- On Wednesday, The Wall Street Journal reported that federal regulators are investigating Medicare, Medicaid billing practices at the diagnostic device provider Alere.
- The Department of Justice requested patient-billing records as well as information about copayment collection efforts, WSJ reported.
- After the news broke, Alere's stock plummeted about 29% Wednesday to $31.47 on NYSE, Chicago Tribune reported.
In February, Abbott Labs -- who is no stranger to merger activity -- agreed to buy Alere for $5.8 billion. The deal has not closed yet.
Alere's toxicology unit is specifically under the gun with the looming investigation. A DOJ subpoena requested information for Medicare, Medicaid billings as far back as 2010, Bloomberg reported.
Federal regulation bans payment coverage for patients in Medicare and Medicaid by healthcare companies, The Wall Street Journal noted, adding the DOJ is looking into if Alere made any payments or gave valuable items to doctors.
Chicago Tribune reported that Abbott got cold feet on the acquisition idea in April and offered $50 million for Alere to never look back at what could have been. However, the diagnostic device provider rejected the money to see the acquisition through.
However, as The Wall Street Journal noted, the 29% share fall resulting in shares being "40% below Abbott's $56-a-share offer, suggesting investors are nervous the deal may fall apart."
Abbott's merger with St. Jude Medical, another medical device maker, also has yet to close. That merger was announced in April.