Shares of CardioNet, Inc. (NASDAQ: BEAT) plummeted after CardioNet’s officers and directors withdrew their 2009, 2010 and 2001 guidance. Shareholders allege CardioNet’s senior executives made false, reckless and misleading predictions concerning CardioNet’s projected performance.
Shareholder lawsuits have been filed, alleging CardioNet made false and misleading statements about its Mobile Cardiac Outpatient Telemetry, or MCOT, device. Shareholders further allege CardioNet issued false and misleading financial projections for 2009-2011 because CardioNet knew its reimbursement rates for the MCOT device were under review and were likely to be cut. Because of the false and misleading statements, CardioNet traded at artificially inflated prices, as high as $19.60 per share on May 19, 2009.
On June 30, 2009 CardioNet disclosed its full year 2009 guidance would be slashed, and CardioNet withdrew its 2010 and 2011 guidance due to the lowered MCOT reimbursement rates. Less than one month later, CardioNet withdrew its 2009 guidance as well, due in part to reduced reimbursement rates. CardioNet’s shares fel to $5.87 per common share on July 13, 2009.
Shareholders allege the defendants had no reasonable bases for CardioNet’s wildly inflated 2009, 2010 and 2011 financial projections and outlook, in part because defendants knew their MCOT reimbursement rates were under review and likely to be cut.
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