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Why This Analyst Thinks Tabula Rasa's Divestiture Plans 'An Important Step'

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  • RBC Capital Markets believe that the market has been assigning little-to-no value to Tabula Rasa HealthCare Inc's (NASDAQ: TRHC) MedWise, which has been burning cash and clouding, a strong core PACE business.

  • The analyst lowered the price target to $6 from $8, with an Outperform rating.

  • Offloading MedWise should provide enough liquidity to fund operations, which RBC expects to happen sooner than anticipated.

  • The management sounded confident the transaction(s) would close within the next quarter or two, which is believed to lift a sizable overhang on the stock once complete.

  • The analysts also said that the softer 2022 growth outlook for CareVention will likely keep some buyers on the sidelines in the near term.

  • Proceeds should give the company some flexibility, but it will still need to prove it can generate cash. TRHC paid over $200 million for PrescribeWellness, SinfoniaRx, and DoseMe, contributing ~$80 million of revenue in 2021.

  • Proceeds from the sale(s) should help the company pay down the $57 million balance on its revolver and fund operations for the balance of the year.

  • Price Action: TRHC shares are down 8.29% at $3.76 during the market session on the last check Monday.

Latest Ratings for TRHC

Mar 2022

Benchmark

Maintains

Buy

Feb 2022

SVB Leerink

Maintains

Market Perform

Feb 2022

Baird

Downgrades

Outperform

Neutral

View More Analyst Ratings for TRHC

View the Latest Analyst Ratings

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