhythm common stock between August 4, 2020 and January 28, 2021, inclusive (the “Class Period”). The iRhythm class action lawsuit was commenced on February 1, 2021 in the Northern District of California and is captioned Habelt v. iRhythm Technologies, Inc., No. 21-cv-00776.
iRhythm is a digital healthcare company that seeks to redefine the way cardiac arrythmias are clinically diagnosed by combining iRhythm’s wearable biosensing technology with cloud-based data analytics and deep-learning capabilities. iRhythm offers a portfolio of ambulatory cardiac monitoring services on its platform, called the Zio service. iRhythm receives revenue for its Zio service primarily from third-party payors, which include commercial payors and government agencies, such as the U.S. Centers for Medicare and Medicaid Services (“CMS”).
The iRhythm class action lawsuit alleges that, throughout the Class Period, defendants made false and/or misleading statements and/or failed to disclose that: (1) iRhythm’s business would suffer as a result of the CMS’s rulemaking; (2) reimbursement rates would in fact plummet; (3) a lack of national pricing in the CMS rule and fee schedule would cause uncertainty and weakness in iRhythm’s business; and (4) as a result of the foregoing, defendants’ public statements were materially false and misleading at all relevant times.
On December 1, 2020, CMS issued its final rule, which finalized the codes as anticipated, but did not finalize national pricing for certain products and services offered by iRhythm. On this news, the price of iRhythm common stock fell nearly 24%.
Then, on January 29, 2021, Medicare Administrative Contractor Novitas Solutions published actual reimbursement rates under the CMS’s 2021 Medicare Physician Fee Schedule. A Baird analyst commented that these rates were “way lower than” the former codes, citing one example where iRhythm was previously reimbursed around $311, but was now receiving just $42.68. On this news, the price of iRhythm common stock fell by approximately 33%, further damaging investors.
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