Pomerantz LLP announces that a class action lawsuit has been filed against NantHealth, Inc. (“NantHealth” or the “Company”) and certain of its officers. The class action, filed in United States District Court, Central District of California, and docketed under 17-cv-1824, is on behalf of a class consisting of investors who purchased or otherwise acquired NantHealth securities: (1) pursuant and/or traceable to NantHealth’s false and misleading Registration Statement and Prospectus, issued in connection with the Company’s initial public offering on or about June 2, 2016 (the “IPO” or the “Offering”); and/or (2) on the open market between June 2, 2016 and March 3, 2017, both dates inclusive (the “Class Period”), seeking to recover damages caused by defendants’ violations of the Securities Act of 1933 (the “Securities Act”) and the Securities Exchange Act of 1934 (the “Exchange Act”).
NantHealth, a transformational healthcare cloud-based IT company, purports to provide cloud-based platform solutions that converge science and technology through an integrated clinical platform to provide actionable health information at the point of care for critical illnesses.
In September 2014, the Company’s founder and Chief Executive Officer (“CEO”), Defendant 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. The donation came from three different tax-exempt entities controlled by Soon-Shiong: $9 million from two private foundations, and the remaining $3 million from the NantHealth Foundation, a medical research organization.
The complaint alleges that throughout the Class Period, Defendants made materially false and/or 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 that: (i) Defendant 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; (ii) consequently, the number of test orders that NantHealth reported to investors was artificially inflated; (iii) the contracts governing Soon-Shiong’s donation to the university violated federal tax law; and (iv) as a result, NantHealth’s public statements were materially false and misleading at all relevant times.
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. In addition, 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.”
On this news, NantHealth’s share price fell $1.67, or 23.29%, to close at $5.50 on March 6, 2017.