Eargo Dodges Investor Suit Over Hearing Aid Insurer, DOJ Probes

Eargo Inc. shareholders can’t proceed on claims that the hearing aid company and its underwriters inflated its value before its initial public offering by touting sales to insured customers and downplaying an insurance audit later taken up by the Department of Justice.

The investors alleged that Eargo’s business model, which allowed patients to avoid an in-person audiology examination, was incompatible with insurance requirements for federal employees and retirees—its target customers.

The proposed class suit doesn’t adequately allege that most of the challenged statements are false or misleading, Judge Charles R. Breyer said Tuesday for the US District Court for the ...