Abu Dhabi, UAEThursday 13 August 2020

NMC says nothing to declare after record share slump following short seller report

The company says it has responded to many of the allegations made by Carson Block’s Muddy Waters Capital

Shares of the UAE-based NMC Health plunged following the share sale by two major investors. Ravindranath K / The National
Shares of the UAE-based NMC Health plunged following the share sale by two major investors. Ravindranath K / The National

NMC Health, a London-listed UAE healthcare operator, said it is aware of a hedge fund report that caused its share price to plunge and has responded to unfounded allegations made by the short-seller. There is nothing further to add beyond what has been declared to the market, the company said.

The operator’s shares were down 32 per cent on Tuesday after a report by Muddy Waters said NMC’s financial statements suggest potential overpayment for assets, inflated cash balances and understated debt.

NMC Health, one of the leading private healthcare operators from the region with a network of clinics, hospitals, fertility centres and long-term care homes hospitals across 19 countries is the latest target of short-seller Carson Block’s Muddy Waters Capital.

Short-sellers borrow shares, pay the lender a fee and sell them on, betting that the price will fall before buying them back and returning them to the original lender – pocketing the difference, minus the fee.

NMC “understands its regulatory disclosure obligations,” and has already responded to many of the allegations made in the report over the past year, it said on Wednesday, a day after the company lost £1.8 billion (Dh8.66bn) in market value in a one trading session.

“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,” the healthcare operator said.

“The company has a track record of significant, open and increasingly detailed disclosure to the market, as monitored and reviewed by its entirely independent disclosure committee,” it added.

NMC reported a gross adjusted margin of 41 per cent in 2018, close to Mediclinic’s 38 per cent, according to data compiled by Bloomberg. The company’s operating margin of 19 per cent, however, vastly exceeded Mediclinic’s 2.7 per cent and Aster DM Healthcare’s 7.1 per cent, the data showed.

NMC said it “remains a growth company, with a solid balance sheet generating strong levels of cash as demonstrated by yesterday’s [Tuesday] buyback of $90 million (Dh330m) of its convertible bonds due 2025, which has been repaid through existing cash balance”.

This prepayment is in addition to the regular amortisation of long-term loans during the year, the company said, adding it is reaffirming its “broader trading and operational guidance for the business for both 2019 and 2020”.

NMC, founded by Dubai billionaire from India, BR Shetty, was 1.5 per cent lower yesterday at 3.34pm Dubai time.

In a separate bourse on Wednesday, the company said it has put in place the formal mechanism through which it can now begin to execute the $200m share buyback programme that NMC’s shareholders approved on December 5.

Financial services company Finablr, which was also founded by Mr Shetty, was trading 2.1 per cent lower yesterday, after its share fell 11 per cent a day earlier.

The company, which listed its shares on the London Stock Exchange in May, said it remains on track to achieve guidance it set out at the time of its initial public offering and said there is no financial or operational reason for the share price movement on Tuesday.

Updated: December 18, 2019 05:49 PM

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