NEW YORK, May 5, 2021: Pomerantz LLP announces that a class action lawsuit has been filed against LifeMD, Inc. f/k/a Conversion Labs, Inc. (“LifeMD” or the “Company”) (NASDAQ: LFMD) and certain of its officers.
The class action, filed in the United States District Court for the Southern District of New York, and docketed under 21-cv-04004, is on behalf of a class consisting of all persons and entities other than Defendants who purchased or otherwise acquired LifeMD securities between January 19, 2021 and April 13, 2021, inclusive (the “Class Period”).
Plaintiff pursues claims against the Defendants under the Securities Exchange Act of 1934 (the “Exchange Act”).
If you are a shareholder who purchased LifeMD securities during the Class Period, you have until June 15, 2021 to ask the Court to appoint you as Lead Plaintiff for the class.
LifeMD is a direct-to-patient telehealth company. It offers a telemedicine platform that purports to help patients access licensed providers for diagnoses, virtual care, and prescription medications.
The complaint alleges that, throughout the Class Period, Defendants made materially false and misleading statements regarding the Company’s business.
Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (i) many of LifeMD’s executives were associated with Redwood Scientific Technologies, Inc. (“Redwood Scientific”) when it was charged for unlawful autoshipping, abusive telemarketing, and false claims, and that they employed similar practices at the Company; (ii) LifeMD engaged in autoshipping products to unwilling customers to record recurring revenue and the Company made it difficult to cancel such subscriptions; (iii) certain of the purportedly licensed physicians on the Company’s platform were not in fact licensed and faced disciplinary action; (iv) as a result of the foregoing practices, the Company was reasonably likely to face regulatory scrutiny and/or reputational harm; and (v) as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.
On April 14, 2021, Culper Research (“Culper”) issued a report alleging that “LifeMD appears to use unlicensed doctors to dispense OTC medications, has implemented an autoshipping/autobilling scheme, failed to honor guarantees, and put in place abusive telemarketing practices.” The report also alleged that several of the Company’s executives were involved in “wide ranging fraud” at Redwood Scientific, which was charged by the U.S. Federal Trade Commission for “unlawful autoshipping, abusive telemarketing, and false claims.” Specifically, according to Culper, “many customers are effectively duped into purchasing subscriptions rather than one-time purchases” and LifeMD “makes cancellations difficult if not impossible.”
On this news, the Company’s share price fell $2.84, or 24%, to close at $9.00 per share on April 14, 2021, on unusually heavy trading volume.
The Pomerantz Firm, with offices in New York, Chicago, Los Angeles, and Paris is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, the Pomerantz Firm pioneered the field of securities class actions. Today, more than 80 years later, the Pomerantz Firm continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members.