Premier Health of America Inc V.PHA

9-10% ebitda margins on track.

[Torontojay]

Q3 ebitda was $1,585,647 and the company expects to get back to the 9-10% ebitda margins they have historically achieved. From MD&A I present the following: 

"The adjusted EBITDA (1) recorded during the third quarter amounted to $1.6 million or 7.1% of revenue. This negative difference compared to a target adjusted EBITDA (1) between 9% and 10% of revenue is explained as follows:

• $0.2 million related to the disposal at a loss of 19 transport vehicles in connection with the termination of one of the two transport contracts as well as maintenance costs for other older vehicles

• $0.2 million due to lower revenue at Premier Soin and Code Bleu

• $0.1 million in transaction costs associated with the acquisition of CHCA

• $0.1 million related to accelerated spending for certain upgrades to our technology platforms"

 

Going forward, I believe the company can achieve $4-$5m in free cash flow with a reasonable chance to surpass this figure. The strong balance sheet can allow them to grow without the need to raise debt/equity.

[profitprophet1]

A solid quarter. The company is currently trading at a value of 50cents/share with over 16 cents/share cash, a run rate of approximately a million free cash/quarter. I'm not sure what the price should be, but with solid growth, good fcf, a diversified regional revenue base, and a long runway ahead it's not requiring an expert to say yhis price is too low. Is it a double? A triple? I think

[colourama]

Torontojay, which metric do you think is the most appropriate to value the company? From a free cashflow perspective? Or adjusted EBITDA, etc.?

[Torontojay]

  I would use free cash flow and then add additional non recurring expenses that might appear on adjust ebitda figures but not free cash flow measures. For instance, acquisition costs would increase adjusted ebitda figures but decrease  free cash flow figures. This would give us a better forward looking free cash flow measure.