NEW YORK, Jan. 18, 2023 (GLOBE NEWSWIRE) -- Bragar Eagel & Squire, P.C., a nationally recognized shareholder rights law firm, reminds investors that class actions have been commenced on behalf of stockholders of F45 Training Holdings, Inc. (NYSE: FXLV), Silvergate Capital Corporation (NYSE: SI), NeoGenomics, Inc. (NASDAQ: NEO), and Iris Energy Limited (NASDAQ: IREN). Stockholders have until the deadlines below to petition the court to serve as lead plaintiff. Additional information about each case can be found at the link provided.
F45 Training Holdings, Inc. (NYSE: FXLV)
Class Period: Pursuant to the F45's July 2021 IPO
Lead Plaintiff Deadline: February 6, 2023
F45 is a fitness franchisor with a business model based on rapid growth through the franchising of low-overhead fitness facilities. The Company was founded in Sydney, Australia in 2013 and, by the time of the Company’s July 16, 2021 initial public offering more fully described below, maintained 2,801 franchises in 68 countries.
Plaintiff brings this class action on behalf of all persons and entities that purchased or otherwise acquired the common stock (“stock” or “shares”) of F45 pursuant and/or traceable to the Company's false and/or misleading Form S-1 Registration Statement and accompanying Prospectus and Supplemental Prospectus (collectively, the “Registration Statement”) issued in connection with the Company's July 16, 2021 initial public offering of 18.75 million shares of common stock, priced at $16 per share (the “July 2021 IPO” or the “Offering”), to pursue remedies under Sections 11 and 15 of the Securities Act of 1933 (the “Securities Act”).
As set forth in the Prospectus issued in support of the July 2021 IPO, the Company asserted that the proceeds would be used, inter alia, to repay indebtedness, to complete the purchase of Flywheel indoor cycling studio, to pay bonuses to certain employees, to pay expenses related to the offering, and for working capital and general corporate purposes.
In support of the July 2021 IPO F45’s Registration Statement professed and represented its advantage over traditional owner-operated fitness facilities both because the franchise model “has enabled us to open new studios at an accelerated pace versus the owner-operator model” and because it generated quick revenue for the Company because “[f]or the majority of franchises that we sell, we receive an upfront payment from the franchisee.” However, due to the material misstatements and omissions contained therein, Defendants’ Registration Statement was false and misleading regarding the Company’s revenue stream and its ability to maintain its rapid expansion business model.
In its Prospectus, the Company noted that it intended to emphasize the growth of multi-unit franchisees over single-unit franchisees, stating that as of March 31, 2021, “[a]pproximately 49% of Total Franchises Sold are owned by single-unit franchisee owners, with the other 51% owned by multi-unit franchisees.” The Company stated that “[a]s we pursue opportunities to develop multi-unit franchise systems with financial partners, we expect the percentage of multi-unit franchisees to increase over time.” However, at the time, the Registration Statement did not disclose that F45 could not maintain new franchise growth because it was offering more favorable payment terms to multi-unit franchisees. The Registration Statement merely represented that “[t]he upfront establishment fee is payable by the franchisee upon signing a new franchise agreement…”
In truth, as of the July 2021 IPO and as the Company would later acknowledge, F45 provided for “modified” payment terms for “large multiunit deals.” This would and did ultimately result in material increases to accounts receivable and lower cash flow for the Company. F45’s approach to starting new franchises was not sustainable over the long term as the Company was not being, and would not be, repaid by multi-unit franchise owners quickly enough to maintain significant franchise growth. Indeed, in the first and second quarters of 2022, F45reported just 117 and 92 new franchise openings, respectively, compared to 96 studio openings in the first quarter of 2020, when the COVID-19 pandemic began. This lackluster pace of growth was accompanied by a massive and unsustainable increase in F45’s accounts receivable and a similar, and equally unsustainable, decrease in its cash and cash equivalents. These practices were not sustainable at the time of the IPO. When the Company could no longer sustain this defective business model, its growth rate and revenue plummeted.
