On June 22, 2020, Progenity commenced its initial public offering (“IPO”) of over 6.6 million shares at $15.00 each, generating over $100 million in gross offering proceeds. Since the IPO, Progenity’s stock price has plummeted, closing as low as $7.71 per share on August 14, 2020, representing a decline of nearly 50% from the IPO price.
The lawsuit was filed in the U.S. District Court for the Southern District of California, and is captioned Soe v. Progenity, Inc., et al., No. 3:20-cv-01683. The suit alleges that the IPO materials were negligently prepared, and as a result, contained untrue statements of material fact and omitted material facts necessary to make the statements therein not misleading. Specifically, the suit alleges that the IPO materials failed to disclose that: (1) Progenity had overbilled government payors by $10.3 million in 2019 and 2020 and had therefore overstated its revenues, earnings, and cash flows from operations; (2) Progenity would need to refund this overpayment in the second quarter of 2020 (the same quarter in which the IPO was conducted; and (3) Progenity was suffering from accelerating negative trends in the second quarter of 2020 with respect to the Company’s testing volumes, revenues, and product pricing.