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Alere Shares Whiplash as Investors Debate Latest Investigation

  • Company says it received federal subpoena on billing practices
  • Alere already investigated for foreign bribery allegations

Alere Inc. investors went on a wild ride in the last 24 hours as the shares plunged following a report of a second U.S. Justice Department investigation of the medical test maker, then rebounded after the company said the probe was narrow in scope.

Alere’s shares fell 29 percent to $31.47 on Wednesday -- their biggest one-day drop ever -- after the Wall Street Journal reported that the Justice Department’s criminal-fraud unit sent the company a subpoena. Later that night, Alere issued a statement saying the investigation was focused on an area that accounts for less than 1 percent of its sales and isn’t material. That sent the shares bouncing back, and they were up 22 percent to $38.28 at 1:35 p.m. in New York on Thursday.

Along with the legal implications of the probe, it could also impact whether or not potential misconduct by Alere will help Abbott Laboratories get out of its offer to buy the troubled company for $5.8 billion. Alere also remains under investigation for alleged violations of the U.S. Foreign Corrupt Practices Act and sales practices in Africa, Asia and Latin...