In our first report Citron referred to FleetCor (NYSE:FLT) as “FeeCor” and “FleeceCor”. The bulls defended the company, claiming FleetCor’s customer fees are legal, not egregious, and most of all are sustainable.
In this report Citron clarifies the illegality of FleetCor’s corporate practices, and the lengths the analyst community goes to in defending them.
Citron predicts that after this report makes its rounds, TransDigm’s (NYSE:TDG) days of exploiting and deceiving the Federal Government are numbered.
Valeant Pharmaceuticals has recently hit prices that some never thought imaginable. As Citron observes today, at $12 per share, that stock is down over 95% from its highs just months prior to Citron’s reporting on Philidor. The questions then turn to:
and
How Motorola Really Makes Its Money!
While Motorola’s has many operating divisions, the bulk of its profits come from selling overpriced handsets into its single source contracts in the United States….taking advantage of both tax payers and the first responder community. In fact, handset sales in the U.S. carry an 83.6% gross margin (see below), while device sales in Europe are at 9%.
Citron’s analysis shows that U.S. device (handset) sales are contributing a whopping 76.7% of Motorola’s bottom line!
As new technologies eclipse Motorola’s monopoly grip on its outdated U.S. first responder’s network, the company’s gravy train of egregious handset pricing will fall to competition. In the current political environment, how long can Motorola’s “extreme lobbying” efforts protect it from competitive pressures?
Citron exposes the secret of the Motorola cash cow — gouging the U.S. Government.
One company in the healthcare system that deserves to fall to the mighty sword of the new Trump administration is Express Scripts. (NASDAQ:ESRX) has used their position as the nation’s largest PBM to make itself into
“The reason drugmakers sharply raise list prices without a corresponding increase in net price is that PBMs demand higher rebates in exchange for including the drug on their preferred-drug lists”
— Enrique Conterno, President, Eli Lilly diabetes business
http://www.wsj.com/articles/insulin-prices-soar-while-drugmakers-share-stays-flat-1475876764
As Medicare drug costs spiral out of control, the percentage of pharma spending Express Scripts extracts from rebates is far greater than its peers, and expanding. This sum is now approaching $100 per person per year for every citizen in the U.S. Ironically, ESRX diverts huge cash flows from companies that actually invest in innovative R&D into “kickbacks” for themselves. They create no new or improved drugs.
The problem is so obvious we read in today’s WSJ:
“Merck has offered higher rebates and discounts to pharmacy-benefit managers so that they would keep Merck products on preferred-drug lists”
Conclusion: It is simple math: If ESRX loses 50% of its rebates, they lose 30% of EPS, and the stock goes straight to $45.