Today NMC Health (LON:NMC) are down currently (@ ~midday) 23-24% after Muddy Waters announced less than two hours ago that they have taken a short position on the stock.

This is on the same day that NMC announced the result of yesterday's offer for it to buy back from holders of its U.S.$450 million Convertible Bonds (1.875%, due 2025) up to U.S.$90 million of those Bonds.

Muddy Waters states they have "SERIOUS DOUBTS" about NMC's financial statements including asset values, cash balance, debt levels, and reported profits.

Up to now, NMC's growth has on the face of it seemed healthy, with high-teens/low-20% growth in revenue and profit, and the company has recently announced a very positive trading update in October after the price previously tanked below £20, where they raised their EBITDA range for both this year and next, with a "stronger H2 expected".

I am not an accountant and, compared to many on here, don't have the best grasp on a company's accounts. However, Stockopedia would seem to helps us in this respect. Looking at the latest, interim balance sheet it looks like gearing for the company, on the face of it, is only 57%, This doesn't seem excessive. However, this takes into account a huge amount of goodwill as assets, which I wonder if it artificially inflates the asset position - if I simplistically assume that it does, then updating the debt equation makes the gearing quite an unhealthy 83%.

I do wonder why NMC announced this buyback of such a small amount of the bonds compared to the overall size of the company, especially when the bond interest rate is so low and the expiry is so far into the future. This debt reduction was flagged up in the October trading update. I do wonder if some of their other debt is being paid at a higher rate of interest.

Does anyone have any views on this company, and the accusations made by Muddy Waters, famous of course for their attack on Burford Capital (LON:BUR) earlier this year? I do wonder as to how Muddy Waters are held in such high esteem, for their actions to be so immediately acted upon by both traders and market makers. This latest attack seems…

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