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02/19/2010 - Barrack, Rodos & Bacine Files Consolidated Complaint for Lead Plaintiff and Putative Class in CardioNet, Inc. Securities Litigation

On behalf of Lead Plaintiff Central Laborers’ Pension Welfare and Annuity Funds, Barrack, Rodos & Bacine and our co-counsel in this case, Branstetter, Stranch & Jennings, PLLC, filed a Consolidated Class Action Complaint on behalf of purchasers of CardioNet, Inc. stock during the period from April 28, 2009 through July 10, 2009. Click here for a copy of the complaint. The complaint was filed in the U.S. District Court for the Eastern District of Pennsylvania. It names as defendants CardioNet, its CEO Randy Thurman, and its former CFO Martin Galvan. The complaint cites to information in the public domain as well as information provided by a number of confidential witnesses contacted during our investigation of the case. The complaint alleges, among other things, that CardioNet and its two senior officers made a series of highly disparaging statements concerning a research report issued by Jefferies & Company on April 24, 2009, which rated the company as “underperform” and expressed the view that a drastic decrease in the Medicare reimbursement rate for CardioNet’s primary product was imminent, which would cause CardioNet to fall far short of its previously issued revenue and earnings guidance for the years 2009 through 2011. During the class period, CardioNet reiterated its guidance to the market and stated publicly that Jefferies had not conducted “proper due diligence” in writing its report and that a rate increase was just as likely as a rate reduction. However, on June 30, 2009, CardioNet was forced to lower its guidance for 2009 and withdraw its guidance for 2010 and 2011 based on “lower than anticipated commercial reimbursement rates” for its primary product, and on July 12, 2009, it withdrew its 2009 guidance entirely when it was forced to announce that its Medicare reimbursement rate was being cut by 33%, which was within the range anticipated by the Jefferies report. With the June 30 and July 12, 2009 announcements, the price of CardioNet’s stock fell from $16.32 per share on June 30, 2009 to $5.87 per share on July 13, 2009 – an overall decline of $10.45 per share, or 64 percent.

If you have any questions about this case, please contact BR&B partner Jeffrey W. Golan by telephone at (215) 963-0600, or by email at jgolan@barrack.com.