Premier Health of America Inc PRHAF

Major new acquisition!

[colourama]

I like what I see - purchase price of about 3x EBITBA! Active in all western provinces and northern territories. Non-dilutive acquisition.

Perhaps I am over-optimistic, but I wouldn't be surprised to see the share price double.

[colourama]

Forward looking numbers with this acquisition: Revenue: About $150million EBITDA: About $12-14million (higher if they can sustain $2million+ without the new acquisition) Debt: About $40 million Significantly de-risked operations through geographic diversification. Acquisition based in BC - exactly what they were looking for.

[colourama]

At $1/share (assuming $40million in debt), you have EV/EBITDA multiple of about 6.9. At $2/share, you have EV/EBITDA at 11. Lots of room to run from here if you take into account the significant de-risking from the aquisition and typical market valuations of healthcare staffing companies.

[stockrook86]

Certainly derisks geographicly, basically doubles the size of the business revenue wise.  I'm just surprised they could swing a deal this size from a debt perspective. Unless they have massively collected on receivables (which would presumbly need some soft of agreement with govenrmen tof quebec to speed up) there revolver is pretty tapped out.  Not sure how they will finance

[colourama]

stockrook, I'm not an expert, but as of March 31, I believe they had about $4million on their senior secured credit facility and $10million on the accordian part (subject to the bank's approval since the acquisition is greater than $8million). So about $14million in known credit facilities. It is not unreasonable to assume that they could collect $7million on their $22.8million in

[Stonksonlyup90]

Colourama, I think a touch on the aggressive side to imply 7x or 11x EV/EBITDA. This acquisition they just closed was at 3x EBITDA and would now consummate about 50% of the business (potentially more of Quebec falls away). What makes PHA significantly more valuable than the entity that just sold? Yes national scale, but they've got floating rate debt that needs to be addressed.

[colourama]

Stonks - I agree those numbers are pretty aggressive at this point in time. No doubt the debt is a big issue to be addressed. It will be interesting to see what they can do with their geographic reach now among the different agencies.

[Torontojay]

I'm very impressed with this deal.  I might be bias, but I think at current prices there is excellent upside potential.  I mean, $4.9m in net income! Are you kidding me? The current market cap is what $13 m?   

[snootchybootchy]

I already own alot of V.PHA but bought another 3200 shares for a short term trade because I feel the market has not yet awakened to this news.

[stockrook86]

The three hours of no traded while the bid/ask sat $0.005 apart suggests you are right about the market sleeping on this so far, or maybe waiting on clarity around financing. We did 800,000 shares a week or so ago in one day, this is pretty low volume so far

[snootchybootchy]

Meant to say 32,000 shares, not 3200. And yes, ihe volume is much too low given how transformative this news is.