Class action lawsuits have been filed on behalf of those who purchased or otherwise acquired NantHealth, Inc. securities in the company’s initial public offering in June 2016 or on the open market between June 2, 2016 and March 3, 2017, the class period.
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NantHealth Accused of Violating Tax Rules; Share Value Drops Over 20%
NantHealth is a transformational healthcare cloud-based IT company that purports to provide cloud-based platform solutions that converge science and technology through integrated clinical platform to provide actionable health information at the point of care for critical illnesses.
In September 2014, NantHealth’s founder and CEO, Patrick Soon-Shiong, announced a $12 million donation to the University of Utah in connection with an initiative to find genetic clues for the cause of diseases, including several cancers and amyotrophic lateral sclerosis.
On March 6, 2017, STAT, a news organization focused on medical industry reporting, published an article alleging that pursuant to the terms of Soon-Shiong’s donation to the University of Utah, the university was effectively required to spend $10 million on genetics analysis performed by NantHealth, an arrangement which enabled NantHealth to inflate by more than 50 percent the number of test orders it reported to investors in 2016. Also, the article quoted two tax experts stating that the deal “appeared to violate federal tax rules governing certain charitable donations” and “amount[ed] to indirect self-dealing by Soon-Shiong and his foundations.”
Following this news, NantHealth’s share price fell $1.67, or 23.29%, to close at $5.50 on March 6, 2017.
Class Actions Allege Investors Were Mislead
The class action lawsuits filed allege that throughout the class period, defendants made materially false and misleading statements, as well as failed to disclose material adverse facts about the company’s business, operations, and prospects. Specifically, defendants made false and/or misleading statements and/or failed to disclose the following
- Soon-Shiong funneled business to NantHealth through his donation to the University of Utah, pursuant to the contractual terms of which the university was effectively required to spend $10 million on genetics analysis performed by the Company
- Consequently, the number of test orders that NantHealth reported to investors was artificially inflated
- The contracts governing Soon-Shiong’s donation to the university violated federal tax law; and as a result, NantHealth’s public statements were materially false and misleading at all relevant times.
About Girard Gibbs LLP
Girard Gibbs LLP is one of the nation’s leading firms representing individual and institutional investors in securities litigation to correct abusive corporate governance practices, breaches of fiduciary duty, and proxy violations. The firm has recovered over a billion dollars for its clients against some of the world’s largest corporations, and has earned Tier-1 rankings and been named in the U.S. Lawyers – Best Law Firms list for four consecutive years.