Clover Health Investments (CLOV) on Friday responded to an attack from Hindenburg Research claiming the tech-focused healthcare company concealed key information from investors, including an active Justice Department investigation. In its response, Clover called Hindenburg’s claims a “desperate attempt for publicity” that disregards the truth.

Hindenburg, which is typically a short seller that bets companies’ stock will go down, said in its report on Thursday that it had no position in Clover, which sells Medicare insurance in mostly low-income areas. Rather, Hindenburg said it was issuing the report because it wants the public to know the role short sellers have in “exposing fraud and corporate malfeasance.”

But Clover suggested Hindenburg is merely trying to redeem its reputation in a climate where short sellers are viewed unfavorably. “Given the market’s latest views on short sellers, we believe that Hindenburg, which takes pains to call out their altruism in saying that they are not short on CLOV stock, is foolheartedly seeking to redeem itself by posturing as a white knight of the financial markets,” Clover said in its response, which said it had no knowledge of the Hindenburg report before it was made public on Thursday.

Chamath Palihapitiya, Founder and CEO of Social Capital, speaks during the Sohn Investment Conference in New York City, U.S., May 8, 2017. REUTERS/Brendan McDermidChamath Palihapitiya, Founder and CEO of Social Capital, speaks during the Sohn Investment Conference in New York City, U.S., May 8, 2017. REUTERS/Brendan McDermid
Chamath Palihapitiya, Founder and CEO of Social Capital, speaks during the Sohn Investment Conference in New York City, U.S., May 8, 2017. REUTERS/Brendan McDermid

According to Hindenburg, a civil investigative demand letter from the Department of Justice shows it’s investigating 12 issues related to Clover, including its software “Clover Assistant,” as well as kickbacks, marketing practices, and undisclosed third-party deals. The investigation, Hindenburg concluded, presents a potential existential risk for a company that derives almost all of its revenue from Medicare.

The Hindenburg report also took aim at the special purpose acquisition company (SPAC) led by Chamath Palihapitiya that took the tech-focused healthcare company public in January.

In its response, Clover acknowledged the Justice Department’s investigation, though said the company’s lawyers as well as outside and third-party lawyers, including IPO underwriter’s counsel, found it wasn’t material and therefore Clover determined it unnecessary to disclose to investors. The subject “received extensive focus and attention,” Clover said, during both its recent IPO and de-SPAC due diligence processes, and noted it had neither received civil investigative demands nor subpoenas.

Clover also responded to Hindenburg’s claims that its relationship with its subsidiary Seek Insurance was “thinly disclosed,” noting that it doesn’t mention the subsidiary on its website yet tells seniors that it will provide them with unbiased information on finding Medicare plans. In its response, Clover described Seek Medicare as a startup separate from Clover, with its own investor, board of directors, management team, and employees.

In response to Hindenburg’s critique over a reported $200 per patient visit fee that Clover pays to physicians who use its Clover Assistant software, Clover said, “To be clear, the ‘extra $200 per visit’ is not incremental or ‘just to use’ the Clover Assistant, but represents the overall payment that covers both the primary care physician (PCPs) office visit and the use of the Clover Assistant. This translates to roughly twice the traditional Medicare fees paid to PCPs for an office visit, more in line with fees paid to specialists.”

Clover said following Hindenburg’s publication on Thursday, it received an inquiry from the SEC, which the healthcare company said it believed was based on the Hindenburg report.

Hindenburg says its report is based on “more than a dozen interviews with former employees, competitors, and industry experts,” along with government reports and insurance filings.

On Friday, Hindenburg released its own response to Clover’s statement defending itself, calling it “amusing” that the healthcare company accused it of posturing as “white knight” altruists. Hindenburg also reiterated that it does not have a position in Clover, short or long.

“We published our report yesterday to further discussion in the investment world about Clover Health, SPAC promotion and to underscore the importance of critical research,” Hindenburg said, going on to refute several points of Clover’s response in a lengthy statement that can be read here.

Hindenburg is known for issuing a scathing report in September calling the electric truck startup Nikola (NKLA) a fraud, causing that company’s stock to plummet.

While Clover shares tumbled after Thursday’s report, they were up nearly 3% after the market open on Friday — though the stock fell in later trading and was down over 4% as of 3:30 p.m. EST on Friday.

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Alexis Keenan is a legal reporter for Yahoo Finance and former litigation attorney. Follow Alexis Keenan on Twitter @alexiskweed.

Ines covers the U.S. stock market. Follow her on Twitter at @ines_ferre

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