The law firm of Kirby McInerney LLP announces that a class action lawsuit has been filed in the U.S. District Court for the Southern District of New York on behalf of those who acquired NeoGenomics, Inc. (“NeoGenomics” or the “Company”) (NASDAQ: NEO) securities during the period from February 27, 2020 through April 26, 2022 (the “Class Period”). Investors have until February 6, 2023 to apply to the Court to be appointed as lead plaintiff in the lawsuit.
NeoGenomics operates a network of clinical laboratories that specializes in cancer genetics diagnostic testing services.
On November 4, 2021, NeoGenomics revealed that it was “conducting an internal investigation with the assistance of outside counsel that focuses on the compliance of certain consulting and service agreements with federal healthcare laws and regulations” including “those relating to fraud, waste and abuse,” and had “accrued a reserve of $10.5 million for potential damage and liabilities associated with the federal healthcare program revenue received spanning multiple years.” On this news, the price of NeoGenomics shares declined by $8.18 per share, or approximately 17.58%, from $46.53 per share to close at $38.35 on November 4, 2021.
On March 28, 2022, NeoGenomics disclosed the departure of its CEO “effective immediately” and simultaneously reduced its financial guidance largely due to “higher than anticipated” costs. On this news, the price of NeoGenomics shares declined by $5.30 per share, or approximately 29.79%, from $17.79 per share to close at $12.49 on March 29, 2022.
Finally, on April 27, 2022, NeoGenomics revealed that “higher payroll and payroll related costs” drove decreased profit and increased operating expenses and admitted that its portfolio of cancer tests “is weighted to legacy” tests “while the market is moving towards larger, more comprehensive panels.” The Company further admitted that it had “not kept up” with competitors that were offering more in-demand technologically advanced cancer tests. On this news, the price of NeoGenomics shares declined by $0.41 per share, or approximately 3.78%, from $10.85 per share to close at $10.44 on April 27, 2022.
The lawsuit alleges that, throughout the Class Period, NeoGenomics and certain members of its management misrepresented and/or failed to disclose that: (i) NeoGenomics was not a “one-stop shop” for cancer testing 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.