WASHINGTON, DC (March 5, 2018) — U.S. Market Advisors Law Group PLLC announces that a securities class action has been filed against MiMedx Group Inc. (“MiMedx” or the “Company”)(NASDAQ: MDXG). The class action is on behalf of investors who acquired MiMedx securities between March 7, 2013 and February 19, 2018.
MiMedx is a medical device development and supply company, utilizing a number of different distributors to deliver its products. Among those distributors is AvKARE, Inc. (“AvKARE”) – a federal contractor.
Allegations Against MiMedx
According to the lawsuit, Defendants made false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that (i) MiMedx was engaged in a “channel-stuffing” scheme designed to inappropriately recognize revenue that had not yet been realized; (ii) the Company lacked adequate internal controls over financial reporting; and (iii) that as a result of the foregoing, MiMedx’s publicly disseminated financial statements were materially false and misleading.
In December 2016, two former employees of MiMedx filed a complaint against the Company, alleging, among other things, retaliatory termination by MiMedx after reporting fraudulent revenue recognition practices (defined herein as the “Whistleblower Action”). In particular, those employees alleged that MiMedx had engaged in a “channel-stuffing scheme” to “fraudulently recognize revenue [purportedly earned under its distribution agreement with AvKARE] in its certified financial statements before the revenue had been realized or realizable and earned.” The Company denied those claims and, in fact, sued the employees for tortious interference, among other things.
In September 2017 several market research analysts (often called “short reporters”) published reports which, among other things, focused on the allegedly fraudulent revenue recognition practices of MiMedx alleged in the Whistleblower Action. Again, MiMedx denied these allegations and sued each of the research companies for, among other things, libel, slander, and defamation.
Then, on February 20, 2018 – after months of denying that it had engaged in a fraudulent revenue scheme – MiMedx disclosed an “internal investigation into current and prior-period matters relating to allegations regarding certain sales and distribution practices at the Company,” and with regard to “the accounting treatment of certain distributor contracts.” The Company further
announced that, because of this internal investigation, it would delay the release of
its fourth quarter and fiscal year 2017 financial results.
On this news, MiMedx’s share price plunged more than 39% to close at $8.75 on February 8, 2018, from its previous close of $14.47, causing tens of millions of dollars in losses to investors.
Pending Lead Plaintiff Deadline Approaching
Investors with losses have until April 23, 2018 to ask the Court to be appointed as Lead Plaintiff for the class. The Lead Plaintiff is a representative for absent members of the class. Investors do not need to seek appointment as Lead Plaintiff to share in any class recovery in this action. If you are a class member and there is a recovery for the class, you can share in that recovery as an absent class member. You may retain counsel of your choice to represent you in this action. Contact USMA Law Group to discuss this action.
About USMA Law Group
U.S. Market Advisors Law Group PLLC is a national law firm based in Washington, D.C. The firm represents investors worldwide in U.S. securities class action lawsuits.
David P. Abel