Insider Weekends: Healthcare Companies and SPAC Combinations Dominate

This Labor Day weekend yielded a crop of very interesting companies that have gone public recently through the traditional IPO process or by merging with SPACs. Almost all of them have been hit hard in recent weeks despite very high revenue growth rates. Investor appetite for post-SPAC merger companies and new IPOs that report losses appears to be tepid. These insiders appear to think differently and there are some prominent ones among them including David Wells who served as the CFO of Netflix for 8 years and Ronald Burkle, the co-founder of the private investment firm The Yucaipa Companies.

Welcome to edition 583 of Insider Weekends. Insider buying decreased last week with insiders purchasing $74.99 million of stock purchased compared to $93.99 million in the week prior. Selling also decreased to $3.29 billion compared to $3.32 billion in the week prior.

Sell/Buy Ratio: The insider Sell/Buy ratio is calculated by dividing the total insider sales in a given week by total insider purchases that week. The adjusted ratio for last week went up to 43.85 In other words, insiders sold almost 44 times as much stock as they purchased. The Sell/Buy ratio this week was unfavorable compared to the prior week when the ratio stood at 35.37.

Note: As mentioned in the first post in this series, certain industries have their preferred metrics such as same store sales for retailers, funds from operations (FFO) for REITs, and revenue per available room (RevPAR) for hotels that provide a better basis for comparison than simple valuation metrics. However, metrics like Price/Earnings, Price/Sales and Enterprise Value/EBITDA included below should provide a good starting point for analyzing the majority of stocks.

Notable Insider Buys:

1. Cano Health, Inc. (CANO): $13.49

Shares of this primary care medical services provider were acquired by 2 insiders:

  • CEO and President Marlow Hernandez acquired 1,327,659 shares, paying $10.88 per share for a total amount of $14.45 million. Mr. Hernandez increased his stake by 701.34% to 1,516,962 shares with this purchase. 67,327 of these shares were purchased indirectly through a trust.
  • Chief Clinical Officer Richard Aguilar acquired 125,155 shares, paying $11.96 per share for a total amount of $1.49 million.

Cano Health went public by merging with the SPAC JAWS Acquisition in July of this year. This Miami, Florida based healthcare firm with 108 medical centers focuses on primary care for seniors and operates in 5 states including Florida, Illinois, Nevada, New Mexico and Texas. The company grew revenue by 130% to $393.4 million in Q2 2021 and “adjusted” EBITDA of $25 million, a 53% increase year-over-year. Net income was $4.9 million in Q2 2021 compared to a loss of $11 million in Q2 2020. Cano Health has been growing organically by opening new clinics and acquiring companies.

The company recently bumped up its guidance for members, revenue and EBITDA for full year 2021 and 2022. The increased guidance was based on organic growth without taking into account any recent or future acquisitions. The company now expects revenue of $1.6 billion for 2021 and between $2.5 and $2.6 billion for 2022.

The stock has rebounded off its lows in mid-August and insiders have been buying actively in the second half of August. An area of concern that came up with researching the company this weekend was their low rating on Yelp from patients and on Indeed from employees. Explosive growth can be difficult to manage and can translate to a less than optimum experience for patients and employees. Growing pains are not unusual and it would be good to see if the company can address these concerns and focus on quality as it continues to grow.

Cano Health Growth

Cano Health Growth (source: Q2 2021 Investor Presentation)

You can view the list of recent insider transactions for Cano Health, Inc. here.

