A week ago, shares of Centric Health Corp. (TSX:CHH) were getting clubbed after saying that proposed regulatory changes in Canada could have an unquantifiable adverse impact on the healthcare services company's business.
Aside from a pause here and there, the bloodletting was severe, sending shares from around 48 cents to a low of 25 cents. On Wednesday, things are looking a little brighter in morning trading, with Centric Health one of the better performing stocks on the TSX after releasing results from the first quarter.
Jack Shevel, chairman of the Toronto-based company, said that the company underperformed expectations as it "completed the transition of beds under a large national contract with an interim management structure, and began to execute on the business re-engineering plan." Shevel added that he was confident the company could overcome headwinds from changes in regulations and mitigate the impact through efficiencies.
During the quarter ended March 31, 2018, Centric Health posted revenue from continuing operations of $44.5 million, up 2% from the year prior quarter. Higher volumes of surgical procedure and healthcare services, along with the outbreak of influenza, were cited for the improved sales.
Adjusted earnings before interest, taxes, depreciation and amortization, better known as EBITDA, sunk 14% to $3.8 million from $4.5 million in Q1 2017. Amongst other things, ODB fee reductions and inventory adjustments related to reductions in generic drug pricing were blamed for the decline.
The company underwent some positive fundamental changes during the quarter, including work revamping its Specialty Pharmacy business, investing $500,000 in AceAge for the production of the first batch of its home-based automated drug delivery appliance called "Karie" and positioning itself to enter the medical cannabis distribution business.
To help run the company more efficiently, the board brought in David Murphy as CEO and president last month.
Centric may have come up short of its own forecast for the quarter, but Bay Street doesn't seem to mind following the share price collapse. Shares of CHH are trading ahead 11.76% at 28.5 cents just after the noon hour in Toronto.
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