MiMedx (NSDQ:MDXG), already embroiled in an internal accounting snafu and several federal probes, reportedly held from government hospitals some of the lower-cost products it made available to private hospitals.
In limiting its regenerative wound care offering to U.S. Veteran Affairs Dept. and other federal caregivers, Marietta, Ga.-based MiMedx ran up the tab on taxpayers, the Wall Street Journal reported.
In September, MiMedx said a probe into its accounting practices turned up “conduct detrimental to the business or reputation of the company” on the part of four departed executives, following the July ouster of CEO Parker Petit and president & COO William Taylor, after the board-directed independent investigation already prompted the departure of CFO Michael Senken and treasurer John Cranston. Petit and Taylor later claimed that they are the scapegoats in an out-of-control internal investigation.
The VA, the Justice Dept. and the Securities & Exchange Commission are all conducting their own investigations into MiMedx’s business practices. In September a Georgia grand jury heard testimony about the company’s financial ties to a VA surgeon as part of a probe by the DoD’s Defense Criminal Investigative Service, according to the newspaper, which cited “a person familiar with the matter.”
Former employees told the paper that the company had one set of its products, which are derived from placental tissue, for the government but offered another, broader set to private customers. For example, the smallest MiMedx EpiFix skin graft available at VA and DoD hospitals was the $895, 16mm model – available at private hospitals in a 14mm, $313 size that the company markets as applicable to more than half of all diabetic foot ulcers, the journal reported.
MiMedx’s ties to physicians are also being investigated; the company claims that its products are exempt from regulations about reporting financial ties to doctors. At least 20 physicians received cash, stock or options from MiMedx for research, consulting or other activities, according to the paper, and Petit required sales reps to host meals he dubbed “healing reviews” with doctors.
An internal spreadsheet reviewed by federal investigators and the newspaper indicates that MiMedx hosted thousands of doctors at hundreds of meals over 10 months in 2016, the Journal reported.