Earlier this week, CareRx Corp (TSX: CRRX) closed their C$21.2 million bought deal. Notably, $6.25 million of the proceeds were purchased by Yorkville Asset Management on behalf of existing significant shareholders. Canaccord has since raised their 12-month price target to C$6.50 from C$6 and reiterated their buy rating on the back of the raise.
Tania Gonsalves, Canaccord’s analyst, estimates that with the raise, the company has roughly C$39 million on its balance sheet. She writes, “We believe the current balance sheet is sufficient to fund the SmartMeds Pharmacy Inc. acquisition (pending completion), repay the Yorkville facility next year, and service debt and cash burn until CRRX turns self-funding (expected this year).”
She has also has updated their forecasts to now include the SmartMeds acquisition. SmartMeds is a pharmacy serving over 2,000 people who reside in long-term care, assisted living in Ontario. The purchase price is segmented into three components: $4.0M of upfront cash, ~$0.5M worth of CRRX stock, and an earn-out of up to ~$2.9M in cash payable two years after closing and based on certain milestones.
She says that the company is expected to add $13 million in revenue and $1.5 million in EBITDA following the close of the transaction. This has increased their EBITDA estimate from C$21.1 million to C$23.3 million.
Information for this briefing was found via Sedar and Refinitiv. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.