NeoGenomics, Inc. (NEO) Misled Investors Regarding the Quality of its Tests and Ability to Fix Costs
A shareholder filed a class action on behalf of all investors who purchased or otherwise acquired NeoGenomics, Inc. (NASDAQ: NEO) securities between February 27, 2020 and April 26, 2022, for violations of the Securities Exchange Act of 1934. NeoGenomics provides cancer tests and testing services to doctors, clinics, hospitals, and pharmaceutical companies. Among the Company’s portfolio of tests are next generation sequencing (“NGS”) tests.
According to the complaint, during the class period, defendants misrepresented to investors that it had a “comprehensive menu” of cancer tests that positioned it as a “one-stop-shop” for pathologists that needed cancer testing. Defendants further asserted that NeoGenomics could “leverage” the supposedly “fixed cost” structure of its business to improve profitability as revenue increased.
In contrast: (i) NeoGenomics was anything but a “one-stop-shop” for cancer testing because it did not offer the most technologically advanced NGS tests, which led to a significant decrease in revenue as current and prospective customers went elsewhere for their testing needs; (ii) the Company’s costs were not fixed because NeoGenomics needed to hire additional employees to process more complex customized testing demanded by customers utilizing the Company’s outdated portfolio of tests, leading to operational challenges, decreased lab efficiency, and increased testing turnaround times; and (iii) NeoGenomics violated federal healthcare laws and regulations related to fraud, waste, and abuse.
As the truth was revealed between November 4, 2021 and April 27, 2022, NeoGenomics stock declined. While the stock was trading at $46.53 per share on November 4, 2021, it now trades at just $11.60 per share.
What Now: Shareholders who purchased shares of NeoGenomics, Inc. between February 27, 2020 and April 26, 2022, have until February 6, 2023, to seek appointment as lead plaintiff. 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