Osmium Partners Issues Letter to Diversicare Board Urging a Substantial Increase in Dividends
September 11 2017 - 12:48PM
PR Newswire (US)
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.
Contact:
John H. Lewis
Managing Partner & CIO
Osmium Partners, LLC
jl@osmiumpartners.com
415.747.8698
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SOURCE Osmium Partners, LLC
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