Billionaire BR Shetty’s NMC Health Calls Short Seller Attack “Baseless”

(Bloomberg) -- NMC Health Plc said claims made by Carson Block’s Muddy Waters Capital LLC “appear principally unfounded,” after a report by the short seller sent shares tumbling the most on record on Tuesday.

“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 company said in a statement Wednesday.

It also reaffirmed 2019 and 2020 forecasts provided in October and, in a separate statement, said it will start a share buyback program of as much as $200 million on Wednesday. The shares rose as much as 10% before dropping as much as 2.6%. The stock was little changed as of 12:12 p.m. in London.

NMC shares lost about a third of their value on Tuesday after Muddy Waters said that the hospital operator’s financial statements hint at potential overpayment for assets, inflated cash balances and understated debt. The company said in Wednesday’s statement that it “has a track record of significant, open and increasingly detailed disclosure to the market, as monitored and reviewed by its entirely independent disclosure committee.”

Before Tuesday’s report, NMC’s shares had gained more than twelve-fold since listing in 2012. They peaked last year after joining a select group of companies in the Arab world worth more than $10 billion.

“We have visited NMC premises several times over the past three years and seen for ourselves the tangible investments it has made in its hospitals, be it in equipment or infrastructure,” Societe Generale analysts including Delphine Le Louet wrote in a note dated Dec. 17. “We have also seen ‘tangible evidence’ of an increase in traffic,” the analysts, who have a buy rating on the stock, wrote.

Analysts are overwhelmingly bullish on NMC Health, with 12 firms tracked by Bloomberg rating the stock buy or an equivalent. The stock has no hold ratings and Jefferies analyst James Vane-Tempest is the lone bear with an underperform rating.

Financial services company Finablr Plc said Wednesday it remains on track to achieve the guidance it set out at its initial public offering. Shares in the company, which listed in May, fell as much as 3.8%. Both NMC Health and Finablr were founded by Abu Dhabi-based billionaire Bavaguthu Raghuram Shetty.

Muddy Waters didn’t disclose the size of its short position in NMC Health in the report. Short sellers seek to benefit from a decline in a company’s share price.

--With assistance from Morwenna Coniam.

To contact the reporter on this story: Lisa Pham in London at lpham14@bloomberg.net

To contact the editors responsible for this story: Celeste Perri at cperri@bloomberg.net, Beth Mellor

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