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Investing.com -- Enovis Corp (NYSE:ENOV) stock fell 1.3% after Jehoshaphat Research announced it has taken a short position in the healthcare company, citing concerns about organic growth rates, debt levels, and accounting practices.
The research firm challenged Enovis’s reported high-single-digit organic growth rate, claiming that traditional organic growth calculations show the company is growing at approximately 2% nominally, or 0% when adjusted for inflation. Jehoshaphat contends that management has repeatedly redefined how growth is measured.
According to the short seller, Enovis has reached problematic debt levels following its most recent acquisition, which they believe will prevent the company from continuing its acquisition-driven growth strategy. This could expose what Jehoshaphat describes as "unrealistic Street expectations," with the firm predicting Enovis will begin missing earnings targets in upcoming quarters.
The research report also questioned the company’s adjusted EBITDA figures, alleging they are "inflated by a swath of accounting irregularities, creative definitions, opaque disclosures, and mathematical impossibilities." Jehoshaphat claims that proper adjustments would reduce the company’s adjusted EBITDA by 60% or more.
Jehoshaphat further criticized Enovis’s business fundamentals, stating it underperforms peers on key metrics including return on invested capital, free cash flows, and margins. The report also noted that Enovis’s CEO recently resigned at age 57 after a streak of consistently meeting or beating quarterly earnings expectations for nearly a decade.
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