Listed care provider stock plunges on allegations of resident mistreatment
NEW YORK: A stock exchange listed care provider saw its share price plunge today on allegations of resident mistreatment.
Orpea SA shares plunged as the French nursing-home operator denied offering a journalist money to head off publication of a critical book and government officials vowed to look into allegations that patients were mistreated.
Orpea “formally denies having offered any sum” to prevent the book’s release, the company said in a statement. The journalist, Victor Castanet, said in a television interview that an intermediary offered him 15 million euros ($17 million) to drop the project during his research for “The Gravediggers,” published this week by Fayard.
The book alleges that the company put profits ahead of patient welfare, leading to mistreatment of elderly residents of its homes. Orpea has denied all the claims, calling them false, outrageous and prejudicial.
Excerpts of the book first published Monday in daily Le Monde triggered a plunge in the stock, sending it down 43% this week. Orpea shares were down 15% to 46.94 euros at 04:41 PM in Paris on Wednesday.
Government officials were cautious about the allegations at first, with Health Minister Olivier Veran saying he would “wait for facts” before deciding whether to start an inquiry into the company. But they have started to step up the pressure as the book drew public attention.
Brigitte Bourguignon, the minister who oversees elderly policy, said in a tweet late Tuesday she will summon Orpea’s chief executive officer “as soon as possible” for a meeting to shed light on the allegations.
“The revelations made in this book are absolutely revolting, your stomach is knotted reading such things, and if these facts are proven, they will obviously have to be sanctioned with the greatest severity,” government spokesman Gabriel Attal said Wednesday after a cabinet meeting. The government also asked the Paris regional health agency for the report from its last unannounced inspection of Orpea and any follow-up, which dates back to 2018, Attal said.
Investors had been stepping up their bets on a decline in Orpea’s shares even before the publication of the book excerpts on Monday, according to data compiled by IHS Markit Ltd., and as of Tuesday they had sold short 4.3% of the outstanding stock, the highest since July.
Exane Asset Management was the latest to disclose a short position, saying Monday it has a bearish bet equal to 0.54% of the company’s shares. A media representative for Exane BNP Paribas had no immediate comment.
Initial allegations, which sound extremely hard to believe, are likely to put the spotlight not only on Orpea but on other nursing-home operators as well, Bryan Garnier & Co. analysts Bruno de la Rochebrochard said in a phone interview late on Tuesday. “This story that will stay with us for some time,” he said.
Among other nursing-home operators, Korian SA dropped 4.1% to 21.70 euros and LNA Sante SA declined 2.5% to 42.40 euros. There have been no allegations targeting either company.
“The blow is a big one,” Alphavalue analyst Yi Zhong wrote by email in response to a Bloomberg query. “The reputation of nursing homes is absolutely crucial.” Government “investigations might also impact the group’s future expansion of the network,” Zhong added.