Post by
Kanatainvestor on Aug 02, 2023 9:29am
NBLY shoudn't trade under $20
Having listened to the CC and fully digested the earnings release. I feel that the management team is executing exactly as planned as they transition from growth at all costs, to profitable growth at a healthy pace. With around $900M in proforma revenues, there is a significant amount of EBITDA that can be extracted by running an optimized operation.
Many of the initiatives being put in place be it improved pricing, better working capital management, , partnership model, digital pharmacy, and higher store productivity, will gradually yield fruit against a favourable macro background in terms of expanded pharmacy scope of service and aging population.
With an estimated 8 new pharmacies added per quarter (National Bank) and 3% annual top line growth, combined with steady operational improvements, this company will continue to create and capture value at a predictable and growing pace.
With 80% of revenues tied to the pharmacy rather than discretionary front of the store, this business is as defensive as one can get and yet offers a tremendous opportunity for growth, both topline and bottom line.
At an acquisition rate of 24 pharmacies per year and 3% growth rate, this company will be adding $15M-$16M in additional high quality EBITDA per year. At 11 EBITDA multiple, this translates into $170M in additional EV per year, or $92M in additional shareholder value (excluding the acquisition debt). Said another way, this is a steady value creation and capture machine.
Anything under $20 is a gift in my opinion.