NEW YORK, Sept. 30, 2020 (GLOBE NEWSWIRE) -- Faruqi & Faruqi, LLP, a leading national securities law firm, reminds investors in Tactile Systems Technology, Inc. (“Tactile” or the “Company”) (NASDAQ:TCMD) of the November 30, 2020 deadline to seek the role of lead plaintiff in a federal securities class action that has been filed against the Company.
If you invested in Tactile stock or options between May 7, 2018 and June 8, 2020 and would like to discuss your legal rights, click here: www.faruqilaw.com/TCMD. There is no cost or obligation to you.
You can also contact us by calling Richard Gonnello toll free at 877-247-4292 or at 212-983-9330 or by sending an e-mail to rgonnello@faruqilaw.com.
CONTACT:
FARUQI & FARUQI, LLP
685 Third Avenue, 26th Floor
New York, NY 10017
Attn: Richard Gonnello, Esq.
rgonnello@faruqilaw.com
Telephone: (877) 247-4292 or (212) 983-9330
A lawsuit has been filed in the U.S. District Court for the District of Minnesota on behalf of those who purchased or otherwise acquired Tactile securities between May 7, 2018 and June 8, 2020 (the “Class Period”). The case, Mart v. Tactile Systems Technology, Inc., et al., No. 20-cv-02074, was filed on September 29, 2020.
As detailed below, the lawsuit focuses on whether the Company and its executives violated federal securities laws by making false and/or misleading statements and/or failing to disclose that: (1) while Tactile publicly touted a $4 plus billion or $5 plus billion market opportunity, in truth, the total addressable market for Tactile’s PCDs was materially smaller; (2) to induce sales growth and share gains, Tactile and/or its employees were engaged in illicit and illegal sales and marketing activities in violation of applicable federal and state rules and public payer regulations; (3) the foregoing illicit and illegal sales and marketing activities increased the risk of a Medicare audit of Tactile’s claims and criminal and civil liability; (4) Tactile’s revenues were in part the product of unlawful conduct and thus unsustainable; and that as a result of the foregoing, (5) Defendants’ public statements, including Tactile’s year-over-year revenue growth, the purported growth drivers, and the effectiveness of Tactile’s internal controls over financial reporting were materially false and misleading at all relevant times.
On March 20, 2019, after market hours, an amended federal Qui Tam complaint filed against Tactile by one of the Company’s competitors and pending in the Southern District of Texas was unsealed. Though Defendants had previously characterized the suit as lacking merit to investors, the Qui Tam complaint – made available to the public for the first time – contained detailed allegations of illegal sales practices on the part of Tactile, causing the Company to submit fraudulent claims to Medicare and the VA. Specifically, the Qui Tam complaint accused Tactile of illegally paying hospital staff to induce physicians to prescribe its medical devices. The Qui Tam complaint further alleged that the Company had violated the Anti-Kickback statute by paying physicians to be “advisors” and “paid spokesmen” when these financial relationships were merely a way to secure those doctors’ business.
Securities analysts covering the Company then released detailed reports summarizing the Qui Tam complaint’s allegations and identifying correspondent risks. This included Northland Capital Markets, which in a March 22, 2019 report entitled “Unsealed qui tam raises questions . . .”, concluded, “Suffice it to say, there will be a tug of war for some time moving forward.”
Following these disclosures, the price of Tactile shares fell $4.53 per share over the next two trading days, or 7.5%, from a close price of $60.10 per share on March 20, 2019 to a close price of $55.57 on March 22, 2019.
Then, on February 21, 2020, the court issued an order in the Qui Tam Action, denying Tactile’s motion to dismiss the Qui Tam complaint in its entirety. Though the Company attempted to downplay the import of the ruling in a February 24, 2020 press release, analysts were not buying it. For example, in a February 24, 2020 report to clients entitled “Tactile’s Motion to Dismiss Qui Tam Gets Denied,” analysts at Oppenheimer stated, “The motion to dismiss the qui tam has now been denied. Only two options remain—either this qui tam gets settled out of court, or it goes to discovery. Neither seem appealing, in our view, as far as Tactile is concerned.”
Following these disclosures, the price of Tactile shares fell $6.65 per share over the course of a single trading day, or 10.59%, from an opening price of $62.74 per share on February 21, 2020 to a close price of $56.09 on February 24, 2020.
Finally, on June 8, 2020, research firm OSS Research published a scathing report about the Company entitled “Strong Sell on Tactile Systems: Bloated Stock Needs Compression Therapy.” In the report, OSS Research accused Tactile of (1) overstating its total addressable market (TAM) by nearly $4.7 billion, (2) using a “‘daisy-chaining kickback scheme’ that has resulted in rampant overprescribing and rapid market share gains at the expense of patients, insurers and the public,” and (3) concealing Medicare audits resulting in denials, for failure to establish medical necessity, of a whopping 71% of Tactile’s submitted claims.
On this news, the Company’s stock price fell $6.05, or 11.69%, from its June 8, 2020 opening price of $51.72 per share to a June 9, 2020 close of $45.67.
The court-appointed lead plaintiff is the investor with the largest financial interest in the relief sought by the class who is adequate and typical of class members who directs and oversees the litigation on behalf of the putative class. Any member of the putative class may move the Court to serve as lead plaintiff through counsel of their choice, or may choose to do nothing and remain an absent class member. Your ability to share in any recovery is not affected by the decision to serve as a lead plaintiff or not.
Faruqi & Faruqi, LLP also encourages anyone with information regarding Tactile’s conduct to contact the firm, including whistleblowers, former employees, shareholders and others.
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