A class action lawsuit was filed against Inari Medical, Inc. (NASDAQ:NARI) on May 13, 2024. The plaintiffs (shareholders) alleged that they bought NARI stock at artificially inflated prices between February 24, 2022 and February 28, 2024 (Class Period) and are now seeking compensation for their financial losses. Investors who bought Inari Medical stock during that period can click here to learn about joining the lawsuit.
Stay Ahead of the Market:
- Discover outperforming stocks and invest smarter with Top Smart Score Stocks
- Filter, analyze, and streamline your search for investment opportunities using Tipranks' Stock Screener
Inari Medical develops medical devices to treat patients suffering from venous and other diseases. The company’s catheter-based solutions cater to patients with venous thromboembolism (VTE). VTE causes clots in the veins, leading to life threatening conditions where the blood flow could be completely blocked.
The plaintiffs maintain that Inari Medical and three of its senior officers and/or directors (Individual Defendants) deceived investors by lying and withholding vital information about the company’s business practices and prospects during the Class Period. Importantly, the Defendants are accused of omitting truthful information about the Company’s product sales and financial results from SEC filings and related material.
The information became clear on February 29, when the company revealed it had received a Civil investigation Demand (CID) from the U.S. Department of Justice in December 2023, investigating kickbacks and false claims. The DOJ is probing certain payments made to healthcare providers related to meals and consulting services. Inari cautioned investors that in the event of a negative outcome from the probe, there could be a material impact on the company’s business, results, and financials. The news was followed by analyst downgrades owing to concerns on the business and time needed to resolve the probe.
Interestingly, during an earnings call in 2022, a defendant attributed the company’s growing expenses to increased staff expenses and higher marketing, travel, and facility-related costs. Moreover, during the Class Period, the ex-CEO of Inari noted that the market for its products was larger than expected and that the company was in initial stages of market penetration. Accordingly, the company stated that it was expected to grow sustainably over the years ahead. Meanwhile, the company failed to reveal that its growing revenue was dependent on the kickbacks offered to the healthcare professionals and that the expenses could also increase due to those kickbacks.
As per the class action lawsuit, Inari Medical caused its shares to trade at artificially inflated prices by knowingly and recklessly misleading investors about the company’s business practices during the Class Period.
Notably, NARI stock plunged over 20% on February 29, causing massive damages to shareholders’ returns.
