The Class: Shareholder rights law firm Robbins LLP reminds investors that a shareholder filed a class action on behalf of investors who purchased Outset Medical, Inc. (NASDAQ: OM) common stock between September 15, 2020 and June 13, 2022, for violations of the Securities Exchange Act of 1934. Outset Medical is a medical technology company focused on kidney dialysis, the primary treatment for acute and chronic kidney failure. The Company's flagship product is the Tablo Hemodialysis System.
If you would like more information about Outset Medical, Inc.'s misconduct, click here.
What is this Case About: Outset Medical, Inc. (OM) Misled Investors Regarding Tablo's Use and FDA Approval
According to the complaint, during the class period, defendants touted that Tablo can "serve as a dialysis clinic on wheels" that has been "cleared by the [U.S.] Food and Drug Administration [(the "FDA)] for use in the hospital, clinic or home setting." Indeed, Outset Medical sought to differentiate itself by highlighting its focus on the "home setting" and contended it was "well-positioned" to "help accelerate th[e] shift to home-based hemodialysis therapy."
While the FDA approved Tablo for sale, its use for the in-home setting was subject to additional studies and approvals. During the class period, defendants assured investors that it was conducting the studies "in accordance with the FDA approved protocol," which required an appropriate demonstration of "real-world" human testing given that the device would be used at home by non-professionals.
Seizing on positive prospects for sales of Tablo, the Company completed two secondary stock offerings and raised more than $570 million in proceeds for the benefit of the Company and its private equity backers.
However, shareholders were unaware that Outset Medical made significant changes to Tablo for use in the home setting, which made it likely that the FDA would order the Company to cease all marketing and selling of Tablo for use in the home pending additional applications and approvals and prevented the Company from conducting the requisite testing.
On May 4, 2022, Outset Medical announced disappointing results for the first quarter of 2022, which analysts attributed to, among other things, the untested nature of Tablo in the home setting. In response, the price of Outset Medical common stock declined more than 40% over the next three trading days, to close at $23.06 on May 9, 2022.
Then, on June 13, 2022, Outset Medical announced the FDA had forced the Company to hold all shipments of Tablo for use in the home until Tablo received proper regulatory clearance. Outset Medical made two astonishing admissions – the "ship hold" had been in place for weeks before investors were provided with this information and the Company was "suspending our prior full-year and long-term guidance." On this news, the Company's stock fell an additional 34%, to close at $13.46 per share on June 14, 2022.
Next Steps: If you acquired Outset Medical, Inc. (OM) common stock between September 15, 2020 and June 13, 2022, you have until September 6, 2022, to ask the court to appoint you lead plaintiff for the class. A lead plaintiff is a representative party acting on behalf of other class members in directing the litigation. You do not have to participate in the case to be eligible for a recovery.
All representation is on a contingency fee basis. Shareholders pay no fees or expenses.
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About Robbins LLP: A recognized leader in shareholder rights litigation, the attorneys and staff of Robbins LLP have been dedicated to helping shareholders recover losses, improve corporate governance structures, and hold company executives accountable for their wrongdoing since 2002. To be notified if a class action against Outset Medical, Inc. settles or to receive free alerts when corporate executives engage in wrongdoing, sign up for Stock Watch today.
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