Shares in hospital operator NMC Health (NMC) have continued their volatile run, rising more than 31% on Monday to £17.07.
The company said today that it has launched an independent review of its balance sheet, less than a week after notorious short-seller Muddy Waters published a report that was highly critical of the company.
Those allegations sparked a huge sell-off in NMC's shares last week. Muddy Waters, which targeted popular Aim listed company Burford Capital (BUR:AIM) earlier in 2019, highlighted concerns about NMC's assets, cash, profits and debt levels.
NMC 'DISAPPOINTED' BY SHARE PRICE DROP
But the company said it was ‘disappointed’ by what it believes to be an ‘unwarranted’ share price decline.
NMC said its review into Muddy Waters’ claims will be undertaken by a ‘leading accounting firm’.
It added, ‘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.
‘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.’
'QUESTIONS ABOUT HOW NMC PRESENTS DEBT'
Also commenting this morning, Muddy Waters dismissed NMC’s earlier response to its claims.
It has attacked NMC over its accountancy practises claiming NMC deliberately understated its debt by $320m last year by not reporting leases associated with buying Aspen Healthcare as finance leases.
Muddy Waters has called on NMC to disclose the amount of the Aspen lease liability and release a reconciliation of its debt to its reported numbers for 2018 and the first half of 2019.
The short seller added, ‘There are a number of questions remaining about how NMC presents its debt, and a reconciliation would begin to address them.’
