Seeking Alpha • Sep 15
Benefitfocus: How The Mighty Have Fallen
Summary
Today, we put Benefitfocus, Inc. in the spotlight for the first time in four years.
The stock took a huge hit starting in early 2019 into the start of the pandemic and has never recovered since.
Are the shares now oversold? An investment analysis follows in the paragraphs below.
"The most critical time in any battle is not when I'm fatigued, it's when I no longer care." - Craig D. Lounsbrough
I got an inquiry on Benefitfocus, Inc. (BNFT) this week from a Seeking Alpha follower. The last piece I put on this cloud-based benefits management provider in the summer of 2018. We took profits in this name within the model portfolio of the Busted IPO Forum a few quarters later. This turned out to be fortuitous timing, as the stock and company have fallen on very hard times since. I have not really looked at it since. Is this equity now oversold? An analysis follows below.
Seeking Alpha
Company Overview:
Benefitfocus, Inc. is headquartered in Charleston, SC. The company provides cloud-based benefits management technology solutions for employers and health plans throughout the United States. The stock currently trades just south of $7.00 a share for an approximate market cap of $240 million.
August Company Presentation
Second Quarter Results:
On August 3rd, the company posted second quarter numbers. Benefitfocus had a GAAP quarterly net loss of 40 cents a share, more than a dime below the consensus. Revenues fell seven percent on a year-over-year basis to $56.6 million, roughly in line with expectations.
August Company Presentation
Here is the breakdown of the core revenue flows during the quarter.
Subscription revenue was $42.0 million, down 5% compared to the second quarter of 2021.
Platform revenue was $6.6 million, up 12% compared to the second quarter of 2021.
Professional services revenue was $8.0 million, down 25% compared to the second quarter of 2021.
Management also provided the following forward guidance.
August Company Overview
Analyst Commentary & Balance Sheet:
The company gets little attention from Wall Street. JPMorgan assumed coverage with a Neutral rating on BNFT late in May, with an $11 price target. Piper Sandler maintained its Hold rating on September 6th and cut its price target from $9 to $6 a share. The analyst at Sandler said her price target cut:
Reflects the company's Q2 results and guidance while also noting its lack of revenue growth, margin erosion and heavily Q4-weighted guidance. Benefitfocus also offers few actual data points to back up its assertion that FY23 growth will accelerate."
Those are the only two analyst firm ratings I can find on the stock so far in 2022.
Just over three percent of the outstanding float in the stock is currently held short. A beneficial owner purchased just over $5 million of shares in the stock in March of this year. Since then, the CFO has disposed of nearly $600,000 worth of his holdings in BNFT.