MiMedx Group Inc MDXG followed up a 6-percent sell-off on Friday with another 28-percent drop Tuesday after the company announced the postponement of its quarterly earnings results due to an internal investigation into the company’s finances.
“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," MiMedx said in a Tuesday statement.
The company — a processor, marketer and distributor of human amniotic tissue, according to its website — said it will not be releasing a quarterly earnings report until the audit committee’s investigation is complete.
The good news for MiMedx investors is that the company said the investigation “should not have a material impact on revenue guidance for 2018.”
The value of the company’s word is up for debate at this point.
On Friday, short seller Aurelius Value accused MiMedx of “serious and pervasive fraud.” MiMedx vice president of investor relations Robert Borchert called the accusations “false information” being “maliciously spread for the purpose of manipulating our company’s stock price.”
Aurelius Value isn’t the first short seller to call out MiMedx. On the past five months, MiMedx has published more than 50 commentary pieces on the negative impact of short sellers such as Citron Research’s Andrew Left, Viceroy Research and Marc Cohodes.
MiMedx has an extremely high short percent of float of 39.8 percent, according to shortsqueeze.com.
The new investigation appears to be a shift in the company’s approach to combating short sellers. Market price action on Tuesday morning suggests investors have little faith the investigation will have a positive resolution.
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