Thanks for sharing, I like the analysis and have spent time looking at this company. The underlying healthtech business is interesting. A lot of companies and people continue to say that hospitals use efax for a lot of things / underlying HIPAA rules on governmental healthcare efax seems to make that sticky. I wonder if EPIC, Cerner change that long-term but until I see some of that decline I can get behind it.
The consumer business for me is the problem. Docusign has a $10/month plan. Adobe has one. Micrsoft gives you the ability to print to pdf, but not track signatures if some people are still signing up for this business for the PDF options.
Also, I have seen a number of people get long LFMD and point to Worksimpli, which seems like a logical competitor. Personally, I think LFMD is not a good business either, but I don't understand how Worksimpli can be growing so quickly while JSign is churning. LFMD would tell you they are better at placing ads on Instagram, FB and TikTok. I don't see that as a logical answer. It's possible that Worksimpli is taking market share, but it seems like this is a race to the bottom for small business and individual customers to be able to sign PDFs for one month and then cancel and try another one. Is LFMD making up numbers or are they better at marketing? They definitely capitalize all their expenses, but I am only looking at topline. If CCSI just needs two or three digital marketing people, why don't they do that? If that isn't the answer, it seems that there isn't one and you should wait until that turns around.
I would hope there is a PE acquiror that will take this off their hands (at any price) and wouldn't get long until they do and then they can refinance the debt. Just my two cents.
Plan A would certainly be to sell the consumer business (if able to untangle at all) and use proceeds to repay debt.
Plan B turns into a "crossover point" stock where investors wait for the growing segment to become large enough to lift the combined company into overall growth. Clearly not there yet and declines are accelerating in consumer. Best they can do is funnel cash flow from DeclineCo into debt paydown.
Admittedly, being long this idea (today) is a bet on it being oversold and massively undervaluing the enterprise business.
I know it's not the point of the write-up, but you're missing the real growth driver with your LFMD comparison. LFMD is considering selling off WorkSimpli to further fund their real growth driver in the telehealth business, particularly their GLP-1 service business line.
So I think it's telling that they're willing to dump the WorkSimpli business, which is a big part of CCSI as I understand it: greener pastures it seems? CCSI looking like a cigar butt play maybe?
They can’t sell worksimpli, it is a high-churn consumer business that competes with docusign. Why would docusign buy it when they could spend $10M on SG&A to steal the customers? If not them, LFMD is in the same boat as CCSI, is there a PE backed company that will pay pennies to buy it? Trust me, they try to sell it every day and no one is buying.
The telehealth business is a doctor wrapper around distributing GLP-1. They make better margins selling hair loss generics. What moat do they have against a much larger business like Ro or Eden, or Eli Lily who is going DTC? That is a stock cash out scheme for the management team and a hope and a prayer business for anyone holding it. Sell it now while you can.
Thanks for sharing, I like the analysis and have spent time looking at this company. The underlying healthtech business is interesting. A lot of companies and people continue to say that hospitals use efax for a lot of things / underlying HIPAA rules on governmental healthcare efax seems to make that sticky. I wonder if EPIC, Cerner change that long-term but until I see some of that decline I can get behind it.
The consumer business for me is the problem. Docusign has a $10/month plan. Adobe has one. Micrsoft gives you the ability to print to pdf, but not track signatures if some people are still signing up for this business for the PDF options.
Also, I have seen a number of people get long LFMD and point to Worksimpli, which seems like a logical competitor. Personally, I think LFMD is not a good business either, but I don't understand how Worksimpli can be growing so quickly while JSign is churning. LFMD would tell you they are better at placing ads on Instagram, FB and TikTok. I don't see that as a logical answer. It's possible that Worksimpli is taking market share, but it seems like this is a race to the bottom for small business and individual customers to be able to sign PDFs for one month and then cancel and try another one. Is LFMD making up numbers or are they better at marketing? They definitely capitalize all their expenses, but I am only looking at topline. If CCSI just needs two or three digital marketing people, why don't they do that? If that isn't the answer, it seems that there isn't one and you should wait until that turns around.
I would hope there is a PE acquiror that will take this off their hands (at any price) and wouldn't get long until they do and then they can refinance the debt. Just my two cents.
Good thoughts
Plan A would certainly be to sell the consumer business (if able to untangle at all) and use proceeds to repay debt.
Plan B turns into a "crossover point" stock where investors wait for the growing segment to become large enough to lift the combined company into overall growth. Clearly not there yet and declines are accelerating in consumer. Best they can do is funnel cash flow from DeclineCo into debt paydown.
Admittedly, being long this idea (today) is a bet on it being oversold and massively undervaluing the enterprise business.
I know it's not the point of the write-up, but you're missing the real growth driver with your LFMD comparison. LFMD is considering selling off WorkSimpli to further fund their real growth driver in the telehealth business, particularly their GLP-1 service business line.
So I think it's telling that they're willing to dump the WorkSimpli business, which is a big part of CCSI as I understand it: greener pastures it seems? CCSI looking like a cigar butt play maybe?
They can’t sell worksimpli, it is a high-churn consumer business that competes with docusign. Why would docusign buy it when they could spend $10M on SG&A to steal the customers? If not them, LFMD is in the same boat as CCSI, is there a PE backed company that will pay pennies to buy it? Trust me, they try to sell it every day and no one is buying.
The telehealth business is a doctor wrapper around distributing GLP-1. They make better margins selling hair loss generics. What moat do they have against a much larger business like Ro or Eden, or Eli Lily who is going DTC? That is a stock cash out scheme for the management team and a hope and a prayer business for anyone holding it. Sell it now while you can.
Great results today! bought back 20% of debt over the last 6 months.