Shareholders of Orthofix (NSDQ:OFIX) piled a raft of lawsuits on the medical device company, accusing it of failing to warn investors that would have to restate its financial results going back to 2011.
The July 29 announcement sent OFIX shares down more than 16% to $22.63 apiece. Share prices have hovered at that level ever since, prompting a purported class-action lawsuit in the U.S. District Court for Southern New York.
Late last month Orthofix said an audit of its books is prompting it to restate its financial results for 2011, 2012 and Q1 2013 after discovering revenues that were improperly recognized. The lawsuits allege that Lewisville, Texas-based Orthofix and its management failed to disclose the revenues issue, meaning its communications with investors were false.
The ongoing review by the Orthofix board of directors’ audit committee means the Lewisville, Texas-based orthopedics company will be late in filing its results for the 2nd quarter, according to regulatory filings.
Orthofix said that "certain revenues recognized during 2011 and 2012, upon further evaluation, should not have been recognized or should not have been recognized during the periods in which they were recognized," according to the filings.
"Management continues to assess the company’s disclosure controls and procedures and internal control over financial reporting for current and prior periods. Management does not expect to reach a final conclusion on the effectiveness of the company’s internal control over financial reporting and disclosure controls and procedures until completion of the restatement process, but expects to report in future or amended filings the existence of 1 or more material weaknesses in the company’s internal control over financial reporting relating to the restatement," according to the filings.
Orthofix said it doesn’t know when the audit will be finished or when it expects to release its new financials.
OFIX shares were trading at $22.29 apiece as of about 3:30 p.m. today, up 0.9%.