Spanish pharmaceutical giant, Grifols SA, plummeted as much as 40% on Tuesday following Gotham City Research LLC's report that the company "manipulated" its financial reports after consolidating profits of the units it does not control, BPC Plasma and Haema, which are owned by Grifol's family vehicle Scranton Enterprises NV.
According to the report by Gotham City Research, the blood plasma-based product manufacturer also reported lower figures for its debt and EBITDA to "artificially reduce" its reported leverage. As opposed to the stated 6 times EBITDA, the research contends that the company's true leverage should be between 10 and 13 times. "Should our estimate of the Grifols' true leverage be correct, GRF will face notably higher financing costs. Consequently, we believe shares are uninvestable, likely zero," the UK short-seller said.
The company's stock trading in Madrid was down by 24.40%, going for €10.78 per share at 3:59 pm CET. At the same time, the Nasdaq-listed shares of the pharmaceutical manufacturer dropped 24.89% to sell at $8.36 apiece.
