Robbins Arroyo LLP: NantHealth, Inc. (NH) Misled Shareholders According to a Recently Filed Class Action
Robbins Arroyo LLP announces that a class action complaint was filed against NantHealth, Inc. (NASDAQGS: NH) in the U.S. District Court for the Central District of California. The complaint is brought on behalf of all purchasers of NantHealth securities pursuant to the company’s registration statement and prospectus issued in connection with the company’s initial public offering (“IPO”) on June 1, 2016 and/or between June 1, 2016 and March 6, 2017, for alleged violations of the Securities Act of 1933 and the Securities Exchange Act of 1934 by NantHealth’s officers and directors. NantHealth, a transformational healthcare cloud-based IT company, provides cloud-based platform solutions that converge science and technology through an integrated clinical platform to provide actionable health information at the point of care for critical illnesses.
NantHealth Accused of Engaging in Money Laundering Scheme
According to the complaint, on June 1, 2016, NantHealth held its IPO of 6,500,000 shares of common stock at a price of $14.00 per share, reaping approximately $83.5 million in proceeds. The company subsequently emphasized the positive outlook for its Genomic Proteomic Spectrometry Cancer (“GPS Cancer”) solution, touted its competitive strengths, and reported strong second quarter 2016 revenues and continued progress on its GPS Cancer product. However, the complaint alleges that NantHealth officials failed to disclose that: (1) the company’s founder, Patrick Soon-Shiong, had donated funds to the University of Utah for the purpose of funneling those funds back into NantHealth; (2) as such, the company and Soon-Shiong violated federal tax laws and exposed the company to possible civil and criminal liability; (3) the company improperly recorded orders received from the University of Utah as GPS Cancer test orders; and (4) as a result, NantHealth reported false and inflated GPS Cancer order figures for the third quarter of 2016.
On March 6, 2017, STAT reported that Soon-Shiong had donated $12 million to the University of Utah from three different tax-exempt entities controlled by him under a contract that required the university to funnel a large part of that money back into NantHealth. STAT further asserted that tax experts indicated that the deal violated federal tax rules governing certain charitable donations and that the former head of the Internal Revenue Service’s tax-exempt division stated “[t]hey’re laundering the funds through the University of Utah.” STAT also revealed that although the company claimed that it had received 524 orders for the GPS Cancer test and that one-third of those orders came from the University of Utah deal, the geneticist leading the research stated that the work they ordered from NantHealth had nothing to do with GPS Cancer. On this news, NantHealth’s stock fell $1.67 per share, or 23.3%, to close at $5.50 per share on March 6, 2017—a 60% decline from the company’s IPO share price.
NantHealth 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.