Shipment courier

Outset Medical faces shareholder lawsuit after shipment blocked

Outset Medical (Nasdaq: OM) is facing a shareholder lawsuit in federal court, a month after announcing the suspension of shipment of its home-use Tablo hemodialysis system.

The company said June 13 that it was suspending shipments as part of a pending FDA review and clearance of a 510(k) submitted for changes made since the Tablo system was originally cleared. in March 2020. News of the suspension of shipments caused OM shares to lose more than a third of their value the following day. Shares of the company are down nearly two-thirds over the past year, currently trading at around $16 per share.

Attorneys for Saxena White PA filed a lawsuit July 8 in the U.S. District Court for Northern California on behalf of plaintiff Plymouth County Retirement Association in Massachusetts and other shareholders of Outset Medical. The lawsuit claims that the company and its top executives made false and misleading positive statements before the announcement of the suspension of shipments.

Other law firms have issued press releases asking shareholders to join possible class action lawsuits.

In a statement a spokesperson shared with mass deviceOutset Medical declined to comment on pending litigation except to say it intends to defend itself vigorously.

David Kaplan and Wolfram Worms of Saxena White point to Outset Medical’s annual report he filed in February. The annual report revealed that the company had to submit a 510(k) “catch-up” request to the FDA to cover design changes – but it didn’t mention that this could result in a suspension of shipment, according to the complaint.

During the company’s first-quarter earnings announcement in May, Outset Medical executives expressed enough optimism about its outlook to raise the lower end of its 2022 revenue guidance range to $144-150 million. dollars, compared to 142-150 dollars previously.

The complaint alleges that between Outset Medical’s IPO in September 2020 and the June 13 announcement, inaccuracies and omissions by the company and its management “had the effect of creating on the market an unrealistic valuation of the company and its business, thereby causing the company’s common stock to be overvalued and artificially inflated or held at all relevant times”.