Care.com (NYSE:CRCM) is a company in transition. This year finds the company battling executive departures and controversy over the steps it takes to ensure the quality of the people selling their services on the site.

Now, Bloomberg reports that Care.com has retained a consultant to review its business strategy, which could result in a possible sale of the company. After dropping from a high of $25.81 earlier this year, the stock sits as of this writing below its IPO price of $17, making a potential sale a possibility.

Despite its challenges, Care.com is a business with plenty of potential and that, plus its decreased price, could make it an alluring takeover target.

Person buried under a pile of paper and holding a help sign

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What's attractive about Care.com

Care.com operates an online marketplace where people can find care providers for children, seniors, and pets. The company boasts 34 million members across more than 20 countries. Just its large user base, which benefits from the network effect, is a solid reason for acquisition. Moreover, Care.com plays in an industry primed for growth. 

The home care industry is projected to double to $225 billion by 2024, primarily driven by an aging population in need of services. At the same time, an estimated shortage of half a million home health aides by 2025 indicates the labor demand for home care is substantial.

Given the size of the market opportunity, Care.com's $51 million in Q2 revenue shows the company has room to grow. And grow it has. The company has enjoyed four consecutive years of revenue growth, from $116.7 million in 2014, the year it went public, to $192.3 million in 2018. Even its Q2 earnings showed an 11% increase from the year prior.

In addition, Care.com possesses a healthy balance sheet. The company has over $89 million in cash alone, more than enough to cover current liabilities of $50.3 million. During the company's Q2 conference call with analysts, acting CFO Mike Goss said the company is open to employing that cash for uses like a stock buyback or strategic acquisitions, like last year's purchase of Trusted, which helps parents find pre-screened nannies and sitters on an as-needed basis.

The company's Care@Work division, which provides Care.com's services to businesses like Facebook and Procter & Gamble, is another bright spot. It has been experiencing strong growth, enjoying a 47% year-over-year increase in Q2, the fourth consecutive quarter of double-digit growth.  

Care.com's downsides

Despite the growth, it wasn't all sunshine for Care.com in Q2. It suffered a net loss of $64.8 million compared to a net loss of $0.2 million in the year-ago quarter, though $44.5 million was due to a one-time income tax expense. Sales growth in its U.S. business slowed from a 10% year-over-year increase in Q1 to 8% in Q2. As a result, the company cut its Q3 and full-year guidance. 

The company's Nov. 6 report on Q3 results will be its first test of whether it can deliver on its revised guidance. If it suffers another quarter of mixed results, Care.com could find itself under pressure to take decisive action, bolstering the case to find a buyer. The news of a possible sale caused Care.com stock to rise, so it's an intriguing option for investors. 

Key to its continued success will be Care.com's ability to assure its customers that its marketplace offers trusted care providers. It was successful in doing so with its Care@Work business clients, maintaining 100% retention after the controversy over how it vets the people on its site first made waves in the press. Yet if the company continues to see a slowdown in its U.S. business, which could signal that consumers still have concerns over safety despite the number of new features Care.com is rolling out to rectify this, such as background checks and Social Security number verification.

Given the company's financials and solid pattern of growth, Care.com could be an attractive acquisition target for the likes of Bright Horizons, known for its child care programs, or even Amazon, which formed a healthcare venture led by Dr. Atul Gawande, who has written about elder care.  At its current stock price, Care.com offers promising upside for potential buyers and investors.