Here's Why MiMedx Group, Inc. Gained 16.6% in September

What happened

Shares of MiMedx Group, Inc. (NASDAQ: MDXG), a biopharmaceutical company with a hand in the tissue repair market, rose 16.6% in September, according to data from S&P Global Market Intelligence. Investors are beginning to like the business again, following the unpaid departure of key executives and a reprieve from the Nasdaq exchange.

Continue Reading Below

So what

MiMedx Group stock tanked earlier this year, following allegations the company was recording more sales of its proprietary tissues that it probably should have. The board has since sacked its CEO, Parker Petit, along with three additional members of the executive team. Last month, investors were happy to see the firings will be considered "for cause," which means the former managers also forfeit all outstanding equity and incentive awards.

Last year, the company's audit committee decided it would need to restate financial information going back to 2012, which could take a while. The Nasdaq exchange is fairly adamant about quarterly reporting, and the stock is in danger of a delisting.

Investors were also pleased last month to see the exchange work out a plan with the company. If MiMedx can regain compliance with the SEC and provide satisfactory progress reports by Feb. 25, there's a strong chance the company can retain its Nasdaq listing.

Now what


Access to equity markets could be crucial to MiMedx Group's survival, but we won't really know until we have some financial statements we can rely on. According to statements we do have, it looks as if operations squeezed out a $31 million profit after the company shelled out $236 million in expenses during the 12-month period ended last September. Now that a major U.S. insurer no longer covers some of the MiMedx Group's products, its slim operating margin could dip deep into negative territory. If we find out that operations are losing money, the $37 million cash balance MiMedx reported a year ago won't last very long.

If we find out previously alleged misdeeds aren't as serious as feared, though, this stock could keep rising. A recent study showed that diabetic patients with foot ulcers who used the company's EpiCord product were 45% more likely to be completely healed after 12 weeks. Until we know for certain, though, it's best to watch this show unfold from a safe distance.

10 stocks we like better than MiMedx GroupWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now… and MiMedx Group wasn't one of them! That's right — they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of August 6, 2018

Cory Renauer has no position in any of the stocks mentioned. The Motley Fool recommends Nasdaq. The Motley Fool has a disclosure policy.

Source: Read Full Article