Repro Med Systems, Inc.
Lead Plaintiff Deadline: 05/25/2021
SUMMARY OF CASE:
A securities class action has been filed against Repro Med Systems, Inc. d/b/a KORU Medical Systems (KRMD) on behalf of shareholders who purchased the Company’s securities between August 4, 2020 through January 25, 2021. This case has been filed in the USDC – S.D.N.Y.
On November 3, 2020, after the market closed, KORU announced its third quarter 2020 financial results, reporting that net sales declined sequentially to $6.1 million. During the conference call the next day, the Company attributed the lower sales to, among other things, “higher allowances for gross rebates for certain customers” and “payment discounts and distribution fees.”
On this news, the Company’s stock price fell $1.97, or 32%, to close at $4.16 per share on November 4, 2020, thereby injuring investors.
Then, on January 25, 2021, after the market closed, KORU announced its preliminary financial results for fiscal 2020, expecting revenue of approximately $24.0 million, an increase of 3.4% over the prior year. The Company attributed the results to, among other things, “[s]lower growth in net revenue as a result of strengthening our contractual position with large customers.” In the press release, KORU also announced that its CEO, Donald Pettigrew, resigned, effective immediately.
On this news, KORU’s stock price fell $0.80 per share, or 15.5%, to close at $4.33 per share on January 26, 2021, thereby injuring investors further.
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The complaint alleges that throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants failed to disclose to investors that: (1) starting in January 2020, KORU ramped up the use of allowances, including growth rebates, to retain key customers and to incentivize growth; (2) as the rebates accrued, the Company’s net sales were reasonably likely to decline; and (3) as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.