SAN FRANCISCO, December 15, 2020 / PRNewswire / – Hagens Berman Calls on OrthoPediatrics Corp. Investors (NASDAQ: KIDS) urges you to file your losses now. The law firm investigates possible violations of the Securities Act.
Contact an attorney now: [email protected]
Investigation of OrthoPediatrics Corp. (KIDS):
The investigation focuses on whether OrthoPediatrics artificially increased reported revenue by running an illegal channel stuffing program.
Over the past few quarters, OrthoPediatrics has touted its “steady growth rate of 20% plus,” which in turn has enabled the company to maintain a valuation at 11 times annual sales. OrthoPediatrics confirmed compliance with GAAP, among other things by only recognizing sales of products that were shipped to its distributors “when products are used in processes”.
But go on December 2, 2020The veracity of OrthoPediatrics’ growth story was questioned when Culper Research released a scathing report.
Based on interviews with OrthoPediatrics dealers and former executives, Culper concludes: (1) OrthoPediatrics “ran a channel stuffing program that systematically and significantly overrated revenue” (2).[w]We believe the company has abused its ability to post revenue by selling and shipping excess products directly to its distributors, many of whom are company exclusive. “and (3)” Distributors have been directed to purchase excess products directly from the Company in exchange for (a) stock-based rewards, (b) the ability to return product and / or (c) product discounts or increased commission plans. ”
This news caused the OrthoPediatrics share to fall.
Most recently, Culper published a follow-up report on December 14, 2020Questioning a sell-side analyst’s reasons for joining OrthoPediatrics management following Culper’s channel stuffing report, and repeated “[w]We continue to believe that OrthoPediatrics is a structurally broken business that has relied on nefarious tactics to increase its reported earnings. “
“We are focused on investor losses and whether OrthoPediatrics has committed revenue recognition fraud,” he said Reed Kathrein, the Hagens Berman partner who led the investigation.
If you are an OrthoPediatrics investor, click here to discuss your statutory rights with Hagens Berman.
Whistleblowers: Individuals with nonpublic information about orthopediatrics should consider their options to help with the investigation or to use the SEC whistleblower program. Under the new program, whistleblowers who provide original information can receive rewards of up to 30 percent for each successful SEC recovery. Please call for more information Reed Kathrein at 844-916-0895 or by email [email protected].
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SOURCE Hagens Berman Sobol Shapiro LLP