Dive Brief:
- The U.S. Securities and Exchange Commission has opened a formal investigation into Hain Celestial Group Inc.’s accounting practices, according to the Wall Street Journal.
- Shares of the natural-food supplier dropped as much as 15% once news spread about the SEC inquiry.
- Hain has delayed the release of its fourth quarter and fiscal 2016 financial results due to an internal review of its accounting.
Dive Insight:
In late August, the Hain Celestial Group struggled with a series of accounting irregularities that led to a delisting notice from the Nasdaq Stock Market. This also caused the delay of its Q4 and year-end fiscal numbers, though the company claims there has been no evidence of "intentional wrongdoing."
After the accounting errors were resolved in November, Hain Celestial's stock did an about-face and spiked more than 13% in a single day.
The company continued to rebound. In November, it launched an incubator called Cultivate Ventures. Last month, the company extended its reach in India with a strategic joint venture with Future Consumer Limited (FCL) and Hain Tilda India Private Limited.
Before these issues, Hain Celestial had been viewed as a company ripe for takeover — the natural products company had seen double-digit revenue growth for 20 consecutive quarters, and is a major supplier for Whole Foods Market Inc. In the last weeks, it's emerged as a potential acquisition target again. Some analysts have even proposed that a failure to rebound makes Hain Celestial all the more desirable as a takeover target.