MiMedx committee investigation found 'extensive misconduct' by old management
MiMedx Group announced last night that the Audit Committee of the Board of Directors has concluded its independent investigation into matters relating to, among other things, allegations regarding certain sales and distribution practices at the company. As announced on February 20, 2018, the Audit Committee retained King & Spalding as counsel to assist the Audit Committee in conducting its investigation. Once engaged, King & Spalding retained KPMG to assist with the investigation, which focused primarily on five key areas: the company's revenue recognition practices, revenue management activities, actions taken against whistleblowers, tone set by former senior management and Anti-Kickback Statute and related allegations. Charles Evans, Chairman of the MiMedx Board of Directors, said, "The investigation uncovered evidence of material wrongdoing on the part of the company's prior senior management team. The Board continues to partner with management to ensure that MiMedx operates at the highest levels of ethics, transparency and compliance...As a leader in the advanced wound care sector and an emerging therapeutic biologics company, the company is focused on executing our long-range strategic plan and achieving ethical and sustainable growth in a renewed culture of compliance." Based on the findings of the investigation, the board said it "has taken decisive action on behalf of all MiMedx stakeholders over the past year." The company noted it has implemented plans to address internal control weaknesses, including: Dismissing members of the prior senior management team, including Messrs. Petit, Taylor, Senken, and Cranston, and ultimately determining their departures as terminations for cause; Appointing a new Interim CFO; Hiring a Chief Compliance Officer; Creating an Ethics and Compliance Committee at the Board level; Establishing a compliance department reporting to the Ethics and Compliance Committee; Hiring a Vice President of Internal Audit to develop an internal audit function; and appointing a new Interim CEO and then appointing Timothy Wright as CEO.