UPDATE: Updated to include new information on Alere’s suit against CMS
Alere (NYSE:ALR) said today it will be unable to file its annual 10-K report by its extended March 16 deadline due to an investigation of inappropriate conduct at its South Korean Standard Diagnostics subsidiary.
The Waltham, Mass.-based company filed for the extension on March 1 after it missed its initial reporting date, allegedly due to issues with how it recognized revenues in Asia.
Alere said it expects the investigation will result in adjustments to its fiscal year 2013, 2014 and 2015 revenue, as well as the 9 months ended Sept. 30, 2016. Adjustments are expected to be between $0 and $5 million for 2013 and 2014 and between $5 million and $10 million for 2015 and 2016, respectively.
The company said it is also investigating its fiscal year 2011 and 2012 to “determine if any misstatements related to revenue recognition occurred in such earlier periods as its Japanese location and its subsidiary in South Korea, Standard Diagnostics,” according to an SEC filing.
Alere did not state an expected time frame for submission.
The delay is not the 1st for the company – Alere belatedly filed its 2015 annual report in August 2016, finding “immaterial errors” in its revenue recognition processes and “material weaknesses” in the way it recognized revenues and accounted for income taxes.
Earlier this week, a federal judge rejected Alere’s suit looking to reinstate its Arriva diabetes division’s Centers for Medicare & Medicaid Services enrollment after it was pulled last October over alleged claims submissions for deceased patients, according to the Boston Business Journal.
The judge denied a preliminary injunction against the decision by CMS, which initially revoked Arriva’s billing privileges on the grounds that it submitted claims for 211 dead patients over 5 years.
Alere attempted to appeal the determination, but the appeal was denied Nov. 2 and the group’s enrollment in CMS was revoked 2 days later.
The news adds yet more fuel to the fire over the pending $5.8 billion acquisition of Alere by Abbott (NYSE:ABT); both companies have filed lawsuits over the merger, with Abbott eager to spike the deal and Alere insisting that it go through.
The $5.8 billion deal with Abbott, announced in February 2016, ran into trouble right out of the gate: A March 2016 subpoena from the U.S. Justice Dept. sought documents on Alere’s dealings with 3rd-party distributors and foreign healthcare officials and the company was late in filing its full-year results for 2015. By April of that year Alere had rejected a $50 million offer from Abbott to spike the buyout; in July the DoJ initiated another probe into Alere’s billing practices for pain management payments from government insurance programs.
Alere sued Abbott the next month, looking to force its would-be acquirer to obtain all antitrust approvals required to complete the acquisition. In early September 2016, Delaware Chancery Court Judge Sam Glasscock put the lawsuit on the fast track and urged the companies to try and talk things out; an attempt at mediation failed later that month.
Abbott filed a counter-suit in November 2016, the same day that the Centers for Medicaid & Medicare Services revoked enrollment for Alere’s Arriva diabetes division after finding that it submitted claims for 211 deceased patients. The next month Abbott filed a new lawsuit seeking to spike the deal altogether, citing a “substantial loss in Alere’s value.”