MiMedx Group, Inc. Accused of Engaging in Fraudulent Revenue Scheme
According to the complaint, in December 2016, two former MiMedx Group, Inc. (MDXG) employees filed a complaint against the company alleging MiMedx fired them for reporting fraudulent revenue recognition practices. The employees alleged that MiMedx inappropriately recorded sales of products that hadn’t yet been filled—otherwise known as channel stuffing—in order to fraudulently recognize revenue in its financial statements before the revenue had been realized and earned. On February 20, 2018, after months of denying that it had engaged in a fraudulent revenue scheme, MiMedx revealed that it hired legal and accounting advisors to conduct an internal investigation regarding certain sales and distribution practices at the company. As a result, the company postponed the release of its financial results and the filing of its 2017 Form 10-K. On this news, MiMedx’s stock plunged over 39% to close at $8.75 per share on February 20, 2018, and continues to decline.
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