Centric Health (CHH.TO)

One division does private surgeries that are not covered by healthcare. Every year they cut more and more services from provincial plans so there are more and more opportunities to use their services. The other division is an industrial pharmacy that services businesses like seniors homes. It is a turnaround story. They used to have a lot of debt, but margins have improved. He is impressed with management. The stock has positive tailwinds and it is a turnaround story. (Analysts’ target: $1.02).

Feels there is a fair bit of catalyst on this. They have 2 parts to the business, a specialty pharmacy and some surgical centres. The specialty pharmacies are basically pharmacies for long-term care facilities. They have a contract with a long-term care facility, and get paid to basically package prescriptions up for them and get paid a dispensing fee. Have about 27,000 beds right now, and he can see another 20,000 beds coming in. (Analysts’ price target is $0.80.)

As far as the sector goes, they are in the right spot. Have just started to do more M&A and changing their business a little. He is watching this, but has other healthcare holdings that he likes better. Valuation is pretty good, and depending on what management does, there could be some potential for it to move higher.

Cut your losses. $.71 is the floor and it broke through there.