REDWOOD CITY – Attorneys representing plaintiffs in a shareholder class action against health care company Castlight Health fully expect those allegedly wronged to accept a settlement.
Details of the settlement against the San Francisco-headquartered company have been revealed, and it includes Castlight paying aggrieved share buyers $9.5 million.
Castlight, a health information cloud-based software company, was accused of misstating and omitting material facts in its registration statement ahead of its March 14, 2014, initial public offering (IPO).
The lawsuit accused the company, certain directors and underwriters of allegedly failing to disclose it was experiencing implementation delays and did not reveal it had increased expenses, or details of its inability to maintain pricing on its principal product. Defendants deny all of the plaintiffs' allegations.
Castlight opened at $16 a share but soared 149 percent on its first day of trading before falling in the following days. Shares were trading at $4.14 on Aug. 17.
The company last week reported second-quarter revenue of $23.6 million, up 27 percent over the same period last year, and slightly ahead of the $23.1 million analysts were expecting.
Attorney Jonathan Gardner, who represents the plaintiffs in the case against Castlight, believes those unnamed in the class action will accept the settlement.
“We are very happy with the settlement as it recovers a significant portion of the class’ damages," Gardner, of the law firm Labaton Sucharow, told the Northern California Record. "We are hopeful and fully expect the class to accept the settlement. As is the case in every settlement in civil litigation, the defendants deny any wrongdoing.”
A hearing to determine whether the settlement should be accepted will be held Oct. 28 at the Superior Court of California in San Mateo.
Those who bought shares between March 14, 2014, and Sept. 10 that year may be eligible for compensation from the settlement fund. To share in the settlement, claimants are asked to contact the claims administrator before Nov. 1.
Those objecting to the settlement must contact class counsel or the court before Oct. 7.
The court will be asked to approve the payment of $9.5 million in cash as “fair, reasonable and adequate.”
The court will also decide whether to award attorneys' fees and expenses out of the settlement fund, and to pay the named plaintiffs for their time and expenses.
Castlight, in its mission statement, says it wants to “empower people to make the best choices for their health and to help companies make the most of their health benefits.”
It offers a health benefits platform aimed to allow employees to make better healthcare decisions, guiding them to the right program, care, and provider. It partners with employers.
In a statement after the release of its second quarter results last week, Giovanni Coletta, Caslight's chief executive officer, said the company saw “strong adoption” of its health benefits platform by new customers.
“Overall, we are pleased to see results from our growth initiatives as we also make clear progress on our path to profitability,”
John Doyle, Caslight's chief financial officer, said in the statement.