Opinions
Bruce Campbell (2)
Centric Health
CHH-T
WATCH
Jul 02, 2020
It is an interesting business. It is specialty pharmacies. They do medication for long term care facilities. They have an interesting pouch technology. They had quite a significant debt load and made a big dent in it when they sold their surgical business. They are trying to pick up new contracts. He has owned it in the past and is watching it now to see how they execute.
$0.225
Stock price when the opinion was issued
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COMMENT
A disappointment. The stock has fallen a lot. They are selling off their western surgical division which should pay off a lot of their debt. They recently added a home-delivery system of pills to seniors, which may be revolutionary. CHH has signed up to be an exclusive provider of cannabis to seniors care facilities--and this could be profitable.
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PAST TOP PICK
(A Top Pick Sep 24/18, Down 68%) He still likes it. It's the biggest specialty pharma distributor of meds to seniors residences in Canada. The stock got hammered recently, because they didn't get the price the market expected for selling the surgery clinics (the deal closes Sept. 30). Still, they will pay down a lot of debt with this deal. The new CEO has done a fantastic job by cutting costs and increasing gross margins, but the market is ignoring this. Their EBITDA is growing. When the sale closes, he'll buy more stock.
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PAST TOP PICK
(A Top Pick Dec 03/18, Down 56%) One of Canada's largest distributors of medications to senior's residences, retirement homes and long term care facilities. They divested themselves of surgery clinics. They got a much lower price than the market was anticipating and so have less cash to pay down debt. The core business, however, had excellent results and continues to improve. They announced a financing and he is going to vote in favour of it. It will give them the ability to grow the core business, which is fragmented across Canada. An easy double or triple over the next few years.
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WATCH
They had a challenging last couple of years. They got over levered. They sold their surgical business. Now you are starting to see them accelerate the pharmacy business. They have less than 10% of the beds in long term care facilities in Canada. They also have a new product to control seniors taking the right medication at the right time. He is waiting to see acceleration in their earnings.
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TOP PICK
One of the biggest suppliers of meds to Canadian seniors' care facilities, so they're having their day in the sun now. Seniors need their meds. In March they made an accretive acquisition that'll make them then #1 player in Canada. A strong balance sheet plus great organic growth from contracts to be renewed later this year. The stock is still cheap and could double in 12 months. A safe play. Little uncertainty in their business. (Analysts’ price target is $0.35)
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TOP PICK
They made huge strides in the past year. They are Canada's biggest provider of meds to seniors' homes. Stock has risen over 50% during the pandemic, partially because they just completed a highly accretive purchase of another company. They have a strong balance sheet now, so they can continue to consolidate in a fragmented industry. The only other big player is Shoppers Drug Mart. CHH has a good balance sheet. Contracts with these retirement homes are coming for renewal in the coming 12 months. This stock could double in 12 months. He expects organic and acquisition growth. (Analysts’ price target is $0.38)
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