On Wednesday, September 22, hearing aid manufacturer Eargo (NASDAQ: EAR) announced that it is being investigated by the U.S. Department of Justice. As reported by The Street, Eargo admitted in an SEC filing that the investigation is centered around “insurance reimbursement claims the Company has submitted on behalf of its customers covered by federal employee health plans.”
As a result of the criminal investigation, Eargo Inc. Stock dropped 68% on September 22, 2021, causing significant harm to investors.
Eargo Subject to Ongoing Audit by Company's Largest Third-Party Payor
Eargo is a medical device manufacturer for the hearing loss community, and its rechargeable hearing aids range in cost from $1,500 to $3,000 per pair.
On Wednesday, September 22, 2021, hearing aid company Eargo disclosed in an SEC filing that it was the target of a criminal investigation by the U.S. Department of Justice (DOJ). Eargo said the investigation was concerning “insurance reimbursement claims” it had submitted on behalf of “customers covered by federal employee health plans.”
Eargo further disclosed that the DOJ was now the “principal contact” behind an ongoing claims audit by an insurance company, an audit Eargo first announced in its Q2 2021 press release on August 12, 2021. In that press release, Eargo had described the insurance company as its “largest third-party payor,” accounting for 80% of Eargo’s gross accounts receivable as of June 30, 2021, and said that as a result of the audit, claims dating back to March 1, 2021 had not yet been paid.
According to The Motley Fool, in August, Eargo had even increased increased its revenue forecast for 2021 from between $89 million and $93 million to between $93 million and $96 million back in August. But in light of the federal government’s criminal investigation, Eargo has now withdrawn its guidance for the rest of 2021.
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