This is a securities class action lawsuit against TomoTherapy and certain of its officers and directors.
TomoTherapy develops, markets, and sells the Hi-Art system, a radiation therapy system for the treatment of various types of cancers.
The class action complaint alleges that during the Class Period TomoTherapy issued a series of materially false and misleading statements regarding TomoTherapy's revenues and net income. Specifically, the complaint alleges that on February 13, 2008, TomoTherapy reported that for fiscal 2008 it "anticipates revenue of $290 million to $310 million and net income per share in the range of $0.34 to $0.39 per diluted share." Moreover, TomoTherapy touted a strong second half 2008 due to "strong order flow in the second half of 2007 and the projected timing of customers' construction projects."
Unbeknownst to shareholders, TomoTherapy knew, or should have known, that a greater percentage of TomoTherapy's backlogged orders were for multi-unit Hi-Art Systems ordered by for-profit entities who had scheduled delivery of the units sequentially. As a result of this delivery schedule, these units would remain in backlog longer than single-unit orders and delivery would be pushed further back in 2008 and even into 2009. Therefore, TomoTherapy had no reasonable basis for its revenue and net income projections for fiscal 2008 because TomoTherapy would not be able to recognize revenue for these multi-unit Hi-Art Systems until late 2008 or 2009.
Then, on April 17, 2008, TomoTherapy announced its estimated 2008 first-quarter results and revised its fiscal 2008 outlook. Specifically, TomoTherapy estimated that 2008 revenues would be in the range of $255 million to $290 million and 2008 net income would be in the range of $0.14 to $0.33 per diluted share. Moreover, TomoTherapy reported that it received fewer new sales orders in Europe and that it had to hire a new Managing Director for European and Middle East operations in April 2008.
Upon this news, on April 17, 2008, the price of TomoTherapy common stock dropped 32%, to close at $9.10 per share, on extraordinary trading volume in excess of eight million shares.
Name (Stock Symbol)
TomoTherapy, Inc. (TOMO)
TomoTherapy, Inc. and its subsidiaries develop, manufacture, market, and sell the Hi Art system, a radiation therapy system for the treatment of various types of cancer.
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