Grifols generates the bulk of its earnings from businesses it does not own. A report by Gotham City Research highlights that non controlled affiliates contribute a surprisingly large portion of the Ibex 35 listed company profits, despite ongoing management and connections to Grifols. This dynamic has triggered substantial attention in the market, linking profit streams to entities outside direct ownership and control.
The corporate action tracing back to Grifols involves the 2018 decision to dispose of Biotest US Corporation and Haema AG to a Scranton based group controlled by the founding family. Grifols has a 30 percent stake in that group. While these plasma collection ventures shifted to family ownership, Grifols no longer holds equity, yet retains a potential buyback option. Since that time, Grifols has continued to record the revenues and profits of these companies within its own accounts, arguing there remains a possibility of regaining control if conditions change. This accounting approach has been documented by a British research firm.
In the Gotham City Research assessment, the profits attributed to Biotest US Corporation and Haema accounted for 40.1 percent of Grifols profits in 2022. According to Grifols own published accounts, this translates to 83.48 million euros of profit for the group, against a total consolidated result of 208.2 million euros. By 2023, Grifols reports that about 99 percent of its profits come from companies over which it does not have direct capital control.
Recorded profit can be as high as 253 million
Before 2018, the entities not under Grifols direct control contributed little to the group’s benefits and at times generated losses on the income statement. Between 2012 and 2018, the Catalan company logged earnings of 15.4 million euros from these activities, according to Gotham City Research. The report notes a reversal occurred when control of the two referenced companies shifted. Gotham cites that Biotest and Haema began to represent a large share of Grifols consolidated profits even after ownership interest fell to zero.
From 2019 through 2022, the portion of earnings driven by these out of control interests rose to 23.5, 90.4, 76.6 and 62.9 million euros per year respectively. In total, profits attributed to these entities reached 253 million euros, while their share in Grifols earnings stood at 3.6, 12.8, 28.9 and 23.2 percent for those same years. The pattern shows a sizable effect on reported earnings without direct ownership, raising questions about how profits are attributed in the company accounts.
The Catalan market regulator, CNMV, is examining whether the Grifols investment vehicle has been used to obscure the true state of the company accounts.
The scope and influence of these non controlled companies expanded rapidly, reaching a striking 96 percent share in 2023. Gotham asserts that most of the 103 million euros earned by Grifols during that year originated from the listed entities under scrutiny. The report argues that Grifols’ management transferred value from the main listing to the Grifols family. It suggests that if business projections hold, Scranton, controlled by the Grifols family, could retain the operations, while the family firm would be positioned to buy them back if necessary.
Gotham also notes that Grifols has, in recent years, reported the full results of its subsidiary Grifols Diagnostic Solutions, or GDS, within the company EBITDA. A 2020 SRAAS acquisition left Grifols with 55 percent of GDS shares while selling 45 percent. Critics say this inclusion has inflated earnings potential. The document mentions that the substantial inclusion of GDS may have overstated Grifols EBITDA by as much as 46 percent in some assessments.
Overall, the investigative report raises questions about how profits are defined and allocated within Grifols accounts, the effectiveness of controls, and the potential impact on the perception of the company’s financial health among investors and regulators. The discussion highlights the tension between ownership, control, and the portrayal of earnings when business units are held indirectly through family linked entities. Analysts and market watchers continue to review the situation as new data and regulatory findings emerge, seeking clarity on the true drivers of profitability in the Grifols group and the implications for governance and investor trust.