Comprehensive Care (CHCR – $0.19) is making great strides in becoming a leading pharmacy management services provider thanks to its unique Pharmacy Savings Program, with which it can save at least 10% of a client’s pharmacy expenses.
Just this week, the Company announced that it closed a $5 million credit facility with TCA Global Credit Master Fund (TCA). Under terms of the agreement, funds will be made available to Comprehensive Care on an as-needed basis, with the initial draw down set at $1 million. The funds will be used for general working capital.
Also, CompCare entered into an agreement with Maxim Group LLC. Maxim Group is registered as a broker-dealer and provides an array of financial services such as investment banking, equity research and private wealth management. More specifically, Maxim Group will introduce CompCare to its wide network of clients with a goal to increase shareholder interest, its stock liquidity and ultimately the stock price itself.
Smart investors are taking notice as increased buying has doubled CompCare’s stock price in less than a month.
Ten Percent Savings Guaranteed
CompCare manages the prescription drug benefit of its clients’ health plans for which it receives a fixed fee, per member per month. In exchange, the Company assumes the financial risk of paying for the plan’s members prescription drugs as well as performing ancillary pharmacy management services.
The traditional Pharmacy Benefit Manager (PBM) business model is based on the spread between what the PBM reimburses the pharmaceutical supplier and what the PBM charges the health plan customer. Today, this spread is around $8 to $20 per script.
CompCare’s new Pharmacy Savings Center Program, which was developed over the past two years, works exclusively with a network of selected PBMs. In this model, the PBM only charges the health plan partner the exact same amount that was paid to the pharmacy. A low administrative fee is added to the charge and is the only margin for the PBM. This “administrative fee” is in the range of $1 to $3 per script – significantly less than the margin in the spread model.
Based on this model, CompCare determined that it could offer the health plan a 10% reduction. Clark A. Marcus, CompCare’s Chairman and CEO, said: “With prescription drug prices rising almost twice as fast as the rate of inflation, we believe the CompCare Pharmacy Savings Program is exactly what labor and industry alike need to contain the rising costs of healthcare and, in particular, pharmacy spends.”
In addition, CompCare is able to guarantee these cost savings with a full performance bond to be issued by a nationally well-known and respected surety company. CompCare’s model to not only materially reduce its client’s pharmacy spend but to also guarantee those savings is unique in the healthcare industry.
In March of this year, Comprehensive Care signed its initial Pharmacy Savings Management Agreement with the Blasters, Drillers & Miners Union, Local No. 29 of the Laborers’ International Union of North America (LIUNA).
Based on a detailed analysis of Local 29’s previous year’s pharmacy spend, CompCare determined it could guarantee Local 29 meaningful savings for the coming year using CompCare’s Pharmacy Savings Program. Under the Pharmacy Savings Management Agreement, CompCare has guaranteed Local 29 a minimum of a 10% savings and backed up by a surety bond.
Tom Russo, Business Manager of Local 29, stated, “The CompCare pharmacy savings program is simple, easily understandable, transparent, and seamless. Our analysis completely supports CompCare’s claim to be able to save at least 10% off of Local 29’s last year’s pharmacy expenses. CompCare’s support of its guarantee with a full performance bond, as well as providing the services of a nationally respected pharmacy benefits manager (PBM), was compelling enough for me to recommend that Local 29 switch from its existing program to CompCare’s. Its innovative program brings measurable value to Local 29 and its members.”
The Company is in negotiations with various other union leaders and union locals. The reason why it’s actively pursuing unions, is because they can easily switch PBM’s. While most private companies have long term contracts, most unions only are subject to one month’s notice.
All the pieces of the puzzle seem to be falling into place at Comprehensive Care.
The Company’s Pharmacy Savings Program creates substantial savings for its clients, backed by a surety bond, while at the same time providing a seamless transition from the customer’s existing PBM to CompCare’s.
It signed an initial agreement with the Blasters, Drillers and Miners Union, Local 29, with plans to ‘go live’ within the next two months.
It’s in negotiations with a number of other parties and already retained the services of several senior sales executives. Moreover, Mr. Ramon Martinez, who was instrumental in securing CompCare’s ability to guarantee pharmacy cost savings backed by a surety bond, was named President of CompCare Pharmacy Solutions, Inc., a wholly-owned subsidiary dedicated to marketing CompCare’s pharmacy program. Mr. Martinez uses his background and experience to introduce the Company to key government officials on both state and local levels.
Not only Mr. Martinez, but CompCare’s entire management team is working tirelessly to make the Pharmacy Savings Program the Company’s most successful endeavor so far.
Finally, the Company mentioned that its Pharmacy Savings Program receives even better traction than expected, and because management indicated that it’s in negotiations with other union leaders and locals, it wouldn’t be a surprise if more contracts were to be announced in coming weeks.
Although the stock price has doubled in a few weeks time, we believe it’s still dirt cheap.
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