Font Size

- Aa +

Tue 17 Dec 2019 04:42 PM

Font Size

- Aa +

$1.9bn wiped off NMC Health value as shares slump after report

NMC Health shares tumble the most on record on Tuesday after hospital operator became the latest target of short seller Carson Block's Muddy Waters

$1.9bn wiped off NMC Health value as shares slump after report

NMC Health plans to buy back as much as $90 million of its senior unsecured guaranteed convertible bonds due 2025.

NMC Health shares tumbled the most on record on Tuesday after the London-listed hospital operator became the latest target of short seller Carson Block’s Muddy Waters.

The UAE-based healthcare company’s financial statements hint at potential overpayment for assets, inflated cash balances and understated debt, according to a report on Muddy Waters’s website.

Shares of NMC Health plunged as much as 27 percent, the most since going public in 2012, wiping out about £1.4 billion ($1.9 billion) in market value. Company representatives declined to comment immediately.

Financial services company Finablr, which listed in May, dropped as much as 16 percent. Both NMC Health and Finablr were founded by Abu Dhabi-based billionaire Bavaguthu Raghuram Shetty.

NMC appears to have overpaid for its investment in redeveloping an Abu Dhabi hospital and for a stake in Premier Care Home Medical and Health Care, the report said.

Its margins also appear too high in comparison with rivals like Mediclinic International, according to Muddy Waters. Reported cash balances are high when compared with the amount of interest the company has reported reports earning, the investment report said.

NMC Health plans to buy back as much as $90 million of its senior unsecured guaranteed convertible bonds due 2025. Analysts are overwhelmingly bullish on the stock. Twelve of the analysts tracked by Bloomberg have a buy rating or equivalent on NMC, while only one has a sell. The average 12 month price target of 3706.5 pence, according to a Bloomberg consensus of analyst estimates, suggests a return potential of 87 percent.

NMC Health was earlier hurt when Muddy Waters tweeted on August 6 that it planned to unveil a new, unnamed short position the following day. After investor speculation pushed NMC Health shares down, the target turned out to be Burford Capital. Still the “knock-on effects of this severe move for Burford” could have hurt NMC as investors fled risk, Citigroup analyst Mathew Menezes wrote at the time.

For all the latest health tips & news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.