P/E: N/A Forward P/E: -337.25 Industry P/E: N/A
P/S: 3.62 Price/Book: 6.52 EV/EBITDA: 58.91
Market Cap: $2.34B Avg. Daily Volume: 2,583,341 52 Week Range: $9.2 – $17.43

2. SelectQuote, Inc. (SLQT): $12.07

Shares of this insurance brokerage were acquired by 5 insiders:

  • President, Selectquote Senior Robert Clay Grant acquired 230,000 shares, paying $8.79 per share for a total amount of $2.02 million. Mr. Grant increased his stake by 21.91% to 1,279,658 shares with this purchase.
  • Chief Operating Officer William Thomas Grant acquired 230,000 shares, paying $8.85 per share for a total amount of $2.04 million. Mr. Grant increased his stake by 17.18% to 1,569,100 shares with this purchase.
  • Chief Executive Officer Timothy Robert Danker acquired 117,000 shares, paying $8.75 per share for a total amount of $1.02 million. Mr. Danker increased his stake by 8.36% to 1,516,137 shares with this purchase.
  • Chief Financial Officer Raffaele Sadun acquired 99,965 shares, paying $8.92 per share for a total amount of $892,171. Mr. Sadun increased his stake by 12.08% to 927,418 shares with this purchase.
  • Chief Communications Officer Matthew Scott Gunter acquired 1,200 shares, paying $8.75 per share for a total amount of $10,499. Mr. Gunter increased his stake by 0.39% to 307,599 shares with this purchase.

SelectQuote is a company very similar to GoHealth (GOCO), an online insurance broker we featured as a spotlight idea in our Special Situations Newsletter. Just like GOCO, the stock has been hit hard in recent weeks. Both companies posted big increases in top line numbers and both have seen insider buying recently. While GOCO focuses on health insurance and specifically Medicare, SelectQuote also lets customers shop for term life, home and auto insurance online.

You can view the list of recent insider transactions for SelectQuote, Inc. here.

P/E: 15.28 Forward P/E: 11.95 Industry P/E: 10.94
P/S: 2.11 Price/Book: 2.92 EV/EBITDA: 9.67
Market Cap: $1.98B Avg. Daily Volume: 2,445,641 52 Week Range: $7.72 – $33

3. Hims & Hers Health, Inc. (HIMS): $8.21

Director David B. Wells acquired 360,000 shares of this multi-specialty telehealth platform, paying $8.24 per share for a total amount of $2.97 million.

You can view the list of recent insider transactions for Hims & Hers Health, Inc. here.

P/E: N/A Forward P/E: -51.31 Industry P/E: N/A
P/S: 8.52 Price/Book: 5.42 EV/EBITDA: -19.08
Market Cap: $1.67B Avg. Daily Volume: 2,329,030 52 Week Range: $6.71 – $25.4

4. Membership Collective Group Inc. (MCG): $12.23

Director Ronald W. Burkle acquired 200,000 shares of this upscale social clubs operator, paying $12.15 per share for a total amount of $2.43 million.

You can view the list of recent insider transactions for Membership Collective Group Inc. here.

P/E: N/A Forward P/E: N/A Industry P/E: N/A
P/S: 6.53 Price/Book: N/A EV/EBITDA: -62.73
Market Cap: $2.49B Avg. Daily Volume: 599,254 52 Week Range: $9.56 – $14.26

5. REE Automotive Ltd. (REE): $5.77

Shares of this pre-revenue EV company were acquired by 2 insiders:

  • Director Hans Thomas acquired 222,000 shares, paying $5.77 per share for a total amount of $1.28 million. These shares were purchased indirectly by 10X SPAC Sponsor Alpha LLC.
  • Member of sponsor Davide Weisburd acquired 123,908 shares, paying $5.97 per share for a total amount of $739,731. These shares were purchased indirectly by WEN 102, LLC.

You can view the list of recent insider transactions for REE Automotive Ltd. here.

P/E: N/A Forward P/E: N/A Industry P/E: N/A
P/S: 10214.6 Price/Book: 9.47 EV/EBITDA: -3.33
Market Cap: $1.81B Avg. Daily Volume: 663,864 52 Week Range: $5.48 – $16.66

You can view the full list of purchases from this Insider Buying page.

