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Gibbs Law Group Investigates Potential Securities Law Violations
OAKLAND, Calif., September 28, 2021--(BUSINESS WIRE)--Shares of recent IPO Eargo, Inc. dropped another 5% on intraday trading Tuesday, September 28, 2021 after admitting in an SEC filing on Wednesday, September 24 that the company was facing a criminal investigation by the federal government. In the filing, Eargo also withdrew its financial guidance for the rest of 2021, resulting in Eargo shares plummeting 68% to a record low of $6.86 on Thursday, September 25. Gibbs Law Group continues to investigate a potential Eargo Securities Class Action Lawsuit on behalf of investors who lost money in Eargo, Inc. (NASDAQ: EAR).
To speak with an attorney regarding this class action lawsuit investigation, click here or call (888) 410-2925.
On Wednesday, September 22, 2021, hearing aid company Eargo disclosed in an SEC filing that it was the target of a criminal investigation by the U.S. Department of Justice (DOJ). Eargo said the investigation was concerning "insurance reimbursement claims" it had submitted on behalf of "customers covered by federal employee health plans."
Eargo further disclosed that the DOJ was now the "principal contact" behind an ongoing claims audit by an insurance company, an audit Eargo first announced in its Q2 2021 press release on August 12, 2021. In that press release, Eargo had described the insurance company as its "largest third-party payor," accounting for 80% of Eargo’s gross accounts receivable as of June 30, 2021, and said that as a result of the audit, claims dating back to March 1, 2021 had not yet been paid.
Despite the audit, Eargo went on in its Q2 report to increase its revenue forecast for 2021 from between $89 million and $93 million to between $93 million and $96 million. But upon disclosure of the DOJ investigation and its relationship to the third-party payor audit, Eargo has now withdrawn its 2021 guidance altogether.
Following news of the criminal investigation, Eargo’s stock price plummeted 68% on September 23, 2021, causing significant harm to investors.
What Should Eargo Investors Do?
If you invested in Eargo, visit our website or contact our securities team directly at (888) 410-2925 to discuss how you may be able to recover your losses. Our investigation concerns whether Eargo has violated federal securities laws by providing false or misleading statements to investors.
About Gibbs Law Group
Gibbs Law Group represents investors throughout the country in securities litigation to correct abusive corporate governance practices, breaches of fiduciary duty, and proxy violations. The firm has recovered over a billion dollars for its clients against some of the world’s largest corporations, and our attorneys have received numerous honors for their work, including "Best Lawyers in America," "Top Plaintiff Lawyers in California," "California Lawyer Attorney of the Year," "Class Action Practice Group of the Year," "Consumer Protection MVP," and "Top Women Lawyers in California."
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