On February 5, 2025, GeneDx Holdings Corp. faced serious allegations of 'widespread fraud' and 'illegal billing practices' following the release of a report by short-seller Grizzly Research. The report claims that GeneDx's growth is an illusion, driven by fraudulent schemes and illegal tactics designed to manipulate Medicaid and Medicare programs to artificially boost revenue.
Grizzly Research specifically alleges that GeneDx engaged in 'code stacking,' an unlawful practice that allows billing for services that do not meet appropriate standards. The report states that testimonies from former employees and pending litigation support these claims.
Furthermore, the report highlights a pattern of insider selling, alleging that CEO Katherine Stueland and CFO Kevin Feeley have routinely sold their shares upon vesting without participating in open market acquisitions. This pattern, according to Grizzly Research, suggests insider awareness of a looming threat to the business, prompting investigations by law firms into potential securities law violations.
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