Patient Home Monitoring (PHM.V)

This is a firm with tremendous growth. It is an American business that came to Canada to raise some equity money. Under Obama care 12 or 13 million more people have health insurance. The American health system is struggling to move people out of hospitals and look after them at home. To look after them at home, you need home monitoring. This company is buying up a lot of the small firms that do that and consolidating them. Has a lot of room to grow.

They continue buying home monitoring patients and are doing that very comfortably. In the US there are pressures on the hospital systems to get people served in their homes or clinics. Management of this company seems to be extremely good and it will continue on up.

The inter-day volatility has been incredible. The company is great, but they are integrating a lot of businesses quite quickly and we’ll all be quite happy with the results. A lot of moving parts, but he is comfortable here. He is quite comfortable that by year-end the stock will be $2 or higher.

This is really in a defensive area. People are not going to change their home monitoring, especially if the economy is going bad. It tends not to be affected by the economy so much. However, it is a growth by acquisition company, which is why there has been a huge run up. They are operating in a fragmented industry and are doing a good job of it. There has been a little bit of a correction taking place, which is why investors are doing a risk-off. There is a lot of build-up speculation in the stock on acquisitions. On these types of companies, if the stock market does correct, investors will start to rush out of them. Has recently broken down a little bit which is a little bit of concern.

Had a conference call on Wednesday night. Doing an excellent job. A growth by acquisition story in the US. The latest acquisition will get the value down to around $1.50, which is roughly where it should be. He trimmed some of his holdings at $1.98. At around $1.50, you could pick away at this. The space is so volatile that you don’t really need to chase it. There is still a long ways to go on this one.

His impressions were that they are focused on an acquisition and roll up strategy. Their conference call did not focus on operations. He does not know if they can integrate their acquisitions and operate them properly.

The longer-term trend is intact, higher highs and higher lows. This obviously needs some consolidation. Look towards buying this more towards the 50 day moving average. (See Top Picks.)

Had a major break out in 2014, which is very bullish. This is called a parabolic movement, which is due for selloff. He would think it might pullback in the short term.

Has been a very good trader. Market cap of $365 million. 10,000 people will turn 65 in the US today, so this company is going after the homecare market. You have a huge baby boom generation that is getting older and needs homecare. He really likes the trend. Hospitals are trying to get patients out of the hospital and into the home. The government is trying to save money by treating patients at home. Here you have a consolidator that is chipping away and buying up companies that treat in-home patients, and will start cross-selling different products and different services. Made some great acquisitions, but in their last year they had 58% internal growth without acquisitions. Just did a $60 million financing and already had $20 million in cash, so now they have $80+ million to spend, and may start going after bigger acquisitions in the US while the timing is right. Management owns 11%.

Has done phenomenally well in the short term, but thinks there is a lot of room for it to grow. Chairman just recently says he can see this being a $1 billion revenue company. That would be down the road a ways. With some more big acquisitions, they could possibly exit the year in the $150-$200 million range. They want to do 1 acquisition a month for the rest of this year. They have great margins, 25% EBITDA. He thinks the stock price could easily double over the next couple of years or so.

Patient Home Monitoring (PHM-X) or Convalo Health International (CXV-X)? She loves this one and has done really well on it. The company has been rolling up a segment of the US healthcare system that has been very fragmented. This is home monitoring of people with heart conditions or COPD. There are about 10,000 little companies that have call centres taking care of patients, and it is all reimbursed by Medicare and Medicaid. This is a huge opportunity for them. Have bought 9 companies so far and have signed 3 other companies which hopefully they will close on. With all of this, you have a company that is doing $100 million in revenue and $20 million in EBITDA. They still have money on their balance sheet and they can take on debt, so they have lots of room to do more deals. Management is really good at doing deals.

He only owns some warrants and some debt. He thinks it is fairly valued for the current level of business. The debt level is increasing and they may have to raise some equity soon. They are still looking at buying products where they can get the patient lists and cross sell other products. He thinks it will consolidate in this range for a while.

A lot of people have liked it and it took off like a rocket. He is cautious about these because they come down as fast as they go up. The business does not have scale and it is difficult to see if it is will have an impact over time. Be cautious. Take some money off the table.

It has very accretive revenues. The hospital system in the US is trying to push people out into the homes to get treatment. PHM-X is very good at consolidating. It is possible that it can go on and on. He is not sure there are any risks unless the US adopts Canada’s health care system. The same management team runs CXV-X.

A stable base of earnings. When the market gets a little toppy, these kind of companies tend to do well. There is no resistance. This chart is very positive. It has now broken above its trading channel. Even if it breaks below the bottom of the trading channel, that does not mean you have to sell it.