Notable Insider Sales:

1. Snowflake Inc. (SNOW): $310

Shares of this cloud-based data platform were sold by 6 insiders:

  • Director Michael L. Speiser sold 535,000 shares for $296.44, generating $158.59 million from the sale. These shares were sold indirectly through a trust.
  • CEO and Chairman Frank Slootman sold 189,282 shares for $302.88, generating $57.33 million from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
  • Chief Revenue Officer Christopher William Degnan sold 51,125 shares for $302.72, generating $15.48 million from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
  • President of Products Benoit Dageville sold 49,092 shares for $302.99, generating $14.87 million from the sale. These shares were sold indirectly through a trust.
  • Director John Dennis McMahon sold 20,330 shares for $300.00, generating $6.09 million from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
  • Director Mark Garrett sold 10,374 shares for $299.00, generating $3.1 million from the sale. These shares were sold as a result of exercising options immediately prior to the sale.

You can view the list of recent insider transactions for Snowflake Inc. here.

P/E: N/A Forward P/E: -1631.58 Industry P/E: 57.15
P/S: 109.59 Price/Book: 18.77 EV/EBITDA: -117.64
Market Cap: $93.28B Avg. Daily Volume: 4,208,718 52 Week Range: $184.71 – $429

2. Walmart Inc. (WMT): $149.25

Director Robson S. Walton sold 1,299,038 shares of Walmart for $148.70, generating $193.17 million from the sale. These shares were sold indirectly through a trust.

You can view the list of recent insider transactions for Walmart Inc. here.

P/E: 69.16 Forward P/E: 22.58 Industry P/E: 33.33
P/S: 0.74 Price/Book: 5.17 EV/EBITDA: 11.84
Market Cap: $418.22B Avg. Daily Volume: 7,389,618 52 Week Range: $126.28 – $153.66

3. Facebook, Inc. (FB): $376.26

Shares of Facebook were sold by 2 insiders:

  • COB and CEO Mark Zuckerberg sold 386,500 shares for $375.36, generating $145.08 million from the sale. These shares were sold indirectly by various entities.
  • Chief Legal Officer Jennifer Newstead sold 250 shares for $380.04, generating $95,010 from the sale.

You can view the list of recent insider transactions for Facebook, Inc. here.

P/E: 27.94 Forward P/E: 23.5 Industry P/E: 31.31
P/S: 10.12 Price/Book: 7.69 EV/EBITDA: 19.38
Market Cap: $1.06T Avg. Daily Volume: 13,911,052 52 Week Range: $244.13 – $384.33

4. NXP Semiconductors N.V. (NXPI): $212.99

Shares of this semiconductor company were sold by 2 insiders:

  • EVP & CFO Peter Kelly sold 142,311 shares for $225.17, generating $32.04 million from the sale. 14,966 of these shares were sold indirectly through a trust.
  • CEO & President Kurt Sievers sold 25,878 shares for $225.00, generating $5.82 million from the sale.

You can view the list of recent insider transactions for NXP Semiconductors N.V. here.

P/E: 58.48 Forward P/E: 18.55 Industry P/E: 32.40
P/S: 5.68 Price/Book: 7.72 EV/EBITDA: 20.22
Market Cap: $56.47B Avg. Daily Volume: 2,255,495 52 Week Range: $117.25 – $228.72

5. Upstart Holdings, Inc. (UPST): $247.29

Shares of this cloud- based artificial intelligence (AI) lending platform were sold by 2 insiders:

  • Chief Executive Officer Dave Girouard sold 137,498 shares for $225.44, generating $30.99 million from the sale. 12,498 of these shares were sold indirectly through various trusts.
  • General Counsel Alison Nicoll sold 22,500 shares for $225.41, generating $5.07 million from the sale.

You can view the list of recent insider transactions for Upstart Holdings, Inc. here.

P/E: 269.09 Forward P/E: 144.61 Industry P/E: 9.29
P/S: 40.71 Price/Book: 26.81 EV/EBITDA: 214.3
Market Cap: $19.23B Avg. Daily Volume: 5,264,330 52 Week Range: $22.61 – $254.13

You can view the full list of sales from this Insider Sales page.

The list of all insider purchases and sales by management people is only available to InsideArbitrage Premium members.

Disclaimer: I hold a long position in GoHealth (GOCO). Please do your own due diligence before buying or selling any securities mentioned in this article. We do not warrant the completeness or accuracy of the content or data provided in this article.

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