March 26, 2021 - An investor in shares of Repro Med Systems, Inc. (NASDAQ: KRMD) filed a lawsuit in the U.S. District Court for the Southern District of New York over alleged violations of Federal Securities Laws by Repro Med Systems, Inc. d/b/a KORU Medical Systems in connection with certain allegedly false and misleading statements made between August 4, 2020 and January 25, 2021.
Chester, NY based Repro Med Systems, Inc., doing business as KORU Medical Systems, designs, manufactures, and markets portable medical devices primarily for the ambulatory infusion market in the United States and internationally.
On November 3, 2020, after the market closed, Repro Med Systems, Inc announced its third quarter 2020 financial results, reporting that net sales declined sequentially to $6.1 million. During the 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.”
Then, on January 25, 2021, after the market closed, Repro Med Systems, Inc 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.” Repro Med Systems, Inc also announced that its CEO, Donald Pettigrew, resigned, effective immediately.
Shares of Repro Med Systems, Inc. (NASDAQ: KRMD) declined to as low as $3,27 per share on March 5, 2021.
According to the complaint the plaintiff alleges on behalf of purchasers of Repro Med Systems, Inc. (NASDAQ: KRMD) common shares between August 4, 2020 and January 25, 2021, that the defendants violated Federal Securities Laws. More specifically, the plaintiff claims that between August 4, 2020 and January 25, 2021, the Defendants failed to disclose to investors that starting in January 2020, KORU ramped up the use of allowances, including growth rebates, to retain key customers and to incentivize growth, that as the rebates accrued, the Company’s net sales were reasonably likely to decline, 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.