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Wed 18 Dec 2019 01:46 PM

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UAE healthcare firm NMC slams criticism after stock market slump

NMC Health says criticism of its financial statements 'baseless' after report led to a third of its market value is wiped

UAE healthcare firm NMC slams criticism after stock market slump

Shares of NMC Health plunged as much as 27 percent, the most since going public in 2012.

UAE-based NMC Health has slammed a report from short seller Carson Block’s Muddy Waters Capital, the contents of which it said “appear principally unfounded.”

In a 34-page report released earlier this week, Muddy Waters claimed that the healthcare company’s financial statements hint at potential overpayment for assets, inflated cash balances and understated debt.

In a statement sent to Arabian Business, NMC said that it will “review the assertions, insinuations and accusations made in the report, which appear principally unfounded, baseless and misleading, containing many errors of fact.”

NMC added that the company will respond in further detail “in due course.”

Additionally, the company reaffirmed guidance for 2019 and 2020 given at an October Capital Markets Day. In a separate statement, the company said it will execute a $200 million buyback programme.

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

The NMC statement also claimed that the Muddy Waters report was conducted “without any accurate data” to support its conclusion, which stands in contrast to the position of a majority of analysts.

“The Muddy Waters report opens up the debate on an often repeated question – what’s the socio/economic impact of a short in the business economy?” the NMC statement said. “Someone creates a business, creates employment, deploys a physical success story and then these shorters only seek to destroy the credibility of the company, annihilating the shareholders’ value for their gains.”

Prior to the release of Tuesday’s report, NMC’s shared has gained more than twelve-fold since listing in 2012, peaking last year when the company joined a small number of Arab companies worth more than $10 billion.

NMC said it has nothing to add to previous disclosures and still has a solid balance sheet with strong levels of cash, as demonstrated by Tuesday’s buyback of $90 million in convertible bonds due in 2025.

The company also plans to begin $200m of share buybacks approved by shareholders earlier this month.

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