An investigation on behalf of investors of OrthoPediatrics Corp. (NASDAQ: KIDS) shares over potential securities laws violations by OrthoPediatrics Corp. and certain of its directors and officers in connection with certain financial statements was announced.
The investigation by a law firm focuses on possible claims on behalf of purchasers of the securities of OrthoPediatrics Corp. (NASDAQ: KIDS) concerning whether a series of statements by OrthoPediatrics Corp. regarding its business, its prospects and its operations were materially false and misleading at the time they were made.
Warsaw, NJ based OrthoPediatrics Corp., a medical device company, designs, develops, and markets anatomically appropriate implants and devices for the treatment of children with orthopedic conditions in the United States and internationally. OrthoPediatrics Corp. reported that its annual Total Revenue rose from $57.55 million in 2018 to $72.55 million in 2019, and that its normalized Loss increased from $12.02 million in 2018 to $12.68 million in 2019.
On December 2, 2020, a report was published entitled 'OrthoPediatrics Corp. (KIDS): Even Channel Stuffing Can't Save This Company'. The report described OrthoPediatrics as having 'engaged in a channel stuffing scheme that has systematically and significantly overstated revenues.' Among other issues, the report alleged that 'the Company has abused its ability to book revenues upon shipment by selling and shipping excess product directly to its distributors, many of whom are exclusive to the Company' and described it as 'concerning that many of the Company's 'exclusive distributors' are simply former OrthoPediatrics employees who have formed their own distributorships, often while still employed at the Company.'
Shares of OrthoPediatrics Corp. (NASDAQ: KIDS) declined from $50.94 per share on November 11, 2020, to as low as $38.01 per share on December 3, 2020.