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CNVY

Convey Health Solutions Holdings NYSE:CNVY Stock Report

Last Price

US$10.50

Market Cap

US$768.8m

7D

-0.2%

1Y

18.5%

Updated

18 Aug, 2022

Data

Company Financials +
CNVY fundamental analysis
Snowflake Score
Valuation5/6
Future Growth4/6
Past Performance0/6
Financial Health3/6
Dividends0/6

CNVY Stock Overview

Convey Health Solutions Holdings, Inc. provides technology enabled solutions and advisory services to assist its clients with workflows across product developments, sales, member experience, clinical management, core operations, and business intelligence and analytics.

Convey Health Solutions Holdings, Inc. Competitors

Price History & Performance

Summary of all time highs, changes and price drops for Convey Health Solutions Holdings
Historical stock prices
Current Share PriceUS$10.50
52 Week HighUS$10.61
52 Week LowUS$3.75
Beta0
1 Month Change0.48%
3 Month Change112.12%
1 Year Change18.51%
3 Year Changen/a
5 Year Changen/a
Change since IPO-19.23%

Recent News & Updates

Jul 13

Convey Health: An Almost Certain Deal Close

Convey Health will be taken private by its majority owner, TPG Capital. Given its intact long-term prospects and the extensive TPG-Convey relationship, a deal close seems highly likely. The stock still trades modestly below the bid price, presenting investors a low-risk merger arb opportunity. Convey Health Solutions (CNVY) recently announced entering into a definitive agreement with PE firm TPG Capital, the 75% owner of CNVY, in an all-cash deal for all outstanding shares. Given the history between both entities (TPG is still the majority owner and last took CNVY to market in 2021), I see limited risk to the transaction closing. Plus, TPG's offer entails a massive >140% premium to the pre-announcement price and comes at a time when the stock price has underwhelmed amid rising interest rates. That said, CNVY has executed well in recent quarters despite labor and supply chain headwinds, and given the purchase price still assumes a reasonable ~12x fwd EV/EBITDA multiple including the offer premium, I am not surprised that TPG sees value in the stock. While the stock is already at $10.41, the high certainty of a deal close and the free optionality from a potential competing bid down the line means this is still a "merger arbitrage" opportunity worth considering. TPG-Convey Health in Boomerang Take-Private Deal Following its post-IPO stock price underperformance, TPG Capital, CNVY's majority shareholder, will be taking the company private and acquiring all outstanding shares in an all-cash deal. Per the disclosed deal terms, existing CNVY shareholders will receive $10.50/share in cash, implying an enterprise value of ~$1.1bn or ~ 2x fwd revenues and 12x fwd EV/EBITDA. In turn, the offer price equates to a hefty premium of >140% to Convey's pre-announcement closing price and an ~100% premium to the 30-day volume-weighted average price (VWAP). Of note, the offer comes a year after TPG first took Convey public for an EV of ~$1.5bn through an IPO in June 2021 at a price of $14/share. At the time of IPO, CNVY stock commanded an ~15x EV/ EBITDA - a steep premium to its ~7x EV/EBITDA multiple pre-announcement and the ~12x fwd EV/EBITDA implied by the offer price. Data by YCharts As disclosed in the 8-K filing released with the deal announcement, the acquisition will be subject to a breakup fee if either party terminates the transaction. Alternatively, either party reserves the right to terminate the transaction by December 20, 2022, if the deal does not close. While management did not hold a conference call or provide further color on the deal, the press release did note the potential transaction benefit of reinvesting in the business and better servicing customers as a private company without quarterly reporting obligations. Going private will not be new for CNVY - the company has long been fully controlled by its financial sponsor TPG, which continued to hold ~75% of the common stock post-IPO. Given its status as a majority shareholder, TPG's approval is all that is required for the transaction (i.e., no other shareholder approval is required). Barring any regulatory hurdles, the deal should close as expected in the back half of this year. Take-Private Rationale Makes Sense Amid Recent Underperformance CNVY's growing cash position, as well as its underwhelming stock performance since its IPO, makes TPG's decision to take the company private quite sensible, in my view. Plus, the offer price still comes at a ~25% discount to the ~$14 IPO price, so TPG should have no issues funding the deal. Operationally, CNVY hasn't done much wrong - the company's execution against its operational and financial targets has been solid, consistently outpacing consensus revenue and EBITDA estimates in the four quarters post-IPO. To be fair, there have been some minor headwinds, including related integration and transaction expenses from the HealthSmart transaction. Like its peers, CNVY has also suffered from wage and supply chain pressures in recent quarters. Still, management's full-year revenue and EBITDA guidance remain intact, as the headwinds look to be manageable and no external funding will be required. JP Research In addition to compressing asset valuations in recent months (mainly due to the rate hikes), a major contributor to the underperformance may well be investor (mis-)perception of the company. In contrast with pure-play SaaS companies, CNVY is "tech-enabled" and thus, depends on labor to realize the value proposition of its tech offerings, resulting in lower margins. Another key headwind has been Medicare Advantage (a key focus area for CNVY), as reports of clients experiencing elevated COVID-related costs and softer enrolment trends during the most recent annual enrolment period have weighed on investor sentiment. Yet, the secular growth trend remains intact as its expanding recurring revenue base, and potential margin benefits (mainly labor and inventory) from HealthSmart kick in.

Shareholder Returns

CNVYUS Healthcare ServicesUS Market
7D-0.2%-3.9%1.4%
1Y18.5%-44.1%-8.4%

Return vs Industry: CNVY exceeded the US Healthcare Services industry which returned -44.7% over the past year.

Return vs Market: CNVY exceeded the US Market which returned -9% over the past year.

Price Volatility

Is CNVY's price volatile compared to industry and market?
CNVY volatility
CNVY Average Weekly Movement40.6%
Healthcare Services Industry Average Movement12.1%
Market Average Movement7.6%
10% most volatile stocks in US Market17.1%
10% least volatile stocks in US Market3.1%

Stable Share Price: CNVY is more volatile than 90% of US stocks over the past 3 months, typically moving +/- 41% a week.

Volatility Over Time: CNVY's weekly volatility has increased from 21% to 41% over the past year.

About the Company

FoundedEmployeesCEOWebsite
20013,105Steve Farrellhttps://www.conveyhealthsolutions.com

Convey Health Solutions Holdings, Inc. provides technology enabled solutions and advisory services to assist its clients with workflows across product developments, sales, member experience, clinical management, core operations, and business intelligence and analytics. It operates through two segments, Technology Enabled Solutions and Advisory Services. The Technology Enabled Solutions segment offers technology solutions through web-based customizable application that is used to identify, track, and administer contractual services, or benefits provided under a client’s plan to its Medicare and Medicaid beneficiaries.

Convey Health Solutions Holdings, Inc. Fundamentals Summary

How do Convey Health Solutions Holdings's earnings and revenue compare to its market cap?
CNVY fundamental statistics
Market CapUS$768.83m
Earnings (TTM)-US$6.94m
Revenue (TTM)US$366.21m

2.1x

P/S Ratio

-110.7x

P/E Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
CNVY income statement (TTM)
RevenueUS$366.21m
Cost of RevenueUS$218.98m
Gross ProfitUS$147.23m
Other ExpensesUS$154.18m
Earnings-US$6.94m

Last Reported Earnings

Jun 30, 2022

Next Earnings Date

n/a

Earnings per share (EPS)-0.095
Gross Margin40.20%
Net Profit Margin-1.90%
Debt/Equity Ratio50.0%

How did CNVY perform over the long term?

See historical performance and comparison