Then, on July 26, 2022, just a year after the IPO, and just a little more than two months after reiterating its growth targets, F45 issued a press release titled “F45 Training Announces Strategic Update.” The press release described “strategic updates to align the Company more closely with macroeconomic conditions and current business trends and prepare for the next phase of studio and membership growth.” According to the press release, the Company’s “strategic updates” informed the market: (1) of a significant reduction in its financial guidance, from a range of $255 to $275 million to a new range of $120 to $130 million; (2) of a dramatic cut in the number of new exercise studios that it would open in 2022- down approximately 60% (or 350 to 450 new studios, versus 1,000); (3) that a $250 million credit line “will not be available;” (4) that it was letting go of about 110 employees, equaling approximately 45% of its workforce; and (5) that CEO, Adam Gilchrist, had resigned his position as CEO, effective July 24, 2022.
Importantly, more adverse news was disclosed in the July 26, 2022, “Strategic Updates.” The Company disclosed that for the full-year net franchises sold would be between 350 and 450, a fraction of the prior guidance of 1,500, and that full-year net initial studio openings would be between 350 and 450, compared to the prior guidance of 1,000.
As a consequence of its infirm business model and condition, existing at the time of the July 2021 IPO, F45 was also forced to substantially slash guidance for the full-year 2022 revenue to just between $120 million and $130 million, compared to the prior guidance of $255 million to $275 million, and full-year Adjusted EBITDA between $25 million and $30 million, compared to the prior guidance of $90 million to $100 million, signaling a dramatic decrease in its business and momentum.
The July 26, 2022 adverse disclosures caused the trading price of F45 to plunge over 60%, from a close at $3.51 on July 26 to close at $1.35 on July 27, 2022 and representing more than a 78% decline from its offering price of $16 per share on July 16, 2021 – just slightly more than a year earlier.
For more information on the F45 Training class action go to: https://bespc.com/cases/FXLV
Silvergate Capital Corporation (NYSE: SI)
Class Period: November 9, 2021 - January 5, 2023
Lead Plaintiff Deadline: February 6, 2023
Silvergate is a digital currency company. Its platform, the Silvergate Exchange Network (“SEN”), provides payments, lending, and funding solutions for an expanding class of digital currency companies and investors. Silvergate is also the parent company of Silvergate Bank which provides financial services that include commercial banking, commercial and residential real estate lending, mortgage warehouse lending, and commercial business lending.
On November 15, 2022, Marcus Aurelius Research tweeted that “Recently subpoenaed Silvergate bank records reveal $425 million in transfers from $SI crypto bank accounts to South American money launderers. Affadavit from investigation into crypto crime ring linked to smugglers/drug traffickers.”
On this news, the Company’s Class A common stock price fell $6.13, or 17%, to close at $29.36 per share on November 15, 2022, on unusually heavy trading volume.
On November 17, 2022, The Bear Cave newsletter released an article about several companies with potential exposure to recently collapsed cryptocurrency exchange FTX, including Silvergate. The article highlighted the connection linking Silvergate to a money laundering operation that transferred $425 million off cryptocurrency trading platforms.
On this news, the Company’s Class A common stock price fell $3.00, or 10.7%, to close at $24.90 per share on November 18, 2022, on unusually heavy trading volume.
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 failed to disclose to investors: (1) that the Company’s platform lacked sufficient controls and procedures to detect instances of money laundering; (2) that Silvergate’s customers had engaged in money laundering in amounts exceeding $425 million; (3) that, as a result of the foregoing, the Company was reasonably likely to receive regulatory scrutiny and face damages, including penalties and reputational harm; and (4) that, as a result of the foregoing, Defendant’s positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.
For more information on the Silvergate class action go to: https://bespc.com/cases/SI
NeoGenomics, Inc. (NASDAQ: NEO)
Class Period: February 27, 2020 - April 26, 2022
Lead Plaintiff Deadline: February 6, 2023
NeoGenomics provides cancer tests and testing services to doctors, clinics, hospitals, and pharmaceutical companies. Among the Company’s portfolio of tests are next generation sequencing (“NGS”) tests. NGS tests have become popular with pathologists in recent years because they can test multiple genes of a cancer simultaneously, making them more cost effective and efficient than older legacy tests that only look for a single specific genetic mutation.
Throughout the Class Period, NeoGenomics consistently misrepresented to investors that it had a “comprehensive menu” of cancer tests that positioned it as a “one-stop-shop” for pathologists that needed cancer testing. Moreover, the Company stated that it had “every kind of testing modality that you can use for cancer, including some of the fast-growing new ones, like next-generation sequencing,” and had “a competitive advantage” as a “go-to reference lab with a comprehensive menu for just about any kind of tests that you want to have done in cancer [] and we keep our test menu very advanced.”
