After Increasing Revenues Fivefold, Comprehensive Care Completes Turnaround With Profitability

CompCare revenue growth between 2009 and 2011

During the last two years, CompCare has experienced some significant growth as its revenues went from $14.2 million in 2009 to $35.2 million in 2010 and finally to $71.2 million in 2011.

We like Comprehensive Care (CHCR – $0.19) because it’s in the midst of a significant turnaround which started in 2009 when the current management team took a controlling position in the Company.

The new management team has invested approximately $20 million in CompCare and completed a Company-wide restructuring. This resulted in a fivefold increase in sales from $14.18 million in 2009 to $71.21 million in 2011.

For 2012, management aims to become profitable, which is succeeding again. In the first quarter, earnings almost doubled to $80,000, compared with $41,000 in the same period last year. For the second quarter, ending June 30, 2012, management expects to be profitable whereas it posted a loss of almost $4 million in the comparable period in 2011.

Moreover, thanks to a recently launched innovative pharmacy cost containment program, CompCare is able to reduce pharmacy costs by up to 10% for its health plan partners, offering them the lowest possible prices for both branded and generic drugs. Since CompCare started offering this unique service, it has already signed up three new contracts with several others in the pipeline. We foresee considerable growth in the following years generated by this Program.

Next to new contracts from the Pharmacy Management Program, CompCare is also picking up new contracts for managed behavioral health services. For example, it signed a new multi-service agreement with Essence Healthcare to provide services to the Medicare Advantage population in Missouri, Washington and Illinois. In February it added 42,000 covered people to its existing contract with L.A. Care, the nation’s largest public health plan. This deal more than doubled the number of lives covered in the original contract which CompCare secured early 2011. And in March, CompCare began supplying behavioral health services on an at-risk basis to approximately 7,000 members of a Texas health plan that serves Medicaid and CHIP beneficiaries.

Based on 2012 revenue estimates of $72.5 million and earnings of $1.15 million, we reiterated our buy recommendation for Comprehensive Care Corporation with a price target of $0.40, which is more than double today’s stock price.


For important disclosures, please read our disclaimer.

0 comments… add one

Leave a Comment