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Analyst Encouraged by ON Gov's Decision To Sustain Fees
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CareRx Corp. will continue to receive funding for professional fees at the same levels as before for at least one more year, according to a Leede Jones Gable research note.

Leede Jones Gable analyst Dr. Dougals Loe reported in an April 1 research note that CareRx Corp. (CHHHF:OTCMKTS;CRRX:TSE), a company that provides pharmaceutical services to long-term care facilities in Ontario, will continue to receive funding for professional fees at the same levels as before for at least one more year.

Loe stated that this news might seem unimportant without additional context, but it actually will help to stabilize the company's operations in Ontario's long-term care pharmacy sector. There were concerns that the professional fee funding might be reduced in the near future, but this announcement puts those concerns to rest for now.

In the report, Loe noted that the Ontario government's decision to delay and potentially disregard the proposed cuts to professional fees is good news for investment in CareRx. The original plan, as outlined in the Ontario Government's Drug Benefit Act, was to reduce the professional fees from CA$1,500 per bed served annually to CA$1,400 after one year, then to CA$1,300, and eventually settle at $1,200 per bed annually in the third year after implementation.

If the original fee reduction plan had been implemented according to the initial timeline, Loe commented that it would have been fully in place by now. However, due to factors related to disease outbreaks that negatively affected eldercare services in the province, the plan was delayed.

"Had the schedule been enacted as proposed, the degree of which could have driven the LTC Rx industry specifically into negative EBITDA territory," Loe wrote. 

With this, Loe reported no change in his F2024/2025 forecast as "we already assumed that the ON government would reflect rationally on its intention to reduce LTC Rx funding."

The Ontario government's actions last year regarding funding for nursing care suggested to Loe that they might take a similar approach to long-term care pharmacy (LTC Rx) services. 

He commented, "We were encouraged, for example, to see the ON Ministry of Health confer funding increases to the province’s nursing care industry last year."

With this, Loe gave CareRx a Buy rating and a CA$4.25 target price, showing a potential return of 107%

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  2. This article does not constitute medical advice. Officers, employees and contributors to Streetwise Reports are not licensed medical professionals. Readers should always contact their healthcare professionals for medical advice.

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Disclosures for Leede Jones Gable, CareRx Corp., April 1, 2024

Important Information and Legal Disclaimers Leede Jones Gable Inc. (LJG) is a member of the Investment Industry Regulatory Organization of Canada (IIROC) and the Canadian Investor Protection Fund (CIPF). This document is not an offer to buy or sell or a solicitation of an offer to buy or sell any security or instrument or to participate in any particular investing strategy. Data from various sources were used in the preparation of these documents; the information is believed but in no way warranted to be reliable, accurate and appropriate. All information is as of the date of publication and is subject to change without notice. Any opinions or recommendations expressed herein do not necessarily reflect those of LJG. LJG cannot accept any trading instructions via e-mail as the timely receipt of e-mail messages, or their integrity over the Internet, cannot be guaranteed. Dividend yields change as stock prices change, and companies may change or cancel dividend payments in the future. All securities involve varying amounts of risk, and their values will fluctuate, and the fluctuation of foreign currency exchange rates will also impact your investment returns if measured in Canadian Dollars. Past performance does not guarantee future returns, investments may increase or decrease in value and you may lose money. LJG employees may buy and sell shares of the companies that are recommended for their own accounts and for the accounts of other clients. LJG employees may buy and sell shares of the companies that are recommended for their own accounts and for the accounts of other clients. Disclosure codes are used in accordance with Policy 3400 of IIROC.

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Canadian Disclosures This research has been approved by Leede Jones Gable Inc. (LJG), which accepts sole responsibility for this research and its dissemination in Canada. LJG is registered and regulated by the Investment Industry Regulatory Organization of Canada (IIROC) and is a Member of the Canadian Investor Protection Fund (CIPF). Canadian clients wishing to effect transactions in any designated investment discussed should do so through a LJG Registered Representative.

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