MiMedx CEO Gets Called Out By Short Seller at JPM Healthcare Conference
Respected biotech journalist at STAT, Adam Feuerstein, caught lightning in a bottle while he was recording the MiMedx breakout session at the JP Morgan Healthcare Conference on Wednesday.
Join the conversation on the MiMedx board, discussing the channel stuffing accusations.
Since last fall, MiMedx CEO, Parker Petit, and short-seller, Marc Cohodes, have been involved in a verbal battle over business practices and accounting at MiMedx. The accusations only intensified when an anonymous Mimedx employee sent a letter to Cohodes with detailed examples of misconduct by MiMedx and its executives.
The accusations range from channel stuffing (shelf stocking), deleting company information and MiMedx creating fake sales at the end of the quarter.
As mentioned above, the two finally met during MiMedx's breakout session.
After the Q&A Breakout, Cohodes took to Twitter:
https://t.co/JyV8kB9UEi site has been updated to cover the Lies $MDXG told yesterday at the #jpm18 #jpm2018 with the actual numbers. Parker Petite needs to resign at once @viceroyresearch @adamfeuerstein @SEC_Enforcement . This company is a Fraud on The Marketplace— Marc Cohodes (@AlderLaneeggs) January 11, 2018
At the JP Morgan Healthcare conference in San Francisco on January 10, 2018, CEO Parker and friends were asked some tough questions about share count. In response, they chose to LIE ABOUT THEIR OWN FINANCIAL STATEMENTS rather than answer the question.
You’ve issued 1.4 million shares of restricted stock since the end of 2016 which is unexplained in your filings. That’s not stock issued to executives, employees, or consultants for share based compensation or stock issued for services performed because those are separate line items. So were those stock issued to
- pay for MiMedx product
- induce MiMedx sales
- factor MiMedx receivables
- or if not where did they go?
I have yet to hit my stride in $MDXG . Parker Petite bringing Tom Price with him as the errand boy speaks volumes to the corruption at this outfit... @viceroyresearch Parker the coward had every chance to answer a question but did not. “ I am too small to shake your hand”— Marc Cohodes (@AlderLaneeggs) January 11, 2018
$MDXG needs to disclose to ALL INVESTORS who is INVESTIGATING them and why. File and 8k so that everyone is in the same page Parker. $MDXG “I AM TOO SMALL TO SHAKE YOUR HAND” @viceroyresearch When you are speaking to the @SEC_Enforcement “Every Day” that is Material!— Marc Cohodes (@AlderLaneeggs) January 11, 2018
First, you have to have conviction (and something else) to show up at the premier biotech conference and confront the company and CEO you've been accusing of illegal activities. Cohodes gets credit for that in my book.
You can disagree with him showing up at the meeting all you want but he clearly believes the information he's been given is accurate. If not, he seems like a smart enough guy to know there will be repercussions, whether legal or a significant knock on his reputation.
Petit and MiMedx also stood firm. Their responses shouldn't come as a surprise. From their point of view, they were ambushed at a meeting where they were planning to speak with investors about the great business they have. Not have to defend their business practices in what they thought would be a safe setting.
Then, boom, they get hit with these questions.
Without a lawyer present.
According to Cohodes recent tweet, more people are coming out with information. Who knows what will come of it but it's clear he isn't taking his foot off the gas.
The conviction is strong.
As someone with significant medical device sales experience, nothing in the letter Cohodes received surprises me.
I have no knowledge of anything at MiMedx, never even seen their product used in surgery or met one of their reps.
With that said, I can confidently say that every medical device company I have worked for could be accused of shelf stocking. Some small, some egregiously large, and likely illegal.
Like other companies, medical device companies have numbers to make, and at the end of each month, management turns the heat on the entire sales organization. The VP hits up the Directors, who then hit up the Regional Managers, who then hit up the front line sales reps.
It's a cycle that's repeated at the end of each month. The end of each quarter presents even more pressure and the end of the year is more pressure than quarter's end.
From this experience, it would not surprise me that some form of shelf stocking was going on.
However, for the accusations provided in that letter to be true, it would take more than a single rogue employee who was trying to make their quarterly number. The channel stuffing accusations in the anonymous letter took planning and people. Not just a Regional Manager or Director. The scale of this type of channel stuffing would take the help from people at the top.
One thing is for sure, the drama has just started.
Both parties are unequivocal in their defense which makes the story that much more interesting.
Feel free to share your thoughts on our anonymous MiMedx Message Board.