Co-Diagnostics ($CODX) Investor Settlement

Co-Diagnostics has agreed to a $6,500,000 settlement to resolve investor claims that it misled the market about demand for its Logix Smart™ COVID-19 Test.

Outline:

On May 12, 2022, Co-Diagnostics told investors it remained "very confident" about demand for its Logix Smart™ COVID-19 Test despite pulling quarterly guidance. Through June 2022, executives repeatedly reassured investors that any forecasting difficulty was a timing issue, not a demand issue. On August 11, 2022, after market close, Co-Diagnostics disclosed that Q2 2022 revenue had fallen to $5.0 million from $27.4 million a year earlier, driven by collapsing demand for the COVID-19 test. The case has now reached a $6,500,000 settlement.

Timeline:

• May 12, 2022: Co-Diagnostics reported Q1 2022 results and pulled quarterly guidance, with CEO Dwight Egan stating the company remained "very confident" about long-term demand for the Logix Smart™ COVID-19 Test.

• June 15, 2022: At the Sidoti Summer 2022 Small Cap Virtual Conference, Egan told investors he expected "continued demand" for COVID-19 testing for at least the next year or two.

• August 11, 2022: After market close, Co-Diagnostics disclosed Q2 2022 revenue of $5.0 million, down 82% from $27.4 million the prior year, attributing the drop to falling demand for the Logix Smart™ COVID-19 Test.

• August 12, 2022: Co-Diagnostics' stock fell $1.98, or 30.65%, from a closing price of $6.46 to close at $4.48.

• August 14, 2026: Parties executed the Stipulation and Agreement of Settlement for $6,500,000.

Background:

Co-Diagnostics develops and sells diagnostic test reagents, including its Logix Smart™ COVID-19 detection test, which received FDA Emergency Use Authorization in April 2020 and was sold to hundreds of certified labs in the U.S. and abroad.

During the class period, the company and its executives repeatedly reassured investors about continued demand for the Logix Smart™ COVID-19 Test, even as they declined to provide quarterly guidance. When directly asked by analysts whether the company was seeing declining orders, CFO Brian Brown stated the issue was "more about the timing" of orders rather than "a demand issue." CEO Egan told investors at a June 2022 conference that he expected continued demand for COVID-19 testing for at least the next year or two.

Investors allege this picture was false. According to the complaint, demand for the Logix Smart™ COVID-19 Test had already plummeted throughout the quarter, and the company's positive statements about demand lacked a reasonable basis. The truth emerged on August 11, 2022, when Co-Diagnostics disclosed that quarterly revenue had collapsed by 82% due to lower testing volumes, sending the stock down over 30% the next day.

The case proceeded through class certification, extensive discovery (58,000+ documents, 11 depositions), and cross-motions for summary judgment before the parties reached a mediated settlement in 2026, just months ahead of a scheduled October 2026 trial.

What Can Investors Expect Now?

Co-Diagnostics has agreed to a $6,500,000 settlement to resolve investor claims that it misled the market about demand for its Logix Smart™ COVID-19 Test.

If you were damaged due to this situation, you can file for a payout and get your share of the settlement once claims filing opens. You can check if you are eligible and other details in the FAQ section.