NeoGenomics also consistently asserted during the Class Period that it could “leverage” the supposedly “fixed cost” structure of its business to improve profitability as revenue increased. NeoGenomics also repeatedly touted its “robust Compliance Program . . . overseen by our Board of Directors . . . to ensure compliance with the myriad of . . . laws, regulations and governmental guidance applicable to our business,” merely listing failure to comply among the many hypothetical risks that could impact the Company’s results.
These statements were materially false and misleading. In truth: (i) NeoGenomics was anything but a “one-stop-shop” for cancer testing because it did not offer the most technologically advanced NGS tests, which led to a significant decrease in revenue as current and prospective customers went elsewhere for their testing needs; (ii) the Company’s costs were not fixed because NeoGenomics needed to hire additional employees to process more complex customized testing demanded by customers utilizing the Company’s outdated portfolio of tests, leading to operational challenges, decreased lab efficiency, and increased testing turnaround times; and (iii) NeoGenomics violated federal healthcare laws and regulations related to fraud, waste, and abuse.
On November 4, 2021, NeoGenomics revealed that it was, “conducting an internal investigation with the assistance of outside counsel that focuses on the compliance of certain consulting and service agreements with federal healthcare laws and regulations” and had recently “notified the Office of the Inspector General of the U.S. Department of Health and Human Services of our investigation.” Additionally, the Company disclosed that it “accrued a reserve of $10.5 million for potential damage and liabilities associated with the federal healthcare program revenue received spanning multiple years.” On this news, the price of NeoGenomics common stock fell $8.18 per share, or 17.6%, from $46.53 per share on November 3, 2021 to $38.35 per share at the close of trading on November 4, 2021.
After the close of trading on November 4, 2021, NeoGenomics provided some limited additional details about the internal investigation, specifically that the “federal healthcare laws and regulations” at the center of the Company’s investigation “include those relating to fraud, waste and abuse.”
On March 28, 2022, NeoGenomics disclosed that “the Board of Directors and Mark Mallon, Chief Executive Officer, have agreed that Mr. Mallon will step down as CEO and member of the Board, effective immediately.” At the same time, the Company disclosed that it “currently expects revenue for Q1 2022 may be below the low end of its prior guidance of $118 - $120 million and EBITDA for Q1 2022 will be below the low end of its prior guidance of $(15) - $(12) million. The larger than anticipated EBITDA loss was primarily driven by higher than anticipated Clinical Services cost of goods sold. The Company intends to take immediate action to address performance and costs . . . Additionally, the Company has withdrawn its 2022 annual financial guidance issued February 23, 2022.” On this news, the price of NeoGenomics common stock fell $5.30 per share, or 29.8%, from $17.79 per share on March 28, 2022 to $12.49 per share at the close of trading on March 29, 2022.
Then, on April 27, 2022, NeoGenomics reported its first-quarter 2022 financial results including that revenue for the quarter was $117 million and EBITDA loss was $19 million, that “[c]onsolidated gross profit for the first quarter of 2022” had “decrease[d] 8.0% compared to the first quarter of 2021,” and that “[o]perating expenses increased by $34 million, or 59%, compared to the first quarter of 2021.” The Company explained that “higher payroll and payroll related costs to support the Company’s strategic growth initiatives” drove the decreased profit and increased operating expenses.
Also on April 27, 2022, NeoGenomics held a conference call to discuss its firstquarter 2022 results (the “1Q22 Earnings Call”). During the 1Q22 Earnings Call, the Company attributed its poor performance in substantial part to the fact that, “our test mix is weighted to legacy modalities and disease-specific NGS offerings, while the market is moving towards larger, more comprehensive panels” and “we’ve seen a notable decrease in lab efficiency over the course of the past year . . . largely attributable to increased complexity of both our product offerings and our lab processes, due in part to efforts to respond to customer requests for customization.” NeoGenomics further disclosed that it was “seeing increased competition on the NGS front as panels move or as customers move to demanding larger, more comprehensive NGS-only panels, and our offering is more oriented towards smaller targeted panels” and that the Company was “seeing bigger and bigger panels coming from some of these emerging companies . . . where we have not kept up.”
