Robbins Arroyo LLP: Invuity, Inc. (IVTY) Misled Shareholders According to a Recently Filed Class Action
Robbins Arroyo LLP announces that a class action complaint was filed against Invuity, Inc. (NASDAQGM: IVTY) in the U.S. District Court for the Northern District of California. The complaint is brought on behalf of all purchasers of Invuity securities between July 19, 2016 and November 3, 2016, for alleged violations of the Securities Exchange Act of 1934 by Invuity’s officers and directors. Invuity, a medical technology company, develops various surgical devices to address various surgical procedures in the United States.
Invuity Accused of Overstating Growth Potential For Its Accounts
According to the complaint, Invuity officials repeatedly praised the increasing growth at the company, highlighting its 73% revenue growth. Invuity’s Chief Executive Officer, Philip Sawyer, stated, “We are pleased with our progress to date and excited about our momentum towards the widespread adoption of our unique devices and technologies.” Sawyer further emphasized the company’s confidence that it would continue to report increasing revenue growth in its current accounts and confirmed that the company had multiple ways to grow its business and remain focused on adding new accounts and new complementary products to leverage its commercial investment. However, the complaint alleges that Invuity officials failed to disclose that Invuity’s continued opportunities for growth in mature active accounts stagnated after the initial sale of a new product, that revenues per active account were actually declining, and that the company’s sales force was not meeting stated revenue growth goals in mature active accounts.
On November 3, 2016, Invuity reported that it had dramatically cut its revenue expectations and 2017 guidance, attributing the decline to lower revenue per active account than anticipated. Invuity’s Chief Financial Officer, James Mackaness, further elaborated that creating many new customers comes with its challenges since the new customers tend to order more in the first order, drop to a level rate in the next order, which then has to build up over time. In accordance with the earnings release, Invuity’s 2017 full-year guidance was dramatically decreased from a projected $60 million to only $43 million. On this news, Invuity’s stock decreased by nearly 45% to close at $5.10 per share on November 4, 2016.
Invuity Shareholders Have Legal Options
Concerned shareholders who would like more information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, or you can complete the form below and we will contact you directly.