The concerns about Vitura's current situation pointed out by @JPPicard are valid. However, I thought i might add some counter thoughts. Obviously I have the contrarian view to the market judging by the SP performance of late!
It's essential to consider that FY23 was a year focussed on investment for the future of the company. While stagnation in volume growth is not great, Vitura has significantly invested in both infrastructure and technology, notably with the launch of a new distribution facility in Melbourne and the introduction of the CanView 2.0 app.
The company has also made several strategic business decisions, such as the closure of physical CDA clinics, closure of its Asian business and the rebranding from Cronos to Vitura. These moves are part of the larger strategy to streamline operations and focus on more profitable areas. Furthermore, the establishment of a 50:50 joint venture to become a leading supplier of psychedelic medicines in Australia positions Vitura in an emerging market, diversifying its product portfolio, and in line with highly regulated pharmaceutical distribution business core.
The company has pointed out that their initial focus onboarding pharmacies, now at 4000+ is established. As part of their growth strategy, they are now switching to prescribers and patients. The acquisition of Doctors on Demand, while initially seeming misaligned with Vitura's core business, it does bring over 120 additional doctors/prescribers to the Canview platform, potentially boosting prescription volumes, benefiting the core distribution business. I don’t believe this move is about becoming a telehealth business, but rather about enhancing the prescriber base and distribution volume.
Despite the potential red flags, the acquisition of Doctors on Demand could strategically save on future marketing and sales efforts, instantly adding to prescriber numbers and consultation volumes, which could have taken a long time to acquire organically.
After a year focused on investment and restructuring, I want the management to return its focus to growth. The market currently values the company, at a PE of 11. Any indication that growth has returned may see the multiple expand again. Holding onto the stock could be prudent for those not needing immediate capital, given the uncertainties around the best time to re-enter the market.
While I acknowledge the uncertainty and potential for flat growth or margin compression in the short term, I will be maintaining a position in Vitura for now. This reflects a watchful optimism, balancing the need for caution with the recognition of Vitura's strategic initiatives and their possible long-term benefits is tricky for me. Luckily the severe fall in share price means that Vitura is now one of my smaller positions… hah