Robbins LLP Announces Progenity, Inc. (PROG) Sued for Misleading Shareholders
Progenity conducted its IPO on June 22, 2020, selling approximately 6.6 million shares for $15.00 per share. According to the complaint, the Registration Statement failed to disclose that Progenity had overbilled government payors by $10.3 million in 2019 and early 2020, and had therefore materially overstated its revenues, earnings, and cash flows from operations for historical financial periods provided in the Registration Statement. As a result, Progenity would need to refund this overpayment in the second quarter of 2020, adversely impacting its quarterly results. The complaint further alleges that the Registration Statement failed to disclose that Progenity was suffering from accelerating negative trends in second quarter 2020 with respect to testing volumes, revenues, and product pricing.
On August 13, 2020, Progenity issued a press release announcing its second quarter 2020 results, revealing a wide miss on revenue compared to analysts’ estimates. Notably, Progenity generated only $17.3 million in consolidated revenues for the quarter, 70% below the prior year period. On an earnings call, Progenity’s CEO and Chairman revealed that the Company had failed to properly bill the government over the preceding 18 months for goods and services rendered, which resulted in an overpayment of approximately $10.3 million in 2019 and early 2020 from government payors that the Company was required to refund. On this news, Progenity closed at $7.71 per share on August 14, 2020, nearly 50% below the share price investors paid for the stock in the IPO less than two months earlier