Yahoo Finance
Filing
May. 16, 2018
Q1 2018 Data
Price: US$4.08, Shares: 60m. Cap: $250m
1.Basic Information
(1) History
The company was founded around 2014 through the restructuring of 13 independent out-patient imaging center in Florida called Elite imaging. Gradually it acquired and consolidated more imaging center in the US. Today it has 74 imaging center across several states in the US.
(2) Business-related.
MRI: Current MRI counts 50% of the total revenue. There is a big price difference between the hospital and the independent lab like Akumin. Usually, the hospital might charge over 2x over the lab. Also, it seems the reimbursement from the government dropped a lot as well. It was quoted by the CEO Zine that 10 years ago the reimbursement of one MRI procedure was around $1000, but now only $230. Currently, the margin is only about 15% compare to 50%+ 10 years ago. Once consolidated, the company declared to be able to increase margin by 10%.
Around 70% of its revenue is paid by the insurance company. Around 20% is paid by Medicare & Medicaid.
(3) Management.
Riadh Zine seems to be the key person in this company. Previously he was a Managing Director in Global Investment Banking at RBC. He did quite some big M&As and IPOs. Later in 2013, he co-founded Roadmap Capitals Inc. It seems a VC firm and invested over $100m in high tech sectors.
(4) Debt and Credit Facility.
Currently, there is US$72m debt outstanding. Currently, it has US10m in cash.
(5) Insider holding, options, Insider trading info, share buyback.
By Q1 2018, there are 51m shares outstanding. 1.2m warrants, 2m RSUs.
(6) Employee numbers
(7) Industry comparison.
Radnet: 306 imaging center. $900m+ revenue. $100m EBITDA, $15m net income. Cap over $600m.
SimonMed Imaging: 72 center. Private company.
LabCrop: $10B revenue. Net income $800m. Cap $17B
Quest Diagnostic: $8B revenue. $800m net income. $14B cap,
(8) Major events
At May 2018, the company purchased all the minority interest for $21.6m + $3.7m in shares. It is a reasonable move since it paid $0.95m at Q2 2018 in minority interest.
2. Financial data.
3. Valuation
(1) At Q1 2018, the company made $33m in revenue. $6.8m in adjusted EBITDA. $1.1m in net income after $0.95m minority interest payment. If we add that back, net income is $2.1m.
(2) The medical labs are going through consolidation lately. There is plenty of opportunity for the company to grow. If it does well, the upside is pretty high.
(3) Assuming by 2020, it can $200m in revenue, $40m in EBITDA, $30m income, $600m Cap. 70m share. It supports a price of $8.5.
4. Risk
(1) The government might decrease the reimbursement which will affect its profit greatly as in the Vimed cases.
(2) Its growth plan might not work well which won't turn into growing profit. Also, growth might stop.
(3) It seems like issuing shares too loosely.
5. Conclusion
Although the company is a new IPO. It is very profitable and growing well with strong management. The price is not cheap if based on current earning. But if the company continue its current trend, it is actually worth much more than the current price.
6.Links
Mar. 29, 2019
Price: CA$4.79. Shares 62.4m. Cap: CA$300m.
2018 Data (in US$)
(1) For full-year 2018, revenue is $155m, EBITDA $32m. Real cash generated is around $15m. Debt $113m. EV/EBITDA is around 10 times.
(2) Assuming by 2021, revenue $250m, EBITDA $60m. Debt $150m. 75m shares. Real income $30m, Cap $600m, Support CAD$10.6 share price.
