MiMedx Stock Hits New Low on Financial Restatements, CFO Switch

The biotech began an internal audit back in February

Jun 7, 2018 at 9:44 AM
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Shares of MiMedx Group Inc (NASDAQ:MDXG) have plunged 17.05% this morning to trade at $6.81 -- fresh off a four-year low of $5.80 -- on news the biopharmaceutical firm will restate financial statements from fiscal 2012 through 2016 and the first three quarters of 2017 in the wake of an internal audit that was sparked by a federal investigation. The Georgia-based company also named Edward Borkowski as chief financial officer (CFO), after Michael Senker stepped down from the position he was temporarily filling.

Since gapping into single digits after news of the probe first hit back in February, MDXG shares had been churning in the $6.50-to-$10.00 range. Not only does today's drop have the shares near levels not seen since mid-2014, but they are now staring at a nearly 50% year-to-date deficit.

Not surprisingly, there's plenty of skepticism priced into MDXG shares. Short interest edged up in the latest reporting period to 49.96 million shares. In addition to this being the most on record, these bearish bets represent a whopping 51% of the stock's available float. These traders are sidelined for the next two days, though, with MDXG landing on the short-sale restricted list this morning.

Options traders have been betting on bigger losses, too. Currently, 143,163 puts are open on MDXG, in the 96th percentile of its annual range. More than two-fifths of these contracts are centered at the June 5, 7.50, and 10 puts -- which make up three of MDXG's top four positions. Data from the major options exchanges and Trade-Alert point to buy-to-open activity at each strike, pointing to expectations for stiffer headwind through expiration at next Friday's close.

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