CareRx Corporation is a ‘Buy’ with a price target of $5.50 according to analysts at Leede Jones Gable after the long-term care pharmaceutical services provider posted its 2Q results, which included a revenue jump of 95%.
For the three months ended June 30, 2022, the company posted revenue of $96.9 million, up from $49.7 million for the year-ago quarter, with adjusted earnings before interest, tax, depreciation and amortization (EBITDA) jumping 103% to $8.8 million.
CareRx’s Toronto-listed shares are currently trading at about C$3.80.
READ: CareRx reports continued strong growth in Q2 with revenue almost doubling
In a note, analysts wrote that they were encouraged by CareRx's sustained revenue and EBITDA stability but noted challenges in both revenue compression and cost escalation compelled caution on near-term profitability.
“We are highly positive on CareRx’s ability to hold financial data at a stable level in both FQ122 and FQ222 in a post-Medical Pharmacies world, but we do see a few headwinds on the horizon that are likely to compress EBITDA margin down to the 8% to 8.5% range in the near-term, which our model will now assume,” analysts wrote.
Analysts noted that while the company had eliminated 5,800 beds and about $6 to $6.5 million in EBITDA from a long-standing long-term care Rx contract, the firm was able to renew long-term Rx contracts with three other sizable long-term care or retirement residence operators in the quarter, stabilizing cumulative service to 18,000 beds in CareRx’s existing bed portfolio.
CareRx Corporation (TSX:CRRX) is Canada's leading provider of pharmacy services to seniors living communities and other institutional settings, serving more than 96,000 residents in more than 1,600 facilities communities, including long-term care homes, retirement homes, assisted living facilities, and group homes.
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