Marietta-based MiMedx this morning announced that it must revise years’ worth of financial statements, following an audit committee investigation.
The biopharma company, run by Peter Petit, one of Georgia’s most successful and politically connected businessmen, also announced the abrupt departures of two top officials: its chief financial officer and its controller/treasurer.
The company's internal investigation began after former employees alleged the company had illegally inflated revenue by overshipping products to Veterans Affairs hospitals, triggering probes by the Securities and Exchange Commission and the Department of Justice.
Then last month, three Department of Veterans Affairs workers were indicted on federal health care fraud charges, accused of excessive use of MiMedx products on VA patients after accepting gift cards, meals and other inducements from a company representative. Two of the three workers were also charged with accepting bribes.
Today's announcement said that financial statements released by the company from 2012-2016 and the first three quarters of 2017 cannot be relied on, and that the company is withdrawing all previous financial guidance issued for 2018.
The Audit Committee investigation so far has focused on practices of two distributors, the company also said.
But the company also said that the investigation is continuing to evaluate sales and distribution practices. That investigation, its news release said, "may ultimately result in the identification of additional issues" and may result in additional actions by the company.
MiMedx has also been embroiled in a controversy with the Food and Drug Administration over its human tissue grafts. The FDA said in 2013 that some of its products qualify as drugs and biologicals but were being sold without proper FDA approval. As a result, Petit told the AJC last month that the company negotiated an agreement to start investigational new drug trials on one product.
Another controversy involves payments the company made to doctors and other health care professionals. Under a federal law, companies that make drugs, medical devices, biologics or medical supplies are required to file annual reports on those payments. MiMedx did not file the reports, although it has made payments to more than 20 physicians. The company said it was not covered by the law but once its products are FDA approved, it will comply.
