Post by
Possibleidiot01 on Aug 18, 2024 6:15am
Donville Kent July newsletter update
Don't think this has been posted.
VitalHub (VHI)
VitalHub is one of our largest investments and we have covered it in detail over
the years. VHI has been consistently growing both organically and through
acquisition. The most impressive aspect has been the growth in profit margins,
which we think still has a lot of room to run. For a relatively small company,
they have over $70m of cash and no debt on the balance sheet. On July 30 th , they
announced the acquisition of Medcurrent, which sells OrderWise, a clinical
decision support software. OrderWise analyzes medical imaging tests using
criteria inputs and AI to determine whether certain tests are appropriate for
treatment, saving hospitals money. This will provide VitalHub’s sales team withanother opportunity to cross-sell plus expand OrderWise to other fields. This
software is highly complementary to VitalHub’s current decision support
platform for admitting/discharging patients.
The deal looks to be structured well with $12m cash up front and $22m in
earnouts based on aggressive growth targets over the next 36 months. This
management team and board are very disciplined and have shown to acquire
extremely well and increase margins significantly after integration.
Investors, like ourselves were/are expecting a big deal and based on this deal we
still expect a large deal and further tuck-ins this year. VitalHub’s margins
continue to expand as they scale and organic growth has been impressive. We
expect them to continue to execute well on their current business plus deploy a
decent amount of capital by year-end, which would position the stock price
much higher than it is today.