On Tuesday, Walter De Schutter filed a complaint in the Eastern District of New York against Teladoc Health Inc., Jason Gorevic, and Mala Murthy over misleading statements about the future of the company and its BetterHelp product.
The defendants offer a direct-to-consumer virtual healthcare product known as BetterHelp, which competes with Amazon, Walmart, and other major players in the industry, the filing says. In their third quarter 2021 conference call, the company leader defendants “downplayed anticipated headwinds to the Company’s chronic care business” and “assur[ed] investors of the limited impact” of market slowdowns.
According to the plaintiff, the defendants’ statements were materially false since they failed to disclose increased competition. Further, the complaint said that the growth of businesses such as BetterHelp “was less sustainable than Defendants had led investors to believe,” meaning that given growth projections were “unrealistic.”
On April 27th, 2022, Teladoc issued a press release for the first quarter of 2022 which showed a “net loss per share of $41.58” and lowered the company’s 2022 fiscal year projections by tens of millions of dollars.
On Apr. 28th, 2022, an investor news site published an article entitled “Teladoc draws downgrades after 1Q revenue miss” highlighting the near 33% loss in share value. This reportedly caused the shares to drop an additional 40% down to $33.51 per share.
According to the shareholder, the deceptive forecasts caused investors to purchase Teladoc securities at an “artificially inflated” price only to suffer grave losses when it plummeted. In turn, De Schutter and the putative class allege violations of Sections 10(b) and 20(a) of the Exchange Act.
The suit seeks class certification, damages, pre- and post-judgment interest, attorneys’ fees and costs, and other relief. The plaintiff is represented by The Rosen Law Firm, P.A.