Target Raised on CA Pharma Co. as EBITDA Margins Sustain Upward Trajectory
Research Report

1.  This article does not constitute investment advice and is not a solicitation for any investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Each reader is encouraged to consult with his or her personal financial adviser and perform their own comprehensive investment research. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company. 
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.

For additional disclosures, please click here.

Disclosures for Leede Financial Inc., CareRX Corp., March 6, 2026

Disclosures None

Important Information and Legal Disclaimers Leede Financial Inc. (Leede) is a member of the Canadian Investment Regulatory Organization (CIRO) and a member of 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 Leede. Leede 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. Leede 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 3600 of CIRO. Description of Disclosure Codes 1. Leede and its affiliates collectively beneficially own 1% or more of any class of equity securities of the company as of the end of the preceding month or the month prior to the preceding month if the report was issued prior to the 10th. 2. The analyst or any associate of the analyst responsible for the report or public comment hold shares or is short any of the company's securities directly or through derivatives. 3. Leede or a director or officer of Leede or any analyst provided services to the company for remuneration other than normal investment advisory or trade execution services within the preceding 12 months. 4. Leede provided investment banking services for the company during the 12 months preceding the publication of the research report. 5. Leede expects to receive or intends to seek compensation for investment banking services in the next three months. 6. The analyst preparing the report received compensation based upon Leede investment banking revenues for this issuer within the preceding 12 months. 7. The director, officer, employee, or research analyst is an officer, director or employee of the company, or serves in an advisory capacity to the company. 8. Leede acts as a market maker of the company. 9. The analyst has conducted a site visit and has viewed a major facility or operation of the issuer. 10. The company has paid for all, or a material portion, of the travel costs associated with the site visit by the analyst. Dissemination All final research reports are disseminated to existing and potential institutional clients of Leede Financial Inc. (Leede) in electronic form to intended recipients thorough e-mail and third-party aggregators. Research reports are posted to the Leede website and are accessible to customers who are entitled to the firm’s research. Reproduction of this report in whole or in part without permission is prohibited. Research Analyst Certification The Research Analyst(s) who prepare this report certify that their respective report accurately reflects his/her personal opinion and that no part of his/her compensation was, is, or will be directly or indirectly related to the specific recommendations or views as to the securities or companies. Leede Financial Inc. (Leede) compensates its research analysts from a variety of sources and research analysts may or may not receive compensation based upon Leede investment banking revenue. Canadian Disclosures This research has been approved by Leede Financial Inc. (Leede), which accepts sole responsibility for this research and its dissemination in Canada. Leede is registered and regulated by the Canadian Investment Regulatory Organization (CIRO) 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 Leede Registered Representative. U.S. Disclosures This research report was prepared by Leede Financial Inc. (Leede). Leede is registered and regulated by the Canadian Investment Regulatory Organization (CIRO) and is a member of the Canadian Investor Protection Fund (CIPF). This report does not constitute an offer to sell or the solicitation of an offer to buy any of the securities discussed herein. Leede is not registered as a broker-dealer in the United States and is not subject to U.S. rules regarding the preparation of research reports and the independence of research analysts. Any resulting transactions should be effected through a U.S. broker-dealer.

On March 6, 2026, Douglas W. Loe, PhD, MBA, Managing Director and Analyst at Leede Financial Inc., maintained a Buy rating on CareRX Corp. (CRRX:TSX; CHHHF:OTCMKTS) and raised the price target to CA$5.25 from CA$4.75. The target increase reflects a shift in the valuation reference year to F2027, applying a 10x EV-to-EBITDA multiple to the analyst's F2027 EBITDA forecast of CA$35.6M while incorporating FQ425 balance sheet data, including cash of CA$14.1M and total debt of CA$41.1M. At the current share price of CA$3.82, the revised target corresponds to a total one-year return of 39.5% including projected dividend yield.

The Ontario-based long-term care pharmacy services provider reported FQ425 (September-end quarter) revenue of CA$96.1M, adjusted EBITDA of CA$8.8M, and an EBITDA margin of 9.2%. These figures represent sequential improvement from FQ325 results of CA$93.2M/CA$8.3M/9.0% and year-over-year gains compared to FQ424 results of CA$92.2M/CA$7.6M/8.2%. The analyst notes that while incremental sequential improvements in EBITDA and margin may appear modest in absolute terms, the upward trajectory has been sustained on both metrics since trough levels were reported in FQ123.

Revenue growth in the quarter was driven proportionally by increased beds served, with average beds rising to 92,250 from 91,298 in FQ325 and 87,658 in FQ424. Annualized revenue per bed was CA$4,166, consistent with the approximately CA$4,000 level that has persisted since the Medical Pharmacies acquisition in FQ321. The company continues to operate twenty-five fulfillment centers primarily in Ontario, Alberta, and British Columbia, with one center each in Saskatchewan and New Brunswick.

Debt-based financial ratios continued to improve, with the FQ425 debt-to-EBITDA run-rate ratio at 1.2x and the adjusted EBITDA-to-interest coverage ratio at 5.9x, both well within safe territory. The analyst highlights that financial risk has not been material to overall business risk since FQ323, following years of debt reduction from CA$103.8M in FQ323 to CA$67.1M in FQ423 and CA$41.1M in the current quarter.

Operating cash flow also demonstrated an upward trajectory, with FQ425 pure operating cash flow of CA$8.6M (CA$0.14/share) compared to CA$7.9M in FQ325 and CA$7.3M in FQ424. Quarter-end cash declined by CA$1.5M sequentially, driven by CA$2.5M in debt reduction, CA$0.8M in share repurchases, and CA$1.3M in dividends paid. The quarterly dividend of CA$0.02/share represented approximately 13% of consolidated FQ425 operating cash flow.

On the regulatory front, the analyst was encouraged that CareRx's FQ425 MD&A indicates the Ontario Ministry of Health no longer appears committed to implementing a previously proposed reduction in professional fees from CA$1,500 to CA$1,200 per bed annually, a policy that had been postponed annually since 2020 during the pandemic. The analyst's model assumes the current per-bed capitation fee structure of approximately CA$4,000 annually will be sustained across all provinces where CareRx operates through the F2026-to-F2028 forecast period.

CareRx's main competitors include Loblaw's (L-TSX) Shoppers Drug Mart-Medisystem in Ontario and Sobey's National Pharmacy Group, part of Empire Company (EMP.A-TSX), in Atlantic Canada. The firm's primary US peer is Guardian Pharmacy Services (GRDN-NYSE), which has projected F2026 revenue of US$1.4B to US$1.42B and EBITDA of US$115M to US$118M.

The analyst's F2026 and F2027 revenue estimates are CA$389.5M and CA$397.9M, respectively, with adjusted EBITDA forecast at CA$34.4M and CA$35.6M. CRRX shares have appreciated 51% over the trailing twelve-month period and 143% over the trailing twenty-four-month period. The analyst sees no barriers to ongoing organic growth in beds served without excessive fixed costs or new growth capex, and the forecast period does not assume any acquisitive growth.