Patient Home Monitoring
(PHM – V)
Excellent Q3 Results. Large
Cash Position to Drive More
Acquisitions – Target Raised
September 2, 2014
Doug Cooper, MBA
(416) 643-3863
dcooper@beaconsecurities.ca
Margaux Berry, MSF, Associate
(416) 364-5148
mberry@beaconsecurities.ca
PHM announced record revenues and profits in
Q3/FY14. Revenue was $5.5 million with EBITDA of $1.3
million and EPS of $0.008. Results were positively
impacted by a 1-month contribution from the
acquisition of Care Medical, which closed on June 4,
as well as a strong internal growth rate of 10%
sequentially.
On a pro-forma basis, if the acquisition had closed on
April 1st
, we believe revenue and EBITDA would have
been closer to $7.6 million and $1.75 million.
Organic growth was 10% sequentially as a result of
successful cross selling between the now 4 operating
companies. Management has guided to a base
organic annual growth rate of 20% going forward.
PHM ended the quarter with $3.5 million in cash. Post
the end of the quarter, through the exercise of warrants
as well as a new $8.6 million debenture and strong
cash flow (~$2 million/quarter) should leave the
company with ~$15 million to make additional
accretive acquisitions.
Its past 2 acquisitions have been done at an average
of 3x EBITDA. As such, $15 million could buy ~$5 million
of incremental EBITDA at similar valuations.
Raising our FY14-FY16 forecasts based on the better
than expected organic growth rate experienced in Q3,
which is expected to continue.
We maintain our BUY rating and increasing our 12-
month target price to $1.05 from $0.65.
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ciao vito