Comprehensive Care Further Reduces Costs to Remain Profitable
Comprehensive Care's general and administrative expenses decreased to $11.3 million in 2011 from $11.9 million in 2010. For 2012, CompCare aims to reduce G&A costs by 12%, which would amount to savings of $1.35 million.
Although it wasn’t specifically mentioned in the press release, this may involve a reduction in personnel. It would be a logical step as CompCare’s management has continuously invested in the Company’s IT infrastructure since 2009. As such, the Company has been able to automate many processes at a much lower cost.
Also salaries and benefits, and other items like travel expenses, are being closely monitored and cut back where possible.
First Quarter Trend
In the first quarter, ended March 31, 2012, CompCare’s bottom line already was positive thanks, in part, to the cost containment program. Starting the process in the first quarter of this year, the Company thus far has reduced its monthly general and administrative expenses by approximately 12 percent. Assuming this trend continues, G&A costs will be reduced by as much as $1.35 million this year.
Moreover, it’s great to know that no taxes are due on any profits in the foreseeable future because of the Company’s net operating loss carryforward of approximately $34 million.
Managed Behavioral Healthcare
CompCare also announced that next to its Pharmacy Management Program, which it recently launched in cooperation with the largest retailer in the US, that its pipeline for behavioral health business also remains strong.
During the last few months, the Company renewed several contracts and signed new ones. For example, it signed a new agreement 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. 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.
Conclusion
Steady revenues, combined with reduced expenses, should lead to profits in 2012 for Comprehensive Care. Adding to that the significant potential of the unique Pharmacy Management Program, it’s clear this Company is undervalued at current prices.
| Smallcaps.us Advice: Buy | Price Target: $0.40 | Latest Company Report (pdf) |
| For important disclosures, please read our disclaimer. |