GeneDx Holdings (WGS) shares were down over 5% in recent Wednesday trading following a Grizzly Research report alleging that the company is inflating its revenue through illegal billing practices.

The report claims GeneDx has been using a method called "code stacking" that involves billing insurers with multiple procedure codes for the same test to secure reimbursements above standard rates.

Insiders said that CEO Katherine Stueland and CFO Kevin Feeley have consistently sold shares immediately upon vesting, suggesting they might be aware of an "imminent risk," the report said. Additional allegations from the short-seller include that the company operated "independent" counselor entities to steer patients exclusively toward its testing services.

The Department of Justice is stepping up its scrutiny of billing practices in Medicare and Medicaid, with penalties already exceeding $800 million for similar fraud cases and they expect GeneDx to be next if further evidence of wrongdoing emerges, Grizzly Research said, citing industry sources.

GeneDx did not immediately respond to a request for comment from MT Newswires.

Price: 68.22, Change: -3.80, Percent Change: -5.28