April 16, 2021 - An investor in shares of LifeMD, Inc. (NASDAQ: LFMD) filed a lawsuit in the U.S. District Court for the Southern District of New York over alleged violations of Federal Securities Laws by LifeMD, Inc. in connection with certain allegedly false and misleading statements made between January 19, 2021 and April 13, 2021.
New York based LifeMD, Inc. operates as an online direct-to-patient marketing and telemedicine company with a portfolio of health and wellness brands in the United States.
LifeMD, Inc. reported that its annual Total Revenue rose from $12.46 million in 2019 to $37.29 million in 2020, and that its Net Loss increased from $3.13 million in 2019 to $58.64 million in 2020.
On April 14, 2021, a report was issued alleging that “LifeMD appears to use unlicensed doctors to dispense OTC medications, has implemented an autoshipping/autobilling scheme, failed to honor guarantees, and put in place abusive telemarketing practices.” The report also alleged that several of the Company’s executives were involved in “wide ranging fraud” at Redwood Scientific, which was charged by the U.S. Federal Trade Commission for “unlawful autoshipping, abusive telemarketing, and false claims.” Specifically, according to the report, “many customers are effectively duped into purchasing subscriptions rather than one-time purchases” and LifeMD “makes cancellations difficult if not impossible.”
Shares of LifeMD, Inc. (NASDAQ: LFMD) declined from $21.95 per share on March 22, 2021 to as low as $7.40 per share on April 21, 2021.
According to the complaint the plaintiff alleges on behalf of purchasers of LifeMD, Inc. (NASDAQ: LFMD) common shares between January 19, 2021 and April 13, 2021, that the defendants violated Federal Securities Laws. More specifically, the plaintiff claims that between January 19, 2021 and April 13, 2021, the defendants failed to disclose to investors that many of LifeMD’s executives were associated with Redwood Scientific when it was charged for unlawful autoshipping, abusive telemarketing, and false claims, and that they employed similar practices at the Company, that LifeMD engaged in autoshipping products to unwilling customers to record recurring revenue and the Company made it difficult to cancel such subscriptions, that certain of the purportedly licensed physicians on the Company’s platform were not in fact licensed and faced disciplinary action, that, as a result of the foregoing practices, the Company was reasonably likely to face regulatory scrutiny and/or reputational harm, and that, 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.