NMC Health’s shares fall 17% as two investors sell down stake

Company's shares have halved in value since short seller Muddy Waters released report suggesting the firm had inflated cash balances and understated debt

Shares of the UAE-based NMC Health plunged following the share sale by two major investors. Ravindranath K / The National

Abu Dhabi-headquartered NMC Health’s shares dipped 17 per cent on Wednesday as two of its major investors reduced their stakes, selling shares worth $493 million (Dh1.81bn) in the company.

Investors Saeed Al Qebaisi and Khaleefa Al Muhairi sold about 15 per cent of the London-listed healthcare group’s stocks, a regulatory filing showed. The investors now own a total of 17.2 per cent of the company, with Mr Al Muhairi having a 12.5 per cent stake.

Both investors also sold about 6 per cent of shares in financial services firm Finablr, raising $72m through the transaction, the disclosure showed.

Finablr and NMC – founded by UAE-based Indian billionaire BR Shetty – have had a troubled start to the year. Travelex, a company belonging to Finablr, was hit by a ransomware attack on New Year's Eve, which has since derailed its operations.

NMC’s shares fell sharply towards the end of 2019 after short seller Carson Block’s Muddy Waters Capital issued a report alleging that the healthcare group had inflated cash balances, overpaid for its assets and understated its debt.

Muddy Waters' report argued the firm's profits were "too good to be true", especially when compared to similar listed companies operating in the same sector.

The healthcare firm, though, dismissed these allegations and said it would carry out an "independent third-party review", which will be overseen by the company's independent, non-executive directors. On Monday, it also said it would conduct an independent review of its cash balances as of December 15, 2019. The results of this review are set to be announced before the company’s 2019 full-year earnings.

NMC's shares fell to £12.71 by 5.05pm UAE time on Wednesday, and are trading at almost half the value they were since a recent peak of £25.85 on December 16, the day before Muddy Waters published its report.

NMC is one of the largest healthcare groups in the UAE with a network of clinics, hospitals, and long term care centres that it has acquired over the years.

In 2019, the company reported first half net profit of $138.1m while revenues for the reporting period climbed 33 per cent year-on-year to $1.24 billion.