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iRhythm Technologies, Inc. Class Action Lawsuit

Company Name
iRhythm Technologies, Inc.
Stock Symbol
IRTC
Class Period
August 4, 2020 to January 28, 2021
Court
Northern District of California

Case Summary

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.

Robbins Geller Rudman & Dowd LLP is one of the world’s leading law firms representing investors in securities class action litigation.  With 200 lawyers in 9 offices, Robbins Geller has obtained many of the largest securities class action recoveries in history.  For eight consecutive years, ISS Securities Class Action Services has ranked the Firm in its annual SCAS Top 50 Report as one of the top law firms in the world in both amount recovered for shareholders and total number of class action settlements.  Robbins Geller attorneys have helped shape the securities laws and have recovered tens of billions of dollars on behalf of aggrieved victims.  Beyond securing financial recoveries for defrauded investors, Robbins Geller also specializes in implementing corporate governance reforms, helping to improve the financial markets for investors worldwide.  Robbins Geller attorneys are consistently recognized by courts, professional organizations and the media as leading lawyers in the industry.

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