|Company Name||CareDx, Inc.|
|Class Period||February 24, 2021 to May 05, 2022|
|Lead Plaintiff Motion Deadline||July 22, 2022|
On October 28, 2021, after the market closed, CareDx revealed that it had received a civil investigative demand from the U.S. Department of Justice as part of an investigation into the Company’s “business practices related to [its] kidney testing and phlebotomy services.” The Company had also received a subpoena from the U.S. Securities and Exchange Commission (“SEC”) for similar issues as well as certain accounting and public reporting practices.
On this news, the Company’s share price fell $19.34, or 27%, to close at $51.00 per share on October 29, 2021, thereby injuring investors.
Then, on April 15, 2022, the Company’s former Head of Community Nephrology filed a complaint that provided detail regarding CareDx’s misconduct, including the use of its home-based blood-drawing service, RemoTraC to improperly bundle the Company’s most expensive testing services with other blood tests, that led to the government investigations, as well as the Company’s knowledge of the misconduct and its attempts to conceal it.
On this news, CareDx’s stock fell $2.89, or 8.1%, to close at $32.55 on April 18, 2022, thereby injuring investors further.
Then, on May 5, 2022, after the market closed, the Company released its financial results for the first quarter of 2022, reporting that testing service revenue fell short of analysts’ expectations with an average price decline of 4.9%.
On this news, CareDx’s stock fell $5.88, or 18.6%, to close at $25.78 on May 6, 2022, thereby injuring investors further.
The complaint filed in this class action alleges that throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants failed to disclose to investors that: (1) CareDx had engaged in a variety of improper and illegal schemes to inflate testing services revenue and demand, including pushing a surveillance protocol through inaccurate marketing materials, offering extravagant inducements or kickbacks to physicians and other providers, and improperly bundling expensive testing services with other blood tests as part of the RemoTraC service; (2) these practices, and others, subjected CareDx to an undisclosed risk of regulatory scrutiny; (3) these practices rendered the Company’s testing services revenue reported throughout the Class Period artificially inflated; and (4) as a result, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis at all relevant times.
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