Pomerantz Appointed Lead Counsel in Repro Med Systems Securities Litigation
On June 11, 2021, U.S. District Judge Valerie Caproni of the Southern District of New York appointed Pomerantz LLP as Lead Counsel on behalf of Lead Plaintiff Brian Pavlick in Pavlick v. Repro Med Systems, Inc., 21-cv-2632 (S.D.N.Y.), a securities action brought on behalf of a class of defrauded investors concerning allegations that Repro Med Systems, Inc. d/b/a KORU Medical Systems (“KORU” or the “Company”) materially misled investors by failing to disclose that sales incentives used to promote growth were reasonably likely to eventually lead to a decline in net sales.
KORU designs, manufactures, and markets proprietary portable medical devices, primarily for the ambulatory infusion market.
Allegations against KORU include that: (i) starting in January 2020, the Company ramped up the use of allowances, including growth rebates, to retain key customers and to incentivize growth; (ii) as the rebates accrued, the Company’s net sales were reasonably likely to decline; and (iii) 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.
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 a 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 fell $1.97, or 32%, to close at $4.16 per share on November 4, 2020.
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 a further $0.80 per share, or 15.5%, to close at $4.33 per share on January 26, 2021.