Yahoo Finance
Filing
May. 20, 2020
2020 Q1 Data
Price: $0.18 Shares:70m, Cap: $12.5m
1.Business
(1) History
The company was founded by Ronald Loucks in 2003. It was aiming to create a service for companies who want to manage their health benefit in house. It was IPOed in 2006. It invested heavily in its system to grow its revenue.
By 2012 which it turned into profit with $4.4m in revenue., it had incurred over $20m in losses.
In late 2013, it lost one 20% revenue customer which cost 2014 and 2015 in red again. It turned a profit in 2016 briefly and then in loss again when pursuing growth.
In 2018, it acquired two small companies in related business for 4m. Currently, it has a 10m annual revenue run-rate with positive earnings.
(2) Major business
It has only one business which is managing health care claims including medical, dental, extended medical care, etc. It charges fees per transaction. The transaction fees account for around 50% of total revenue lately. It also charges admin fees based on monthly members' enrollments. This counts for around 30% of its revenue. Rest is just consulting fees and etc.
Its main product is web-based and it has a mobile app for submitting claims. It also created a website for the extended medical servicer to submit a claim to any company.
(3) Debt
Currently, it has 3.2m in debt mainly from the 2018 acquisition. Including 0.8m payable to the previous owner of these businesses. The rest are from current shareholders. Most debt carries an 8% interest.
(4) Industry
2. Management
(1) Key person
Ronald Loucks is the CEO from the beginning. Previously he was working for Bell and Mercer for 18 years. Both positions were healthcare-related.
(2) Insider ownership & Compensation
Loucks owns around 15% of the company at the time of IPO. Now he owns 7.3m shares, around 10.5%. His annual compensation is quite low at around 180k.
3. Financial data
4. Valuation and comments
(1)The current lock-down will have quite a bit negative for the company. It might lose 1/3 to 1/2 of its revenue in Q2. However, I expect it can fully recover its revenue once this is over.
(3) Debt
Currently, it has 3.2m in debt mainly from the 2018 acquisition. Including 0.8m payable to the previous owner of these businesses. The rest are from current shareholders. Most debt carries an 8% interest.
(4) Industry
2. Management
(1) Key person
Ronald Loucks is the CEO from the beginning. Previously he was working for Bell and Mercer for 18 years. Both positions were healthcare-related.
(2) Insider ownership & Compensation
Loucks owns around 15% of the company at the time of IPO. Now he owns 7.3m shares, around 10.5%. His annual compensation is quite low at around 180k.
3. Financial data
4. Valuation and comments
(1)The current lock-down will have quite a bit negative for the company. It might lose 1/3 to 1/2 of its revenue in Q2. However, I expect it can fully recover its revenue once this is over.
(2) Based on the trend from last year to Q1 2020, it is capable to generate 1m to 2m in the near future, which could support $40c in the share price.
(3) The company had tripled its revenue in the last 10 years. Pretty good growth. However, both the company's management and product are not so strong. Its profit basically added up as zero from 2012 to 2019.
(4) The new acquisitions in 2018 seem not too bad.
5. Risk
(1) It might need to issues shares at a low price in the near future if it needs to fund operating losses or force to pay down debt.
5. Risk
(1) It might need to issues shares at a low price in the near future if it needs to fund operating losses or force to pay down debt.
(2) The company historically didn't care too much about generating profit. It might stay like this for quite a long in the future.
6. Conclusion
The company is in a good industry and has grown quite well in the past. Its product and management are less ideal. The current price is quite cheap, but it is uncertain how it will turn out. Shouldn't be heavily invested.
7.Links
The company is in a good industry and has grown quite well in the past. Its product and management are less ideal. The current price is quite cheap, but it is uncertain how it will turn out. Shouldn't be heavily invested.
7.Links
