Two law firms in New York announced the filing of a class action lawsuit by investors against Inspire Medical Systems (NYSE:INSP).
Bragar Eagel & Squire, P.C., and Bernstein Liebhard LLP filed on behalf of persons or entities who purchased or otherwise acquired Inspire Medical common stock between May 3, 2023, and Nov. 7, 2023.
The Minneapolis-based company develops minimally invasive implantable products for treating obstructive sleep apnea. It offers an alternative to the traditional CPAP machines made by the likes of Philips and ResMed. Inspire Medical’s reputation has grown over the past several years as Philips dealt with a massive CPAP recall and people moved away from that method of treatment.
Outlining the class action allegations against Inspire Medical
According to the law firms, Inspire introduced a pilot program in 2022. In this program, the company’s advisor care program team could directly access doctors’ electronic schedules and schedule appointments online.
Throughout the period outlined in the class action, Inspire allegedly touted the program’s effectiveness. The suits say the company boasted a 30% improvement in physician appointments. By August 2023, the suit alleges Inspire claimed more than 60 centers used the tool.
The suit alleges that during the May-August period, Inspire misled investors and/or failed to disclose key outcomes. Among the allegations, the firms say that customers encountered challenges with previous authorization submissions and scheduling appointments, despite the acceleration program. The slowdown in authorization submissions from these challenges allegedly led to a shortfall of hundreds of implant procedures.
As a result, the law firms say, Inspire’s positive statements about financial guidance, business, operations and prospects “were materially false and misleading and/or lacked a reasonable basis at all relevant times.”
Inspire’s third-quarter earnings — announced on Nov. 7 — included revenues that fell shy of expectations on Wall Street. The company also reported a decline in prior authorization submissions for patients seeking Inspire therapy. It also said it started to “track” problems with the acceleration program no later than the second quarter of 2023.
In response to the earnings, shares of INSP fell approximately 20% from $161.74 at close on Nov. 7 to $129.95 on Nov. 8. The stock has since rebounded, though, sitting at a share price of $201 before the market opened today, Dec. 27.
An Inspire spokesperson shared the following response to a request for comment:
- We are aware of the lawsuit filed against Inspire alleging securities fraud;
- We intend to vigorously defend ourselves in this matter; and
- Because this is an active litigation matter, we have no additional comments.