Here’s WHY Progressive Care is spending $1.8M for a vacant building in Hallandale Beach as their new Headquarter:
1. The most interesting thing here is the location. The new headquarter will be in Hallandale Beach, which is only about 15 mins north of their current headquarter in North Miami Beach, and about 1 hr south of their second pharmacy location in West Palm Beach. The company’s expansion strategy has been finding new acquisition targets in Orlando, Tampa areas. See Mars’ comment on this from her recent interview:
Stuart Smith - Analyst
What are the plans for any future acquisitions?
Shital Mars As of 8/15/18
We want to get now into the I-4 and to go over that Florida geography, we're looking at St Petersburg, Tampa, Ocala, Orlando, Kissimmee, Daytona area, Titusville area, Palm Coast. All of those cities are densely populated areas, a lot of areas where there are large retirement communities, where adherence is especially necessary. So we know that the next place we're going to try to go is in that in that I-4 corridor. Then if we're going up the East Coast we're going to look into Greater Jacksonville area into Georgia and those are the common sense areas that we think that we can execute on an acquisition. So that's where we're headed next. It takes - just as you saw with Touchpoint, it can take months to execute on an acquisition, so I don't want to put out there that we're going to fully execute on an acquisition within the year, but I do believe that as we work on our expansion plans more acquisitions are part of the agenda and part of the short-term agenda, we're not talking about five years, ten years down the road, we're talking about the next 6 to 18 months of bringing more pharmacies onboard and bringing – consolidating more healthcare companies into the Progressive Care brand and model.
Now the REAL QUESTION is WHY they would spend so much money on this vacant building that is SO CLOSE TO NORTH MIAMI BEACH? This will be a serious overlap with their current service territory, especially when considering the amount of MONEY they are gonna spend here. Also, keep in mind, their current lease at North Miami Beach won’t expire for another 5-10 years! And in this PR, they said this Hallandale Headquarter will be their THIRD PHARMCY LOCOATION! So that means they will not just totally leave North Miami Beach and move everything into the Hallandale Headquarter! But WHY would they spend so much here?! Don’t they worry about if they can actually find enough customers in this already fully serviced area for decent profit to rationalize their HUGE INVESTMENT OF $1.8M ON THIS NEW EMPTY BUILDING?! The common sense for expanding a business is there has to be some good market needs for the new business BEFORE STARTING ANY EXPANSIONS. They cannot afford to wait for another 3, 6 or even 12 months to pick up new customers to cover this $1.8M spending! But Why do they pick it here in Hallandale?
2. When I talked to Armen three weeks ago asking whether they are still on track to get back to fully SEC compliant by March, he told me it would depend on when the new acquisition will be completed because the new pharmacy also needs to be audited for SEC filing. That means they are currently already in an active acquisition search/negotiation in parallel to this new Headquarter purchase. Armen also said they have made “working progress” on the CBD project. They are currently very actively talking/working with some CBD manufacturers to form partnerships.
3. Traditional pharmacy services in North Miami/Hallandale areas probably will take some time to bring them IMMEDIATE AND LARGE revenues since they have been servicing these areas for over 10 years. Then the most likely scenario to me is this NEW 11,000 SF HEADQUARTER will be used not only for regular pharmacy services, but also will be used for CBD MANUFACTURING. Their next biggest move is to acquire/merge with a BIG CBD manufacturer/distributor and the Hallandale location will be the Headquarter for this NEWLY merged business, which will bring in IMMEDIATE REVENUE once the CBD business starts rolling at the new location!
4. I’m expecting they will have a great announcement on their CBD project right after the purchase of the Hallandale Building is fully completed.
AI
