A class action lawsuit was filed against iRhythm Technologies (NASDAQ:IRTC) on February 6, 2024. The plaintiffs (shareholders) allege that they bought iRhythm Technologies stock at artificially inflated prices between January 11, 2022, and May 30, 2023 (Class Period) and are now seeking compensation for their financial losses. Investors who bought IRTC stock during that period can learn about joining the lawsuit here: https://zlk.com/pslra-1/irhythm-technologies-lawsuit-submission-form?wire=16.
iRhythm Technologies is a digital healthcare company that creates solutions for detecting, predicting, and preventing diseases. IRTC claims that it collects data from millions of heartbeats and translates them into clinically actionable information through the use of wearable biosensors, cloud-based data analytics, and powerful proprietary algorithms.
Importantly, the company’s Zio platform enables physicians to diagnose many arrhythmias more quickly and efficiently than traditional technologies, thus, avoiding severe health consequences.
The plaintiffs noted that iRhythm Technologies and three of its current and/or former senior officers repeatedly made false claims about its products and withheld material information. For instance, the company received a Warning Letter from the U.S. Food and Drug Administration (FDA) in May 2023. Prior to that, the FDA subpoenaed IRTC to submit documents related to some of its products and services.
The Warning Letter detailed several serious issues with the Zio AT device, criticizing the company for marketing the product as a “mobile cardiac telemetry monitor” that provides “near real-time monitoring.” The letter also alleged that claims about the approval of the use of the Zio AT device in “high-risk patients” were false.
Meanwhile, during the Class Period, iRhythm Technologies claimed that “revenues from Zio AT doubled in 2021 versus 2020 and now represent approximately 10% of [iRhythm’s] revenues.” Moreover, in the Fiscal 2021 annual report, IRTC claimed that “[t]he FDA and the Federal Trade Commission (“FTC”)… regulate the advertising and promotion of [its] products and services to ensure that the claims [iRhythm] make[s] are consistent with [its] regulatory clearances.”
As per the class action lawsuit, iRhythm Technologies caused the IRTC stock to trade at artificially inflated prices by knowingly and recklessly misleading investors about its business practices and performance.
Notably, from May 2023 until the end of December 2023, IRTC stock lost over 12%, and is down 5.1% in the past year.
