Opinions
Fabrice Taylor
BLVD Centers Corp
CXV-X
PAST TOP PICK
Sep 09, 2016
Stock price when the opinion was issued
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(A Top Pick May 20/15. Down 54.76%.) A high flyer about a year ago, and probably got ahead of itself. However, they are doing all the right things. He was very close to making this a Top Pick because they continue to execute really well. They’ve opened 4 new clinics in the last 45 days, and have also opened their lab. They are hoping to have a run rate of about 80 million by the end of this year. He still really likes this.
They continue to execute fairly well. They have 5 of these pods and are guiding for $80 million of run rate by the end of the year. They have to get up to speed for you to see this level. They have started up a lab for all the samples they take from patients. They are bringing this in-house and it will be a big savings for them from an expense point of view. They are fairly valued, but if you look at the run rate by year end then they look good.
(A Top Pick Dec 9/15. Down 59.32%.) In the rehab treatment business in the US, and it has been a huge disappointment. They continue to execute. Valuation was ahead of what he should have paid for it. Also, it has taken a little longer for them to roll out what they were trying to accomplish. He got stopped out.
They are changing the way they compensate each of the ground managers. Have built out 5 pods so far, which offered in-patient services as well as day services. They were making all the decisions from a top down perspective, and the individual centres were not as profitable as they should have been. They recently adjusted the compensation structure, so now the managers are compensated on the profitability of each of their individual pods. This next quarter will not be indicative of that change, it will be one quarter after that. It has a lot of potential, but they haven’t lived up to that yet.
This has been disappointing. They’ve changed their compensation program for managers, where they used to operate everything out of head office with no individual profit centres for their individual locations. Now, the individual manager is responsible for their profit and loss. He is hoping to see an uptick in profitability when this starts to come through, probably another quarter or two. Long-term this should be a very strong business, because they deal with addiction treatment in a number of different forms.
It has been a bit of a disappointment in the how they have executed. They are in the rehabilitation business, acquiring centers. They were driving everything out of the head office and each center was not that profitable. Now each manager is incentivized with how profitable they are. We have to see how this works. He has it on his radar screen.
Addiction treatment centres, mostly in California. Their plan was to roll these out all over the US and have different phases of treatment. The company wasn't that profitable, as employees in each of the individual centres was not really buying what management was doing and not taking ownership. The company changed their compensation to actually compensate managers of the individual centres. There still hasn't been tremendous results from that.
(A Top Pick Aug 12/15. Down 133%.) This got caught up in the healthcare meltdown, but there are also some company specific problems. Revenues are okay, but they are not profitable. Thinks they need to bring in management that actually knows the industry better. He would watch for 2 more quarters, and if they don’t show improvement in the bottom line, he would consider exiting.