Did an iceberg just wallop into MiMedx Group Inc’s (NASDAQ:MDXG) stock? The medical-device maker’s shares are plunging at breakneck speed of over 35%, on back of concerns about serious irregularities. As such, the company announced that it will postpone the release of its financial results.
Block & Leviton, a securities litigation firm representing investors nationwide, is investigating whether MiMedx certain of its officers and directors violated federal securities laws following claims that the Company is engaged in a fraudulent accounting scheme and is under investigation by the SEC.
In reaction, MiMedx shares are falling over 30% to $9.65 in early trading Tuesday.
The 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. Company executives are also reviewing, among other items, the accounting treatment of certain distributor contracts.
The Audit Committee is working closely with its advisors to complete this investigation in as timely a manner as possible. The Company will not be in a position to release its financial results until the Audit Committee’s internal investigation is completed.
The Company believes, based on information available to date, that the outcome of such investigation should not have a material impact on revenue guidance for 2018. The Company’s unaudited cash and cash equivalents as of December 31, 2017 were approximately $33 million, after giving effect to the use of approximately $24 million for share repurchases in the fourth quarter of 2017 as part of the Company’s Share Repurchase Program. The Company had no debt outstanding as of December 31, 2017. The Company also does not expect this delay to affect its operational performance and clinical research activities.
“Our Board of Directors and executives believe it is in the best interests of our Company and shareholders for our Audit Committee to address these allegations in an internal investigation with the support of independent legal and accounting advisors. We look forward to releasing our 2017 financial results as soon as this process is complete,” said Parker H. “Pete” Petit, Chairman and CEO. “MiMedx has been experiencing rapid growth over the last few years as our product portfolio continues to meet significant, unmet needs in the marketplace. We are literally saving lives by saving limbs, and we expect to continue to deliver operational and clinical success in the months and years to come.”
When it comes to Wall Street’s bet, the odds are on this regenerative medicine firm, with TipRanks analytics showcasing MDXG as a Strong Buy. Out of 4 analysts polled in the last 12 months, three are bullish on MiMedx stock, while one is bearish. With a return potential of nearly 94%, the stock’s consensus target price stands at $19.