NMC Health's shares jumped about 32 per cent on the London Stock Exchange on Monday after the company said it would carry out an "independent third-party review" undertaken by a leading accountancy firm in response to accusations made against it by a short seller in the US.
The company said it was "disappointed with the very material and, we believe, unwarranted share price reaction" to a report by activist investor Muddy Waters, which said the health company's financial statements suggest it had potentially overpaid for assets, inflated cash balances and understated debt.
In a separate statement, NMC said it bought back 100,000 shares at an average price of £12.62 (Dh60.23) per share under a $200 million (Dh734m) share buyback programme announced last Wednesday.
"This independent review will be overseen by a committee made up of a majority of independent non-executive directors of the company, which is being formed. We are confident that this review, when complete, will be entirely confirmatory of the disclosures provided by the company to date," NMC said in a statement to the London Stock Exchange, where its shares trade.
"We will also be progressing relevant legal and regulatory options following the actions taken by third parties to mislead the market and manipulate the share price," the company said.
NMC, the largest private healthcare provider in the UAE, was founded by Indian billionaire BR Shetty and runs a chain of hospitals, clinics and pharmacies across the country. In the six months to June 30, the company made a profit of $138.1m on revenue of $1.24 billion and gave guidance that its full-year profit was likely to be in the range of about $300m.
However, NMC's share price plunged 50 per cent last week to up to £13 after Muddy Waters' allegations, before rebounding following the announcement of its independent review on Monday to £17.13 per share at 3.05pm UAE time.
"The current share price is not a fair reflection of the value of the company which has a consistent track record of strong growth and cash generation," the company said.
Despite the volatility, NMC has 12 analyst recommendations to buy its stock against one sell previously, according to Bloomberg data. Vanguard Group, BlackRock, Standard Chartered, HSBC, Lombard Odier, UBS, Goldman Sachs, Deutsche Bank, Barclays and PineBridge Investments are among institutional holders of the stock.
In an earlier rebuttal of an article last week, NMC said it had approached the UK's Financial Conduct Authority "with evidence to show that a number of hedge funds have been acting in concert and systematic fashion to undermine shareholder value in NMC".
