Interesting question for any long term shareholder given the massive decrease in the share price.
So I asked myself that question. Following is my reasoning for what it is worth: . In recent years, RHC has grown rapidly through both organic growth and acquisitions . This has been financed through taking on increasing debt . The positive side of this expansion is that revenues have increased massively over recent years . Unfortunately, costs have increased at an even higher rate . This has meant that margins have decreased substantially . And so have profits . Interest costs have increased from $390m to $630m over the past 3 years . This is one major reason for declining profits . If the Board are serious, they should be able to bring down debt by focusing on reducing capital spending and focus on repayments. Also, when interest rates decline, this will also help . Employee benefits and contract costs have blown out from $7258m in 2022 to $9649 in 2024 . There are all sorts of reasons for this some of which have been beyond Managements control . However, we should be at the tail end of greater than historically normal wages inflation so the rate of growth should decrease . Reimbursements from Health Funds have not kept up with costs over recent years but I believe that the balance between the two will be restored over the next couple of years and so that should help improve margins . RHC keeps talking about "Tailwinds" in the health care industry. These haven't yet benefited RHC as the Board and Senior Management have not been able to harness them. Hopefully with some of the Board and Management changes made, there will be a renewed focus - but this is a wait and see as I don't think the changes have gone far enough. . The RHC share price has been hammered. In my view, it is being set up for a takeover which will probably undervalue the true future potential of the company but that the Board will probably recommend . Finally, the share price has fallen so much that I continue to see more upside than downside from here. Although it would have been great to sell out before now, having held on for "grim death" I believe there is a higher chance that he share price will increase by 25% from here rather than decrease 25%.
Having said all that I have been wrong so far so DYOR
RHC Price at posting:
$34.58 Sentiment: Hold Disclosure: Held
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