Sandy McIntyre
Futuremed Healthcare
FMD-T
COMMENT
Aug 25, 2010
Rarely sells after an earnings disappointment. Doesn’t think there is a structural problem with the business. They need to get some clarity on how they will transition into what is in effect a new business model where they will have a growth side.
He supplied provider to hospitals, nursing homes, et cetera. Healthcare sector so very protected in the event of a recession. Growing between 5% and 15% annually. Generates a lot of free cash flow. Distribution of around $.92 giving a 10% yield plus 10% growth.
Distributor of medical products, mostly in Ontario. Just bought a Quebec company, which should grow revenues and margin expansion. 12% distribution is likely to be increased this year. Earnings per share should grow at 10%-20% also.
Conservative name trading at 10-11 times PE. Entrepreneurial management team with ownership in the company. Strong market share in the distribution business in healthcare and long term care facilities.
Distributes supplies such as wound management, chairs, furniture, etc. to retirement homes. Well run. Have already cut their distributions. Trades at 6 times EBITDA.
Distribute healthcare products primarily to retirement homes. Started to see more competition in the 2nd quarter and intensified in the 3rd quarter. Cut distributions once but may do another cut. He’ll wait for Q4 results.