×

Alere sinks after unit allegedly filed claims for dead people, Medicare status revoked

Shares of Alere plunged Friday morning after the company disclosed in a filing that one of its units has seen its Medicare enrollment revoked.

The Centers for Medicare & Medicaid Services alleged that Alere subsidiary Arriva Medical submitted claims for 211 deceased patients over a five-year period. Alere said in a filing that CMS only specifically identified 47 of the claims.

The stock was halted at 10:40 a.m., ET, and again at 10:52 a.m., ET, for volatility. It plunged as low as 16 percent, but ended the day about 14.5 percent lower.

Alere told CNBC that it will continue its appeal process and that about 90 percent of Arriva patients are elderly and on Medicare/Medicaid. The company said "these situations are not uncommon in the industry due to the lag time between someone passing away and CMS' systems showing them as deceased."

The company said it has "positive confirmation" that it did not receive reimbursement for the cases cited. Alere added that the 211 claims were part of 5.8 million total claims over the five-year period.

The company said that its first notice was dated Oct. 5 and that its appeal was denied on Nov. 2. Alere said it hopes to get Medicare enrollment retroactively reactivated to Nov. 4 so that it would "be able to bill and be reimbursed for all covered products or services furnished."

The company also posted disappointing quarterly results on Friday, saying it saw earnings of 46 cents per share on $582.4 million in revenue in the third-quarter. Analysts had expected the company to post earnings per share of 54 cents on $605.5 million in revenue, according to a Thomson Reuters consensus estimate.

With Friday's declines, Alere shares have fallen 22 percent over the past year.

— CNBC's David Faber contributed to this report.