CASES
Genoptix, Inc.
Class Period: Jul 31, 2009 to Jun 15, 2010
Lead Plaintiff Deadline: Feb 4, 2011 + Deadline passed
Summary of Case:
A securities class action has been filed against Genoptix, Inc. (GXDX) ("Genoptix" or the "Company") on behalf of all securities purchasers from July 31, 2009 through June 15, 2010, inclusive ("Class Period"), in the United States District Court for the Southern District of California.
The complaint alleges that during the Class Period, defendants issued materially false and misleading statements regarding Genoptix's business and financial results. Specifically, defendants continuously hyped the Company's approach to hematology and oncology testing and diagnostics, projecting they would easily be able to double or triple the size of the Company's market share in the next three to five years, while failing to disclose that Genoptix's business model was not working and was causing the Company to actually lose market share. As a result of defendants' false statements, Genoptix's stock traded at artificially inflated prices during the Class Period, reaching a high of $38.79 per share on April 30, 2010.
On May 6, 2010, Genoptix issued a press release announcing first quarter 2010 financial results far below consensus. On this news, Genoptix's stock fell $8.37 per share to close at $27.89 per share on May 7, 2010, a one-day decline of over 23% on high volume. Then, on June 16, 2010, Genoptix issued a press release providing a first look at its second quarter 2010 performance and updating its guidance for the full-year 2010. The Company reduced its revenue guidance to $210 million, down from previous guidance of $235 to $240 million, and its earnings per share guidance to $1.20 per share, down from previous guidance of $1.80 to $1.85 per share. On this news, Genoptix's stock fell another $5.69 per share to close at $17.19 per share on June 16, 2010, a one-day decline of 25% on high volume.
The true facts, which were known by the defendants but concealed from the investing public during the Class Period, were as follows: (a) the Company failed to disclose that its business model was unsustainable; (b) the Company failed to disclose that due to continuing challenges it was facing in the industry, including increased competition, increased managed care pressures, decreased sales force effectiveness and changing trends at the physician level, the Company's past results could not and would not continue, as Genoptix would not only be unable to grow its operations but would have difficulty maintaining its current client base; (c) the Company failed to disclose that the reason for the Company's slowdown in its revenue growth was not temporary, nor was it primarily due to the Company's reconfiguration of its sales department; and (d) given the increased competitive pressures and the changing landscape in the industry, the Company had no reasonable basis to make projections about its revenue growth or its ability to gain or even maintain its market share.
If you purchased this company's shares during the Class Period and suffered a loss or for further information about the case, please review the links below.