MASSDEVICE ON CALL — Analysts at short-seller Ottoman Bay Research, which have long held that Mindray Medical (NYSE:MR) management has misled investors, claim that they’ve found the so-called "smoking gun" that proves their accusations.
Ottoman Bay said that it gathered "in-country" regulatory filings dating back as far as 2010 from all the local registries for each of Mindray’s operating subsidiaries, claiming that the documents prove that China-based Mindray is not what it seems.
The analysts claimed that "MR’s international business of has been hiding significant operating and net profit losses in its subsidiaries for years," and that "the MR story also comes with misrepresented financials, multiple auditor resignations, hidden losses in subsidiaries and governance abuses."
The research group said that it had notified the IRS and the SEC of its findings and that it expected Mindray to restate several years’ worth of filings.
Mindray has previously responded to Ottoman Bay’s accusations that Mindray’s management inflated its revenues by 30% and boosted gross margins to roughly 60%.
Ottoman also accused Mindray of pretending to spend millions on a pair of facilities in Nanjing and Zhonguancuan that allegedly don’t exist. Mindray said the photo Ottoman Bay claimed was of the Zhonguancuan facility was actually a shot of its operation in Changping, Beijing, and denied the charges that its financials are overstated.
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