Opinions
Bruce Campbell (2)
Viemed Healthcare
VMD-T
BUY
Oct 04, 2018
Stock price when the opinion was issued
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VMD EPS of 4c beat estimates of 3.5c; Revenue of $39.6M beat estimates of $38.5M. EBITDA of $8.3M beat estimates by 3%. Sales rose 23%; EPS though was flat year over year. EBITDA rose 15%. 2Q Guidance was maintained and another acquisition was announced. Cash rose to $23.5M (no debt). We would consider it a good quarter.
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Premium contentWhen markets hit 52-week highs and signs point to frothiness, where do you put your money? The safe route is a savings account paying 5%. The riskier one, but could pay you more later, lies in unloved sectors. Healthcare is one. As a ventilator company, Viemed thrived during the pandemic, which explains its 174% rise in the last five years. This year has been a different story as VMD jumped to $16.25 last April, but has sunk to $11.50. (These are its TSX prices. This Louisiana-based company trades on the NYSE as well.)
EPS of $0.04 missed estimates of $0.07 and revenues of $50.6M beat estimates of $49.9M. Revenues grew by 28% year-over-year, and its Adjusted EBITDA grew by 21%. It has no debt and management expects to generate revenues of $53.8M to $54.8M for Q2 2024. It was cash flow negative for the quarter, but its margins are good and it has a strong balance sheet. For a company growing fast with good profit margins, it is only trading at 20X forward earnings, but it is highly volatile and a small name. We consider the results overall decent, but investors are likely not pleased with its earnings miss.
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Momentum has been improving recently and VMD is up 10% year-to-date. Recent earnings were positive with the stock beating EPS and revenue estimates and continuing to grow positively. The stock continues to look good fundamentally with positive, growing free cash flows and a net cah balance. Its valuation at 25x forward earnings is also not bad given the strong earnings and revenue growth expected over the next few years. We think it is be worth holding as it is a fundamentally sound business in our opinion.
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They are an interesting company, spun out of the PHM-X group. They have been executing very well. There was a study that looked at what happens when people are closely monitored and it was very in favour in terms of what Biomed does. This is home monitoring of the COPD disease so they can push them out of hospitals sooner. They were growing at 20% per year organically. He continues to own it. PHM-X also looks really attractive now.