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NeuroMetrix

This article was originally published in The Gray Sheet

Executive Summary

Maker of the NC-stat neuropathy diagnostic system faces a bevy of shareholder class action law suits stemming in part from concerns over reimbursement for the system that contributed to a 19% drop in the company's sales last year to $44.6 million. NeuroMetrix denies charges that it made false and misleading statements between Oct. 27, 2005 and March 6, 2007, as the shareholder suits allege. The Radnor, Pa., law firm of Schiffrin Barroway Topaz & Kessler charges NeuroMetrix, in part, with failing to disclose that health insurers were routinely and increasingly denying reimbursement for NC-stat. On Feb. 9, the American Medical Association CPT editorial panel failed to determine that existing Category I CPT codes were applicable to nerve conduction studies with NC-stat, contrary to the company's hopes, and instead proposed a new Category III CPT code that would "likely result in limited or no Medicare reimbursement" for nerve conduction studies with NC-stat and could adversely impact third-party payers, NeuroMetrix announced Feb. 12. The Waltham, Mass., company maintains that the recent class action suits are "without merit." The company's stock plunged 82% from $10.62 on Feb. 8 to $1.92 on March 28

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NC-stat neuropathy diagnostic device maker eliminates 20 sales reps (40%), reducing its total to 34 reps, as part of a cost reduction program announced May 13. Company-wide, the reduction in force totals 15%. "Additional reductions in operating expenses will be implemented within sales, marketing and other functional areas," NeuroMetrix states. The Waltham, Mass.-based firm expects to fully implement the program by the end of June to save $5 million annually. On May 6, NeuroMetrix reported a 23% decline in first quarter sales compared with last year, at $9.1 million, due to reimbursement difficulties. In February, the American Medical Association CPT editorial panel failed to determine that existing Category I CPT codes were applicable to nerve conduction studies with NC-stat and instead proposed a new Category III CPT code that would "likely result in limited or no Medicare reimbursement," the company explained (1"The Gray Sheet" March 31, 2008, In Brief)

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