RE:Will These 3 Stocks Survive the Rest of 2016? Concordia
Oh, how the mighty have fallen. A year ago, shares of Concordia International Corp. (TSX:CXR)(NASDAQ:CXRX) were flying high, trading around $100 each on the TSX. A year later they’re $12 each, representing a decline of nearly 90%.
Two things hit Concordia. The first was Valeant’s fall from grace, which suddenly exposed some of the weaknesses of the business model to the world, causing investors to rapidly hit the sell button and ask questions later.
The bigger issue continues to be Concordia’s debt. It owes more than US$3.2 billion to creditors after its big acquisition of AMCo back in 2015 with interest rates as high as 9.5%. That’s a lot to pay in today’s world.
Management isn’t exactly bullish on the future either. The company cut its EBITDA guidance for 2016 from US$625 million to US$525 million due to a move in the British pound after the Brexit and increased competition in some key markets. If cash flows continue to erode, bankruptcy could be next.