According to the complaint, Inovalon provides cloud-based data analytics platforms for health insurance plans, pharmaceutical companies, researchers and others in the healthcare industry. In February 2015, Inovalon completed the IPO, selling more than 25 million shares of common stock at $27 per share and raising more than $684 million in gross proceeds.
The complaint alleges that the Registration Statement was negligently prepared and, as a result, contained untrue statements of material fact and omitted to state material facts both required by governing regulations and necessary to make the statements made not inaccurate statements of material fact. Specifically, the complaint alleges that the Registration Statement failed to disclose the substantial revenues the company derived from sales in the City of New York and the State of New York. This was material because as it also failed to disclose, the State of New York had recently implemented – and New York City was on the cusp of implementing – substantial corporate tax reforms that would take effect on January 1, 2015 (New York City retroactively) that had significantly increased Inovalon’s purportedly “stable” 39% effective tax rate to 43% and thus negatively impacted Inovalon’s then current and future financial results.
According to the complaint, on August 5, 2015, after the markets closed, Inovalon issued a press release announcing its second quarter 2015 financial results for the interim period ended June 30, 2015. The release disclosed the negative impact the New York State and New York City corporate tax reforms had on Inovalon’s fiscal 2015 earnings and lowered the company’s 2015 earnings forecast accordingly. Following this news, the price of Inovalon shares fell $7.62 per share, or 30%, from a close of $25.40 per share on August 5, 2015 to trade as low as $17.78 per share in intra-day trading on August 6, 2015, on unusually high trading volume.
At the time of the filing of the complaint, Inovalon shares trade at less than $18 per share, more than one-third lower than the IPO price.
If you are a member of the class described above, you may no later than August 23, 2016 move the Court to serve as lead plaintiff of the class, if you so choose.
A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member’s claim is typical of the claims of other class members, and that the class member will adequately represent the class. Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. Any member of the purported class may move the court to serve as a lead plaintiff through counsel of their choice, or may choose to do nothing and remain an inactive class member.
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