AxoGen, Inc. (AXGN) Accused of Overstating Active Accounts and Backdating Revenue

According to the complaint, AxoGen issued false and misleading Registration Statements in support of it SPOs in November 2017 and May 2018, that failed to disclose to investors that: (1) the company increased prices to mask lower sales; (2) the company's pricing alienated customers and threatened future growth; (3) the company paid surgeons to generate sales; (4) the company's key metrics were overstated; and (5) the company lacked adequate internal controls to prevent such conduct. On December 18, 2018, Seligman Investments published a report stating, among other things, that former employees allege channel stuffing and backdating of revenue, that the number of active accounts may be overstated by a factor of ten, that AxoGen's "growth is driven by unsustainable, aggressive price increases," and that the payments to physicians relative to revenue creates "elevated risks relating to pay-to-play and anti-kickback laws." On this news, AxoGen stock dropped approximately 22% to close at $21.36 on December 18, 2019.