P/E ratioI am not qualified to comment on the medical arguments, but I suggest that a key reason for the current price decline is earnings, or the lack thereof. The current focus on revenue, gross profit and EBITDA ignores the fact that earnings have not moved. Adjusted earnings (net income adjusted for stock-based compensation and derivative adjustments) per share (diluted) are as follows:
Q3Y19 $0.08, Q2Y19 $0.08, Q1Y19 $0.08, Q4Y18 $0.09, Q3Y18 $0.08, Q2Y18 $0.08, Q1Y18 $0.08
This works out at a P/E ratio of about 28 for a stock that is not growing earnings, despite growing revenue, gross profit and EBITDA.
I suggest that the reason for this is that medical equipment leases are accounted for as capital leases i.e. their amortisation costs are not included in cash costs, which results in higher reported gross profit and EBITDA. That growth, however, requires a significant investment in medical equipment which has a relatively short useful life.
This works out at a P/E of about 28 for a stock that is not increasing earnings.