On this news, the price of NeoGenomics common stock fell $0.41 per share, or 3.8%, from $10.85 per share on April 26, 2022 to $10.44 per share at the close of trading on April 27, 2022.
For more information on the NeoGenomics class action go to: https://bespc.com/cases/NEO
Iris Energy Limited (NASDAQ: IREN)
Class Period: November 17, 2021 - November 1, 2022
Lead Plaintiff Deadline: February 13, 2023
Iris touts itself as a leading owner and operator of institutional-grade, highly efficient, proprietary Bitcoin mining data centers powered by 100% renewable energy.
Iris’s Bitcoin mining operations purportedly generate revenue by earning Bitcoin through a combination of block rewards and transaction fees from the operation of specialized computing equipment called “miners” or “Bitcoin miners” and exchanging these Bitcoin for fiat currencies such as U.S. dollars (“USD”) or Canadian dollars (“CAD”) on a daily basis.
Iris has three wholly-owned special purpose vehicles, referred to as “Non-Recourse SPV 1”, “Non-Recourse SPV 2”, and “Non-Recourse SPV 3” (collectively, the “Non-Recourse SPVs”), each of which was incorporated for the specific purpose of financing certain of the Bitcoin miners operated by the Company.
On October 25, 2021, Iris filed a registration statement on Form F-1 with the SEC in connection with the IPO, which, after several amendments, was declared effective by the SEC on November 16, 2021 (the “Registration Statement”).
On or about November 17, 2021, Iris conducted the IPO, issuing approximately 8.27 million of its ordinary shares to the public at the Offering price of $28 per ordinary share for approximate proceeds to the Company of $215 million, before expenses, and after applicable underwriting discounts and commissions.
On November 18, 2021, Iris filed a prospectus on Form 424B4 with the SEC in connection with the IPO, which incorporated and formed part of the Registration Statement (the “Prospectus” and, together with the Registration Statement, the “Offering Documents.”)
The Offering Documents were negligently prepared and, as a result, contained untrue statements of material fact or omitted to state other facts necessary to make the statements made not misleading and were not prepared in accordance with the rules and regulations governing their preparation. Additionally, throughout the Class Period, Defendants made materially false and misleading statements regarding the Company’s business, operations, and prospects. Specifically, the Offering Documents and Defendants made false and/or misleading statements and/or failed to disclose that: (i) certain of Iris’s Bitcoin miners, owned through its Non-Recourse SPVs, were unlikely to produce sufficient cash flow to service their respective debt financing obligations; (ii) accordingly, Iris’s use of equipment financing agreements to procure Bitcoin miners was not as sustainable as Defendants had represented; (iii) the foregoing was likely to have a material negative impact on the Company’s business, operations, and financial condition; and (iv) as a result, the Offering Documents and Defendants’ public statements throughout the Class Period were materially false and/or misleading and failed to state information required to be stated therein.
On November 2, 2022, Iris issued a press release disclosing, among other things, that “[c]ertain equipment (i.e., Bitcoin miners) owned by [NonRecourse SPV 2 and Non-Recourse SPV 3] currently produce insufficient cash flow to service their respective debt financing obligations, and have a current market value well below the principal amount of the relevant loans” and that “[r]estructuring discussions with the lender remain ongoing.”
On this news, Iris’s ordinary share price fell $0.51 per share, or 15.04%, to close at $2.88 per share on November 2, 2022—a nearly 90% decline from the Offering price.
As of the time this Complaint was filed, Iris’s ordinary shares continue to trade significantly below the $28 per share Offering price, damaging investors.
As a result of Defendants’ wrongful acts and omissions, and the precipitous decline in the market value of the Company’s securities, Plaintiff and other Class members have suffered significant losses and damages.
For more information on the Iris class action go to: https://bespc.com/cases/IREN
About Bragar Eagel & Squire, P.C.:
Bragar Eagel & Squire, P.C. is a nationally recognized law firm with offices in New York, California, and South Carolina. The firm represents individual and institutional investors in commercial, securities, derivative, and other complex litigation in state and federal courts across the country. For more information about the firm, please visit www.bespc.com. Attorney advertising. Prior results do not guarantee similar outcomes.
Contact Information:
Bragar Eagel & Squire, P.C.
Brandon Walker, Esq.
Melissa Fortunato, Esq.
(212) 355-4648
investigations@bespc.com
www.bespc.com
