Grifols announced €21 profits in a ‘difficult’ Q1 marked by fraud accusations

Gotham City Research accuse pharmaceutical company of “suspicious movement” of €226M to subsidiary

 Grifols executive chairman Thomas Glanzmann
Grifols executive chairman Thomas Glanzmann / Miquel Vera

ACN | @agenciaacn | Barcelona

May 15, 2024 05:45 PM

Catalan multinational pharmaceutical company Grifols has presented its financial results for the first quarter amid fresh accusations by hedge fund Gotham City Research.

According to the accounts published on Tuesday, Grífols made €21 million in the first quarter of this year, a stark improvement on the €108 million losses of the same period last year. 

Coinciding with the publication of the figures, Gotham has accused Grifols of "suspiciously" moving shareholders' money "to benefit Scranton," a fund in which part of the Grífols family is involved.

Specifically, Gotham says that BPC Plasma, a subsidiary of the pharmaceutical group, lent €266 million to Scranton.

BPC declared a dividend in Scranton and instead of paying it in cash, €266 million in debt was written off, which Gotham says implies the investment firm never intended to repay the loans. 

After the latest report, Grifols shares fell by more than 3% and stood at under €9.50.

Earnings report

The company has sent a statement to the National Securities Market Commission (CNMV) in which it admits that it has had a "difficult" start to the year. Yet, it also says it has been able to refute "all" accusations made by Gotham City.

In addition to the €21 million profit, Grifols' sales through March grew by 5.5% year-on-year to €1.626 billion, and adjusted EBITDA (Earnings Before Interest Taxes Depreciation and Amortization) increased by 21% to €350 million. Net debt stood at €10.948 billion.

Grifols said that as of March 31, it had a liquidity position of €713 million and a cash position of €449 million.

Since Gotham published a report that brought Grifols down on the stock market, the company has had to work hard to reassure its investors of the health and integrity of its finances. 

In the statement, Grifols CEO Thomas Glanzmann said that the company had taken "significant steps" in the first three months of the year, highlighting the placement of bonds worth €1 billionand the sale of 20% of Shanghai Raas for 1,600 million euros, which will be completed in June.

For the financial year 2024,  the Catalan multinational expects a 7% increase in revenue and an adjusted EBITDA of more than €1.8 billion.

Price plummet

Catalan multinational Grifols saw its stock market price plummet on January 9 following a report that accused the company of manipulating its accounts. 

The company's price dropped by as much as 40% during the course of that morning, after it initially appeared on the index without a price. 

The report, created by Gotham City Research investment fund, said that the company's shares were worth "zero." 

Grifols' CEO denied the fraud allegations and made commitments to improve company governance. Thomas Glanzmann said the claims in the short seller's report were "false."