NMC Health has hit back at Muddy Waters after an attack by the short seller yesterday wiped around £1.75bn off the value of the FTSE 100 healthcare operator.
Shares in NMC plunged as much as 42 per cent yesterday – the most on record – after the US short seller published a 34-page report raising “serious doubts” about the company’s finances.
Around a third of the company’s market value was wiped off following the short attack.
NMC Health, which was founded by UAE-based billionaire Bavaguthu Raghuram Shetty, issued a statement today saying Muddy Waters’ claims “appear principally unfounded”.
“NMC will review the assertions, insinuations and accusations made in the report, which appear principally unfounded, baseless and misleading, containing many errors of fact, and will respond in detail in due course,” it said in a statement issued to the stock exchange this morning.
Shares in NMC had gained as much as 9.8 per cent in early trading, but dropped back to a loss of 2.12 per cent by late morning.
The healthcare operator reaffirmed forecasts for 2019 and 2020 issued in October, and said it would launch a share buyback programme of up to $200m (£153m).
Muddy Waters’ research note had questioned the value of NMC’s assets, cash balance, and reported profits and debt.
“NMC’s reported cash balances show two red flags that indicate they could be materially
Overstated,” said Muddy Waters in the report, adding that its margins appear “too good to be true” compared to its regional peers.
The short seller, which was founded by Carson Block, is known for publicly declaring its short positions on the basis of its in-house research.
Muddy Waters launched its first attack on a UK-listed company in August, wiping 40 per cent off the share price of AIM-listed litigation funder Burford Capital.
The announcement of its bet against NMC also hit the shares of payment firm Finablr, which is co-chaired by Shetty.
Finablr shares dropped around 16 per cent on Tuesday, and were down just over two per cent by late morning on Wednesday.
The payment company issued a statement reiterating its guidance and saying there was no reason for the price move.
Muddy Waters declined to comment on NMC’s statement.