Why MiMedx Group Inc. Is Sinking Today

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What happened

Shares of MiMedx Group (NASDAQ: MDXG), a biopharmaceutical company focused on regenerative medicine, fell 10% as of 3:45 p.m. EDT on Monday. However, there doesn't appear to be any company-specific news that can help to explain the sell-off.

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So what

MiMedx Group has been targeted by short-sellers over the last month, so today's volatility could simply be attributable to more activity on this front. That seems likely since the number of shares that have been sold short has jumped over the past two months:

For what it is worth, MiMedx Group's management team has done its best to combat the attack by posting a series of responses on its investor relations page.

Another tactic that management had used to reassure investors was to preannounce third-quarter results. The company stated that it expects third-quarter revenue to come in around $84.6 million, which is well ahead of its guidance range of $79 million to $80 million. That represents growth of 31% year over year, which is very strong. The company also stated that accounts-receivable days sales outstanding (DSO) -- a common calculation that is used to estimate a company's average collection period -- fell to the mid-60s.

If all of that wasn't enough, MiMedx's board of directors also recently authorized an additional $10 million in share repurchases.

Commenting on the repurchase activity, CEO Pete Petit said:

In spite of these aggressive responses, the high number of shares sold short is likely to keep the share price volatile for the foreseeable future.

Now what

Short-term price action aside, MiMedx's investors should do their best to remain heads-down and focus on the long-term potential of the business. A brief look back at MiMedx's growth over the last few years shows that the company has stumbled upon a winning business model:

MiMedx will officially announce its third-quarter earnings results on Friday at 10:30 a.m. EDT. Bulls and bears alike would be advised to listen in for clues about what's next for this business.

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Brian Feroldi has no position in any of the stocks mentioned. The Motley Fool recommends Nasdaq. The Motley Fool has a disclosure policy.