Shares in MiMedx plummeted 30% after it announced Thursday that it must restate its financial results for the last six years. The embattled pharmaceutical company said its underlying business “remains strong,” but that it is still unclear what the exact damage is from the restatements.
Q1 hedge fund letters, conference, scoops etc, Also read Lear Capital: Financial Products You Should Avoid?
MiMedx launched an internal accounting probe earlier this year after short sellers Marc Cohodes, Viceroy Research, and Aurelius Value accused the firm of engaging in channel stuffing to increase sales. Corroborating the short sellers’ theses, the internal investigation found that certain implicit arrangements with two distributors “modified the explicit terms of the contracts, impacting revenue recognition during specified periods,” the company said. Chief Financial Officer Michael Senken was replaced on Wednesday.
“I have said that MiMedx is the biggest perpetrator of fraud I have seen in my career and today’s news only reinforces that view!” Cohodes said in a response to the company’s announcement. “Bribes, kickbacks, channel stuffing, Medicare/Medicaid fraud, lying to the [Food and Drug Administration] and the [Veterans Affairs] is just the tip of the iceberg.”
Separately, Sparrow Fund Management sued MiMedx last Monday for defamation, seeking permanent injunctive relief and at least $100 million in damages. MiMedx previously accused Sparrow of being Aurelius, but the hedge fund denied any association with the anonymous short seller.
Article by Activist Insight
