(Bloomberg) -- Just when it looked like the worst was over for the Spanish family behind one of the world’s biggest medical fortunes, its financial woes plumbed to a new low.

The Grifols family last year said they were retreating from the helm of their namesake business empire following a chaotic period for the company during the pandemic. Grifols SA’s stock started recovering, paring a drop that had reached 60% since 2020. Then, a US short seller report on Tuesday questioning the dynasty’s continued dealings with the company through its private investment firm sent shares plunging as much as 43%. 

New York-based Gotham City Research LLC published a report accusing the company of manipulating its debt and profit figures by consolidating earnings of units it doesn’t control. Haema and Biotest Pharmaceuticals Corp., two businesses Grifols acquired in 2018, are owned by Scranton Enterprises BV, an investment vehicle controlled by former executives of the firm including members of the founding family. On Wednesday, Gotham slashed its short position, paring Grifols’ two-day decline to 18%.

Grifols lost more than €2 billion ($2.2 billion) in value after the report on Tuesday, shrinking by at least €350 million the wealth of the family, which owns about 35% of the business, according to data compiled by Bloomberg. It recouped some of those paper losses on Wednesday.

The Barcelona-based blood plasma company pushed back against the report. It said all the transactions mentioned in the short seller’s report were recorded and presented to regulatory authorities in Spain and the US. “There’s no new information that can be considered hidden,” Grifols said in a filing. 

The accounting treatment given to deals such as the sale of Haema and BPC to Scranton, a vehicle related to the founding family, was fully endorsed by auditor KPMG, the company said. Gotham City had said that because of this transfer none of the revenues of the two companies were available to Grifols or its creditors to pay back debt.

A representative for the Grifols family — which now has a combined fortune of about $1.5 billion, according to the Bloomberg Billionaires Index — didn’t immediately respond to a request for comment.

Read more: Grifols Sinks as Short Seller Gotham Criticizes Accounting

Grifols, which has a pile of debt of over €9 billion, seemed to be finding relief after it sold a 20% stake in Shanghai RaaS Blood Products Co. last month that is expected to pocket them $1.7 billion. 

About 2.6% of Grifols shares have been borrowed and sold short currently, according to S&P Global Market Intelligence data. That’s down from a peak of about 10% in March. After a year that saw management changes, a cost-cutting plan and a transaction to help pay debt, the stock only had 1 sell rating and 19 buys from analysts.

A bombshell for the company, Gotham’s attack puts the spotlight on the Grifols family’s ties to their eponymous business, illustrating the often complex connections that multi-generational fortunes forge with their major assets. 

Scranton, which is domiciled in the Netherlands, is controlled by former directives of Grifols, including Victor Grifols Roura, the founder’s grandson and architect of the company’s international expansion and IPO. He retired from his board seat at the end of last year. 

The firm ponied up more than $500 million to buy Haema and BPC from Grifols in 2018, filings show. That deal included a call option for Grifols to buy the operations back by assuming liabilities that Scranton took on to purchase the businesses. The family office, which also owns Grifols’s headquarters and facilities in Barcelona, recently sold real estate and other peripheral assets to pay down debt.

Gotham’s report follows a few turbulent years for Grifols that saw the pandemic slash blood plasma collections and fears grow over the company’s debt pile, leading to the family’s fortune more than halving since early 2020.

To help turnaround the company, Chairman Thomas Glanzmann took over in May as chief executive officer, replacing two family members who were co-CEOs, ending the reign of four generations of Grifols. 

Read more: Billionaire Dynasty Built on Blood Ends Reign at Troubled Empire

His predecessor Stephen Mayer, who had been named in October of 2022, launched a cost-cutting plan that’s expected to achieve €450 million savings.

His surprise departure in February sent ripples through the investor community just as confidence was increasing in the management’s ability to turn Grifols’ fortunes around. With nearly €2 billion of debt maturing in 2025, all eyes were on a divestment the company had promised to deliver by the end of 2023.

That seemed to be the case when in December the company agreed to sell most of its stake in Shanghai RaaS to Chinese appliance maker Haier Group for about $1.7 billion, sending the shares up as much as 8.6% to the highest level in over a year.

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The group’s history goes back to 1909, when Jose Antonio Grifols Roig founded a blood-analysis laboratory in Barcelona shortly after getting his medical degree. Working at one point out of his apartment located on the city’s tree-lined Rambla street, he used a row of hutches on the balconies to rear rabbits and guinea pigs for experiments.

Víctor’s brother, Raimon, and his namesake son became joint CEOs in 2017. In October, Víctor stepped down as non-executive chairman, becoming honorary chairman. The younger Víctor, 47, is now chief operating officer, while 59-year-old Raimon is chief corporate officer, after they ceded their CEO roles last year.

(Updates with Gotham cutting its short position after the plunge in shares in 3rd paragraph.)

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