hummms - yes don't think August will change things in terms of market perception so can't see too many buyers recognising the underlying value of still a pretty sound business that is largely marking time. Just thought I might add some thoughts to this conversation.
On the pharmacy side of the business it is probably the emergence of discount chains and other corporate models has meant groups have been able to pressure Corum on their fee structure. For example when there were more independents they individually paid full price. Many independents have in recent years joined alliances to compete with the larger discounters. Groups like Chemist Warehouse have been able to negotiate multi-site licences at a much reduced fee (i.e. screwed Corum). So every independent that joins a group or is bought by a group out has cost Corum income. The landscape has changed significantly.
Corum may have lost a few clients also but I think this is not the major effect on income, it is what I have stated above. Their market share is still around 40% of the 5,000 odd pharmacies in Australia. Most of the providers including the major competitor FRED also have failed to invest in system technology upgrades in recent times so all would have attracted some client dissatisfaction. A lot of the issues that arise at the pharmacy level are not Corum's fault alone. Many pharmacies have failed to invest in upgrading computer systems & software, staff training and business management and accounting conectivity. As the software has added more bells and whistles over the years to accommodate quality assurance systems, electronic prescriptions, drug interaction databases, quality use of medicines, electronic ordering & invoicing, electronic PBS claiming, Dose administration aids etc etc (many of the new services have been funded by government at the expense of PBS fees and margins for pharmacy).
Corum's client base is still its best asset but it is probably static at best so it has to introduce new innovative products to grow income streams from current clients and this seems to be the stumbling block at present. It is very difficult to see how the dispensary side of technology can be improved further in the foreseeable future so it is probably developments in the business management and retailing areas that will present the most promise.
If Corum wants Corum to grow its client base in pharmacy the best means is acquiring another software provider (simple as that). If Corum is struggling so are they for the same market forces, so perhaps an opportunity will arise soon. There are still good margins to be made.
In the payment services area they need to get cracking and find new niche clients. I don't think it is unrealistic to assume that if they had been on their game years ago they could have entered the mass market that PayPal, BPay etc now dominate (of course they would have been bought out). But they perhaps have missed many opportunities along the way. The Pharmacy Guild ran a very profitable manual monthly accounts payments service for years (The Guild Clearing House). We manually filled out a suppliers list form and sent it with a cheque to the Guild. Each month the Guild held mega millions which was invested in short term money markets before supplies were actually paid. Perhaps a lost opportunity for Corum as Lots had already captured the majority of supplier invoices electronically, so back office reconciling and linking to bill payments through Corum would have been a lot simpler than the manual system. It was a captive audience - perhaps there is still an opportunity as it of course links both Corum's pharmacy and payments services.
The tech savvy GenX & GenY and some of us enlightened oldies are all now using electronic payment services to pay fees, pay accounts, make online purchases. Surely this is still potentially a growth area for Corum. As recently as this year a large school stopped taking individual term payments from parents and now they have to pay through a USA based provider. Where was Corum?
I am sure the Corum "think tank" is hard at work. Not so the $12m in the cash bucket. Maybe they need to look outside the square.
Has the Nadir been reached though? That is want investors would like to know.
COO Price at posting:
8.5¢ Sentiment: Buy Disclosure: Held
