GREENBRAE, Calif., Sept. 11, 2017
GREENBRAE, Calif., Sept. 11, 2017 /PRNewswire/ -- Over the last several years, Diversicare (DVCR) has meaningfully increased revenue growth and funds from operations without success in increasing shareholder value. Osmium believes the current situation has created a wide spread between public market prices and what the business would be worth when valued from many angles. In our letter to the board of directors, we highlight our suggested strategy to close this gap and dramatically increase shareholder value from current prices.
- Osmium believes that fair value for Diversicare (NASDAQ: DVCR) shares is $17-25 per share vs. $9.40 market price.
- Since 2012, Diversicare has increased revenue from $200 million to nearly $600 million in 2017 while EBITDA has increased by a factor of 4.5x.
- Over the last three years, Diversicare has achieved 20% annualized revenue growth with 33% annualized EBITDA growth yet Diversicare's total annualized shareholder return is -3% and Diversicare's common stock trades at approximately 6x EV/2017 FFO (funds from operations) and just 0.29x EV/sales.
- Osmium issues 6 points of why Diversicare should increase its dividend from $0.22 to $1.00 per share (an incremental cost of $5 million per year). With a total of nearly $4.00 a share in 2017 in funds from operations, the company would still have sufficient liquidity to execute the continued growth strategy.
- Diversicare is in an unusual situation with a mix of strong growth metrics combined with a low valuation. The lack of analyst coverage and aggressive reinvestment into the core business, combined with low trading volumes that discourage investment currently explain why Diversicare trades at a deep discount.
John H. Lewis
Managing Partner & CIO
Osmium Partners, LLC
View original content with multimedia:http://www.prnewswire.com/news-releases/osmium-partners-issues-letter-to-diversicare-board-urging-a-substantial-increase-in-dividends-300517187.html
SOURCE Osmium Partners, LLC