Shares of Ebix Inc. took a beating Monday as investors reacted to last week’s news that an accounting firm had raised questions about the Johns Creek-based company’s financial reporting.
The software company, which is traded on the Nasdaq exchange, lost more than 50% of its value in early trading, before a modest rebound.
Ebix closed at $50.79 a share Friday. Shares plummeted to $25.20 as trading opened Monday. By early afternoon, Ebix had risen to just above $30 a share.
The accounting company, Chicago-based RSM, told Ebix Feb. 15 that it did not have the information needed to be sure that certain “unusual transactions” that occurred late last year had been properly accounted for and disclosed, according to filings with the Securities and Exchange Commission. Those transactions involved the company’s gift card business in India.
However, Ebix released a statement Monday asserting that “the company’s financial health is in better shape than ever.”
“The Company continues to generate strong cash flows,” the statement said, and “is not aware of any wrongdoing in any manner.”
Officials at Ebix did not respond to The Atlanta Journal-Constitution’s request for further comment Monday.
Last year, a large travel company in India broke off a pending merger agreement with Ebix, charging Ebix with breaching the terms of the deal.
In early 2019, the company faced questions about a shareholder connected to the company unloading nearly $1 million in stock just before the firm changed auditors. The shift in auditors sent Ebix shares down 20% in a day and the timing of the sale raised questions of insider trading, legal experts told The Atlanta Journal-Constitution at the time.
In the fourth quarter of 2014, Ebix had to pay $1.4 million following an IRS audit of the company’s income tax returns.
The current situation has drawn the interest of several law firms that handle securities cases. Boston-based Block & Leviton and Los Angeles-based Glancy Prongay & Murray said they have opened investigations.
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