Grifols Shares Plummet as Short-Seller Questions Financial Figures
Shares of Grifols, a Spanish healthcare firm listed on the Madrid Stock Exchange, experienced a significant decline on Tuesday following the release of a report by U.K.-based short-seller Gotham City Research. The report raised doubts about the accuracy of Grifols’ financial figures, causing investors to react negatively.
Gotham City Research Accuses Grifols of Manipulating Debt and Earnings
Gotham City Research alleged in its report that Grifols engages in manipulative practices when reporting its debt and earnings before interest, tax, depreciation, and amortization (EBITDA) figures. The short-seller claimed that Grifols artificially reduces its reported leverage by manipulating these numbers. According to Gotham City, Grifols’ leverage of 6 times EBITDA should be closer to 10 times to 13 times if calculated correctly.
Allegations of Deceptive Accounting Practices Cause Grifols’ Market Value to Drop
The allegations made by Gotham City Research revolve around the sale of two businesses, BPC Plasma and Haema, to Scranton Enterprises, a family vehicle. Gotham City argued that both Grifols and Scranton misleadingly consolidate BPC and Haema onto their financial statements, which they deemed as “materially deceptive and incorrect.” As a result of these fraud allegations, Grifols’ market value plummeted by nearly $3.83 billion at one point.
Grifols Denies Wrongful Accounting in Response to Fraud Allegations
Grifols firmly denied the accusations made by Gotham City Research in a statement to Spain’s market regulator, CNMV. The company categorically rejected the claims of wrongful accounting or reporting practices within their consolidated financial statements. Grifols emphasized its commitment to transparency, integrity, and ethical conduct, insisting that the allegations were baseless.
Barcelona-Based Grifols Faces Serious Challenges to its Reputation and Financial Health
Founded in 1909, Grifols has grown into an international healthcare company with operations in over 30 countries and a workforce of more than 24,000 employees. However, the recent allegations of fraudulent accounting practices have posed significant challenges to the company’s reputation and financial health. The sharp decline in its market value reflects investors’ concerns about the allegations. Grifols now faces the task of restoring investor confidence and addressing the issues raised by Gotham City Research.
Analyst comment
Negative news. As a result of the allegations made by Gotham City Research, Grifols’ market value dropped significantly. The company denies any wrongdoing but will face challenges in restoring investor confidence and addressing the issues raised. The market for Grifols is expected to remain volatile in the short term.
