Shareholder Alert: Bernstein Litowitz Berger & Grossmann LLP Announces the Filing of Securities Class Action Lawsuit Against Eargo, Inc., Expanding the Class Period | State

NEW YORK, November 10, 2021 / PRNewswire / – Renowned law firm Bernstein Litowitz Berger & Grossmann LLP (“BLB & G”) today filed a class action lawsuit for violations of federal securities laws in the US District Court for the Northern District California against Eargo, Inc. (“Eargo” or the “Company”), certain officers of the Company, current and former members of the Board of Directors of the Company and underwriters of Eargos October 15, 2020 Initial Public Offering (“IPO”) (collectively “Defendant”). The lawsuit extends the class action deadline contained in a previously filed class action lawsuit pending against Eargo, entitled Fazio v. Eargo, Inc., No. 4: 21-cv-07848 (ND Cal.), And is being made on behalf of investors who intervene in the purchase of Eargo common stock October 15, 2020 and 09/22/2021, including (the “Class Period”), and / or investors who acquired or were attributable to Eargo common stock in connection with the IPO.

BLB & G has filed this lawsuit on behalf of its client IBEW Local 353 Pension Plan and the case is entitled IBEW Local 353 Pension Plan v. Eargo, Inc., No. 3: 21-cv-8747 (ND Cal.). The complaint is based on an extensive investigation and a careful assessment of the merits of this case. A copy of the complaint is available on BLB & G’s website by clicking here.

Eargo’s alleged fraud

Headquarters in San Jose, California, Eargo is a medical technology company that manufactures and sells hearing aids directly to consumers with mild to moderate hearing loss. Eargo advertises heavily through various media, promoting the availability of insurance coverage for its products as the main selling point, and offering to process insurance claims on behalf of its customers. In October 2020The company went public that ended up selling over 9 million shares of Eargo common stock at a price of. offered and sold $ 18.00 per share, almost reaping $ 163 million in gross proceeds.

The complaint alleges that Eargo made numerous false and misleading representations in the offering documents issued in connection with the IPO and during the class action period regarding the amount of insurance coverage available for Eargo’s products and how that coverage allegedly drives profits and that Influenced the company’s growth. In addition, the company promoted its advertising as a major source of growth in insurance customers, including advertisements aimed directly at federal employees and retirees, allegedly adding to Eargo’s customer base at a low marginal cost. In addition, Eargo has linked its positive financial forecasts directly to its insurance customer base and touted insurance customers as a key revenue driver.

In reality, however, insurance coverage has not been able to increase Eargo’s revenue and growth because insurers do not cover claims for Eargo’s products at the level that the company represented to investors. Additionally, contrary to allegations that insurance customers were a long-term contributor to Eargo’s financial results, a significant portion of Eargo’s insurance claims were likely to be inadequate and could constitute a federal government fraud that led to a criminal investigation of the company by the US – Department of Justice (“DOJ”). As a result of these misrepresentations, Eargo stock traded artificially inflated during the class action period.

The truth was beginning to emerge August 12, 2021after the market closed when Eargo announced that claims Eargo made to its largest third party payer had not been paid since then March 1, 2021while this third party payer was conducting a damage assessment. These deferred payments resulted in a significant increase in Eargo’s claims over previous periods. Despite these disclosures, however, Eargo downplayed the importance of claims assessment and gave false assurances to investors about the strength of the company’s insurance-related revenues and growth prospects.

Then, on 09/22/2021After the market closed, Eargo announced that insurance claims it had filed on behalf of certain customers may constitute a federal government fraud. Specifically, Eargo announced that the DOJ has opened a criminal investigation into the company related to insurance reimbursement claims that Eargo has filed on behalf of customers covered by state employee health insurance. As a result of the DOJ’s criminal investigation into the company, Eargo withdrew its financial guidance for 2021. As a result of these disclosures, the Eargo share price fell sharply.

Filing this lawsuit does not change the previously established deadline for appointment as lead plaintiff. According to the October 6, 2021 Notice under the Private Securities Litigation Reform Act of 1995 issued in connection with the Fazio lawsuit, investors who have purchased or otherwise acquired Eargo securities during the class action period may no later than December 6, 2021to be named as the lead plaintiff for the class action lawsuit. Either member of the proposed group may attempt to act as lead plaintiff through an attorney of their choice or may choose not to do anything and remain a member of the proposed group.

If you would like to discuss this action or if you have any questions about this notice or your rights or interests, please contact Scott R. Foglietta from BLB & G at 212-554-1903 or by email at [email protected].

About BLB & G

BLB & G is recognized worldwide as the leading law firm advising institutional investors on corporate governance, shareholder rights and securities disputes. Since its inception in 1983, BLB&G has built an international reputation for excellence and integrity and pioneered the use of litigation to achieve landmark governance reforms. BLB&G is unique among its peers, having achieved and bounced back over several of the largest and most significant securities returns in history $ 33 billion on behalf of deceived investors. You can find more information about the firm on the Internet at www.blbglaw.com.

Contact

Scott R. Foglietta

Bernstein Litowitz Berger & Grossmann LLP

1251 Avenue of the Americas, 44th floor

New York, New York 10020

(212) 554-1903

[email protected]

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SOURCE Bernstein Litowitz Berger & Grossmann LLP

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