Anticipating Q1 resultsGuidance given on March 7, 2022: (Note: Currency is all in US dollars)
“The Company expects to generate net revenues attributable to its core business of approximately
$29.2 million to $30.2 million during the first quarter of 2022. In addition to its core business, the Company is continuing to pursue additional revenues related to the COVID-19 pandemic and estimates first quarter 2022 revenues of approximately
$1.4 million to $1.8 million related to the COVID-19 pandemic. Total revenues for the first quarter of 2022 are estimated to be approximately
$30.6 million to $32.0 million.”
The guidance for 2022 Q1 was made in early March, well through the quarter, so it is likely quite accurate. The midpoint of guidance suggests probable shrinkage in total revenue from the last quarter. but a shifting back to core revenue. That midpoint shows growth of 4.5% in total revenue and 16.6% in core business revenue from Q1 last year.
This was alluded to by Casey Hoyt in the March 8 conference call:
Moving onto some of the themes from the fourth quarter, we witnessed positive traction from our investments into our industry leasing service model during periods of COVID decline. Increased access to referral sources allowed us to demonstrate the evidence based benefits of our high touch, high tech delivery model of home respiratory care. As a result, our growth trends during these periods indicate an incredible opportunity for post COVID expansion. We are also seeing stabilization of several COVID related risks and uncertainties that have faced our industry over the course of this pandemic. Guidance for Q2 will probably be the most important number to look for in the upcoming news release. I am hoping for core revenue guidance to reflect the historic growth rate of 30% (or perhaps higher) per annum on the core revenue and an elimination of pandemic related revenues. This would result in a midpoint guidance for Q2 at $31.7.
In Casey Hoyt’s words:
As we begin to see a trend towards returning to our historical growth rate and traditional product lines, we are incredibly excited to continue to innovate and expand our services to meet the evolving needs of patients. The Q1 results will be compared to Q1 2021 (year over year) and to q4 2021 (most recent quarter)
- Q1 2021 Stats
- Total Revenue: 28,416
- Core Business revenue: 25,461
- Covid related revenue: 2,995
- Net Income: 1,684
- Adjusted Ebita: 5,468
- Cash balance: 31,097
- Vent patients 7,733
·
Q4 2021 Stats · Total Revenue: 31,962
· Core Business revenue: 28,947
· Covid related revenue: 3,015
· Net Income: 4,087
· Adjusted Ebita: 9,549
· Cash balance: 28,408
· Vent patients 8,405
Negative in Q1: The first six weeks of 2022 were during the peak of Omicron and hospitals would have been overwhelmed and not responsive to VMD’s patient recruitment model. So patient growth would have stalled for the first half of the quarter, yet VMD has forged ahead in its hiring which will be a small drag on profit margins.
Positive in Q1: The CPI reimbursement adjustment of 5% will flow to the bottom line. Share price is still dismal so the egregious stock-based compensation will not be a factor.
Analyst earnings estimates for Q1 are low. Given the revenue guidance, one would expect earnings to be in line with those of the prior quarter. Perhaps the analysts have taken a wait and see approach with their earnings estimates. If the company can repeat the $0.10 eps in Q1, then the analysts will have to adjust their annual earnings estimates. Perhaps RBC will also adjust the target price. Key drivers for an expansion of the PE multiple will be the projected growth rate in per share earnings.
The stock repurchase plan for up to 5% of the shares would only be partially completed in the Q1 period. It will show a reduction in cash of about $2.5 million at the end of the quarter.