MiMedx Group, Inc. (NASDAQ: MDXG)
On February 20, 2018, MiMedx postponed release of its fourth quarter and fiscal year 2017 financial results. Defendants explained “[t]he Audit Committee of MiMedx’s Board of Directors has engaged independent legal and accounting advisors to conduct an internal investigation into current and prior-period matters relating to allegations regarding certain sales and distribution practices at the Company” and “Company executives are also reviewing, among other items, the accounting treatment of certain distributor contracts[.]”
This news drove the price of MiMedx shares down $5.72, or nearly 40%, to close at $8.75 on February 20, 2018.
Then, Reuters reported federal authorities are investigating whether MiMedx overcharged the government for its tissue-repair products and whether it improperly booked sales of products that hadn’t been ordered, a practice known as channel stuffing.
“We’re focused on Defendants’ previous denials of improper accounting that, if false, damaged investors and on whether MiMedx submitted false claims to the Federal government,” said Hagens Berman partner Reed Kathrein.
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