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MiMedx – More physician owned distributors; MiMedx may not wish to address its investors but it will have to answer the regulators

Author: Published on: Published in: MiMedx NASDAQ:MDXG

Viceroy is releasing more on illegal Physician-Owned Distributors (PODs) operating in the wound care space within the state of Texas. Our spreadsheet will follow shortly to expose multi-state PODS and conflicted operations.

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Given the large proportion of income derived from Texas sales, investors should be concerned, especially as the numerous, undeniable, illegal PODs we illustrated on our report dated October 13, 2017 have not been addressed by management.

MiMedx’s blanket denial of Viceroy’s report and aversion to conducting an investigation suggest that management are either fully aware of these illegal distributors, or have been negligent in their duties…

MiMedx is not operating in an industry where these abuses are commonplace, and yet within the single state of Texas, we have connected MiMedx with:

  • Numerous illegal PODs;
  • Numerous related party distributors; and
  • Forest Park Medical Center, a US$40m fraud uncovered by the DOJ and FBI.

Malfeasance by PODs and kickbacks are an abuse of the healthcare system. The abuse not only costs patients and insurers but ultimately undermines the integrity of physicians where products are prescribed to enrich suppliers (namely MiMedx) and kickbacks to physicians in return.

This report further details connections between MiMedx and its network of PODs. This network of distributorships owned by employees and physicians allows MiMedx to engaged in large scale channel stuffing activities.

Lou Roselli made the headlines once more last week as an incriminating email surfaced where Lou admits MiMedx cannot reconcile inventory to federal customers. In the tissues business, this is strictly against the law.

Given the substantive evidence presented in our reports, we call on the board of MiMedx launch an immediate external investigation into the conduct of senior personnel, and subsequently resign.

The structure of these distributors leaves open great opportunities to exploit the US healthcare system. As a reminder to our readers, the Office of the Inspector General of the Department of Health and Human Services issued a special fraud warning stating that such ventures “should be closely scrutinized under the fraud and abuse laws.”

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