Nobilis Health Corp (HLTH)

Makes acquisitions in the ambulatory/surgical centres in the US. Just announced another one today. Also, growing organically in that they have set up a “direct to patient” marketing service, which helps fill their hospitals. Quite often they will buy these hospitals, which are at 50% capacity, and put their marketing plan to work and build it up. Trading at fairly cheap valuations of around 6X next year’s earnings. There are a ton of these ambulatory surgical centres that were started by a doctor or a group of doctors. This company is going to be able to partner up with them and show them how to really grow and manage their business. Expects they will continue to make a few acquisitions every year. The endgame is that probably one of the larger players in the industry will acquire this company.

(Market Call Minute.) One of a great myriad of small healthcare stocks owned by management that buys distressed clinics. It seems to be growing like a weed.

Just put out a great quarter 2 weeks ago, so he is surprised the stock is still in the $6-$7 range. Really impressed with the way they are running operationally. He thinks the numbers continue to be strong going forward. Really cheap at this level.

He would put this in the category of companies that go out and buy slightly “not business run” clinics or distressed health centres, and get them on the cheap. Doctors and dentists do not have much ability to run businesses. You’ve got to have people that are going to manage these operations and knock them into shape. So far this one is working quite well. He wouldn’t expect too much more to happen unless it manages to buy many more centres, and that will take time to get them into shape and earning proper earnings. Thinks there are other places you can do better. The whole sector has been hit with people taking profits.

Has done well and he expects more from it. The big backdrop to much of healthcare sector is the success of Obama care. 12 million more Americans have health insurance than they did 5 years ago. Companies like this are doing well because of the increased volume.

Ambulatory and acute care facilities, imaging centres, urgent care facilities. Likes this company. Thinks there is a lot more to them than meets the eye. It is going to need a couple of quarters to prove itself. He is pretty optimistic about their future.

This has done extremely well. Just had a bunch of analysts and fund managers down to Texas to look at some of their acute care operations. Highly fragmented in the US, and there aren’t that many ways to play this in Canada. He likes the story and owns a little. Thinks there is still a lot of running room for them.

Earnings forecasts are pretty good. 4^th quarter trimming free cash flow yield of 6.7%. 40% forecasted return on equity. Earnings estimates up 26% in the last 90 days. PE multiple of 13.9X 2016 against 17% earnings growth gives a .8 PEG.

Really likes the story, but the stock went parabolic and they issued a lot of shares last week. Initially the stock reacted positively. Now there is an overhang that a founding shareholder still holds a lot of shares he wants to sell. He does not know if they can keep up their buying of troubled hospitals over the next couple of years. In the $6 range, it would be interesting for him.

This has gone parabolic and has been a good stock to own. Probably due for a correction. If you own, you have to decide how much of a long-term investor you are. There is no overhead resistance to make this stock want to crash and burn any time soon. Until it takes out an old low, you have to stay with it.

The management team has plans to be even more acquisitive. He just sold today because it has had such a great run. He would wait for them to do another big acquisition.

A healthcare consolidation story. They have ambulatory care centres in the US, and are basically doing a rollup strategy by buying centres. Typically these centres have been started by a doctor or a doctors’ group who are very good at what they do, but not great at managing. Recently announced the hiring of a marketing company, in order to drive more business to their holdings. The business still looks great. There is a lot of room for them to continue to grow through acquisitions. If you have a longer-term time horizons, he thinks this is going to do very well. Fairly cheap. When they get their US listing, it will attract a lot more attention from an investor’s standpoint.

Owns and operates ambulatory and acute care facilities, imaging centres, urgent care centres, mostly in the US. Great ideas, but there are execution risks. A relatively new company so he doesn’t know a lot about it. He hasn’t met management, so is very reluctant to take a big swing. He has quite a bit less than a half of 1% of his portfolio in it.

They have hospitals in the US, and specifically focus on a few different areas. Spine surgery and knee surgery are 2 of their specialties. Just recently made an acquisition of a company that does the marketing for the hospitals. A lot of these hospitals are started by doctors, and they really don’t have strong business sense, so Nobilis buys the hospitals back from the doctors and partnerships with them. They are seeing increased revenue and increased cash flow and earnings. Just had a pre-announcement of their numbers this week, and the numbers were fantastic. Feels there is lots of runway for them to go.

(Formerly Northstar Healthcare) Just changed their name today, because they are doing a NYSE listing, which has a number of other Northstar Healthcares. A growth by acquisition story. They are partnering with physicians to buy surgical centres in the US. Also, have great organic growth. Over the last 4 years they have grown their revenue at about 100%. From an earnings standpoint, based on the latest acquisition they did, they could earn somewhere between $0.35 and $0.40 next year. If you put a conservative 10X multiple on that stock, this is a $4 stock. Thinks there is more acquisition and organic growth to come.