Summary
- Since I published my bearish piece on Tabula Rasa, the shares are down ~47%. The company has since published two sets of financial statements, so it's worth another look.
- Although some of the troublesome trends are still in place, there are some bright spots among the most recent sets of financial statements.
- In addition, I must admit that the company has tremendous potential. There must be a reason why so many sell side analysts like the name.
Since the publication of my bearish piece on Tabula Rasa HealthCare Inc., (TRHC) the shares are down about 47%. While this is obviously gratifying, the fact is that risk increases as the market moves “in your favor.” Since I last published on this name, the company has submitted a few more financial statements, so I thought I’d check in on the stock. The fact is that the risk rises for every dollar decline, and at some point this business, no matter how flawed, will trade for a price that represents good value. For those who can’t stand the suspense, I’ll come right to the point: I’m moving from outright bearish on this name to neutral. I’ll outline the reasons for my change of heart somewhat more fully below.
In sum, there are some financial bright spots, the company is growing quickly and the TAM is large, the sell side community likes the name, and given that the industry is consolidating, Tabula Rasa may itself be an acquisition target.
