Eargo Inc. (EAR) said after the bell on Wednesday that it is the target of a criminal investigation by the United States Department of Justice.
The company said in an SEC filing that the investigation is “related to insurance reimbursement claims the company has filed on behalf of its customers covered by federal employee health plans.” The investigation was announced on Tuesday. Eargo says he is cooperating with the investigation.
Eargo, Inc., sells hearing aids through online stores. The company’s products range from $1,500 to $3,000. It makes a significant effort on the site to say they “may be covered by federal insurance.” In addition, it publishes its “Federal Employee Program” on the site.
As a result of the investigation, Eargo said it was withdrawing its financial guidance for the fiscal year ending December 31.
At the time of its last earnings report, on Aug. 12, Eargo said it raised its full-year net sales forecast to between $93 million and $96 million, from a previous range of $89 million to $93 million. .
In addition, Eargo said it “has been the subject of an ongoing audit of claims by an insurance company that is the company’s largest third-party payer. The company has been informed by the insurance company that the DOJ is now its primary contact regarding the subject of the audit.”
It also said it “intends to work with the government to validate the process to support future claims the company may file for reimbursement.”
Shares of Eargo fell $11.31, or 52%, to $10.36 in after-hours trading.