Grifols shares tumble after Gotham Research report questions debt and earnings
Shares of the Spanish pharmaceutical group Grifols fell sharply on Wall Street after Gotham Research released a report alleging accounting manipulation. The ADRs listed in the United States plunged in early trading, with the stock sliding more than 40 percent as the market opened. By the close on the New York Stock Exchange, Grifols had declined to $8.70 per share, reflecting a substantial loss for investors in what had been a prominent biopharmaceutical player.
The Grifols conglomerate, controlled by the Grifols family, is a global force in blood products with a substantial footprint across international markets, notably in the United States. The latest available accounts for the third quarter show a heavy debt load approaching 9.54 billion euros. Gotham Research, a New York based analyst, argues that Grifols has exaggerated its ability to generate cash and to manage debt, asserting that the reported leverage has been reduced artificially. The firm claims the true leverage could lie at six times or higher, with some estimates suggesting a ratio closer to ten or thirteen times. These assertions have sparked renewed scrutiny of Grifols’ financial statements and governance practices.
Regulators in Spain examine the use of the Grifols vehicle to conceal accounts
The controversy centers on the relationship between Grifols and its family controlled investment vehicle, Scranton Enterprises, and whether such structures were used to mask true financial conditions. Grifols maintains that its financial statements reflect full consolidation of related entities, including BPC Plasma and Haema, a practice it says has been in place since 2018. The company has publicly denied the accusations and emphasized that its consolidated statements are robust and subject to periodic audits conducted by recognized auditing firms. These audits, Grifols argues, provide a reliable view of the company’s financial health and internal controls.
CNMV stance on trading and allegations
Rodrigo Buenaventura, head of Spain’s National Securities Market Commission, acknowledged the gravity of the allegations while stressing that suspending trading is not a step the regulator would take without compelling justification. The CNMV indicated it would consider the claims carefully but emphasized the importance of maintaining orderly markets and protecting investors as investigations unfold. This response reflects the balance regulators seek between guarding market integrity and avoiding undue disruption for listed companies and their shareholders.
Gotham Research has previously attracted attention in Spain for its investigations into listed entities. The firm gained notoriety in 2014 after accusing Gowex, a wireless provider, of fabricating revenue. The ensuing fallout led to a dramatic decline in Gowex’s stock and eventually a trading suspension on the local market. The Gowex episode remains a benchmark for investors and regulators alike when assessing short sellers and research firms that issue bold claims about financial misrepresentation. The latest Grifols case echoes that history and raises questions about how such alerts influence market perceptions and the soundness of corporate governance in multinational groups with complex ownership structures.