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Poor e-health comes from Muddy Waters Research. The company’s founder, Carson Block, shorted the stock. To be clear, this means that he does not see it as a profitable business and expects the share to fall.
So what exactly is behind the pessimistic intake of EHTH stocks? Block says that the company uses certain accounting methods that cover the fact that the business does not make a profit. It includes how it registers possible future income.
According to Block, this is an attempt by the company to pump up EHTH shares while the company also promotes strong growth. While the founder of Muddy Waters Research says that eHealth does not do anything legally fraudulent, it does so intellectually, CNBC reports.
Here is part of the Muddy Water Research statement on the EHTH stock news.
“EHTH’s very aggressive accounting masks what we consider to be a significantly unprofitable business. Based on the variable costs alone, we estimate that EHTH will lose approximately – $ 135 for each MA member it signed up for in 2019. If we also include fixed costs, our estimate per MA member loss will be $ 402.
We adjust revenues from 2019 by $ 128 million or 25%. We adjust the operating profit for 2019 down by $ 263 million due to subjective and misused mark-to-model accounting, which gives an operating loss of – 181 million dollars. ”
The EHTH share fell by 11.72% when the markets closed on Wednesday.
Article printed from InvestorPlace Media, https://investorplace.com/2020/04/ehealth-news-hits-ehth-stock/.
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