Robbins Arroyo LLP: Natera, Inc. (NTRA) Misled Shareholders According to a Recently Filed Class Action
Robbins Arroyo LLP announces that a class action complaint was filed in the Superior Court of the State of California, County of San Mateo. The complaint alleges that officers and directors of Natera, Inc. (NASDAQGS: NTRA) violated the Securities Act of 1933 in connection with the company’s July 2, 2015 initial public offering (“IPO”) by issuing a Registration and Prospectus that misleadingly represented the state of Natera’s business. Natera is a genetic testing company that develops and commercializes non-invasive methods for analyzing DNA in the United States and Europe. Its primary product is Panorama, a non-invasive prenatal test (“NIPT”) which the company claims is “the most accurate NIPT commercially available in the United States.”
Natera Accused of Misleading Investors About the State of its Business
According to the complaint, Natera attributed its commercial success and future growth prospects to its independent direct sales force, which at the time of the IPO, Natera stated it was continuing to expand. It also stated that the percentage of its overall accessioned tests generated through the higher margin U.S. direct sales force increased from about 25% in 2013 to about 44% in 2014, and approximately 60% for the three months ended March 31, 2015. Natera used the number of tests accessioned—or tests that Natera enters into its system and routes to the appropriate sample flow—as a key indicator to assess its business. Notably, before going public, none of Natera’s directors were compensated for service as a member of the board, but after the IPO, the directors were eligible to receive compensation and an annual stock option grant of 11,169 shares.
On July 2, 2015, Natera conducted its IPO, selling 10.9 million shares at $18 per share, raising approximately $178.5 million in proceeds. Natera’s Registration Statement portrayed the company as a “rapidly growing diagnostics company” with huge year-over-year increases in revenues. Natera stated that these revenue increases were due to increased sales of Panorama. However, the complaint alleges that the offering materials failed to disclose that Natera had experienced a nearly $20 million net loss in the company’s second quarter 2015, which had ended before the IPO, and which exceeded any other quarterly loss the company had suffered by as much as 3700% since at least the second quarter 2013 when Panorama was released. Further, Natera had actually experienced a second quarter 2015 revenue decline, which was the second quarter in a row of declining revenue. Additionally, the percent of Panorama tests accessioned in which revenue was recognized in the same quarter had declined to a mere 47%, as third-party payers were refusing to adequately reimburse patients for Panorama and doctors were not recommending it. On February 22, 2016, Natera stock closed at $7.48 per share, less than half of the IPO price.
Natera 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.