Canaccord Genuity (TSX:CF, LSE:CF) and Stifel GMP are both forecasting strong revenue growth for Canadian healthcare firm CareRx Corporation (TSX:CRRX) after it posted its most recent quarterly results.
The Toronto-based provider of pharmacy services to senior living communities reported revenue of C$96.9 million, compared to C$46.4 million in the fourth quarter of 2020. Excluding $1.1 million in non-recurring costs, the company logged C$8.7 million in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for the quarter.
Stifel GMP noted that the company's 4Q 21 revenue figure came in ahead of street expectations of C$94 million.
READ: CareRx Corporation clocks up C$96.9M in 4Q revenue as its pharmacy services grow rapidly
“Having essentially reached its 100,000 number of beds target a year ahead of schedule, CRRX now targets 130,000 beds and $500 million revenue (around two times growth) by 2024,” Stifel analysts wrote. “We see an opportunity for the company to expand market share to 40-50% with $380 million sales for full-year 2022 and around $38 million in EBITDA.”
Stifel has a 'Buy' rating on CareRx stock and a C$8 price target.
“We continue to believe there is a lot to like about this undervalued Canadian pharmacy play,” the analysts noted. “The company delivers a strong track record of exceeding growth targets, holds a dominant position in an attractive market and has consistently pursued opportunities to build on its competitive advantages.”
'Line of sight' to 130,000 beds
Over at Canaccord, analysts echoed the positive sentiments with a repeated 'Buy' rating and $8.50 price target.
Canaccord noted a “line of sight” to 130,000 beds through both organic contract wins and M&A, largely in its existing geographies and within the senior housing market. Analysts are also baking in request for proposal (RFP) wins for an incremental 7,500 beds in 2022, bringing the 4Q 2022 average bed forecast up from 103,000 to 108,000.
“Given the revenue per bed beat, we've also taken up our forecast for this figure up by around 3% to $3,860 in 2022,” the Canaccord analysts wrote. “This is not quite as high as the less than $4,000 we saw in 4Q since some of this jump was due to seasonality.”
The analysts added: “Our increased pricing is further supported by the fact that the Ontario Ministry of Health has once again postponed the previously scheduled changes to LTC pharmacy funding by one year. Specifically, the all-in-one fee for pharmacy services, which was scheduled to decline from $1,500 to $1,400 per bed per year next month, has been pushed out to April 1, 2023. Together, this results in our 2022 revenue estimate increasing from $376.3 million to $391.7 million.”
CareRx has a large network of pharmacy fulfillment centres strategically located across Canada. This allows the leading provider of pharmacy services to senior living communities to deliver medicines in a timely and cost-effective manner. The company serves over 96,000 residents in over 1,600 seniors and other congregate care communities.
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