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Biotech / Medical : The Stock for 1999(Polymedica)PLMD(Medical Supply Co.)
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To: Sam who wrote (3178)11/22/2000 2:00:40 PM
From: Apakhabar  Read Replies (1) of 3414
 
I agree it's a hatchet job, no question. But Barron's is careful not to directly quote the FBI saying anything specifically about PLMD.

Instead, the article quotes the FBI as saying they are investigating "possible health-care fraud". That's a helluva broad category.

Next, the writer goes to "Government officials in other agencies." She says the FBI won't confirm or deny that an inquiry [into Polymedica] is under way. Einhorn says "two government officials" "indicate" the probe "may relate" to both billing and marketing practices involving "diabetic testing products used by Medicare beneficiaries."

In short, the writier is making a big inferential leap. Nobody she talks to actually mentions Polymedica by name. What she (Cheryl Strauss Einhorn) does is figure out that PLMD is the biggest supplier of these diabetic-testing products, and then she goes looking to dig up dirt on PLMD. The idea is that if a company plays fast and loose with their accounting, they might also engage in fraud.

Needless to say this is a stretch. It MAY prove true, but the closer I look at the Barron's article, the more I tend to think that it's a sloppy, unsubstantiated allegation.

But that is why I think the real damage to PLMD's stock price will be the bringing into full daylight their expensing of advertising costs. AOL took a hit for this sort of thing, and so might PLMD. They even say so in their own SEC filings.
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