Inspira Financial Inc (LND-X)

(A Top Pick Feb 24/16. Down 43.33%.) This was a big disappointment. They changed their focus on their business plan. He got stopped out. They were basically doing loans to doctors, but have now changed and is doing software service. The market didn’t like that.

There is a lot of stuff going on. They just declared a dividend. They’re also in the process of trying to buy a software business. Unrelated to the company, there is an activist shareholder who is questioning the acquisition. Looking at the underlying business, he was a little disappointed with what happened. Initially they were building a loan book, and basically funding US doctors’ receivables with Medicare. It sounded like a great business, but all of a sudden the loan book just flattened out. The company said they were going to go in a different direction with software as a service. That is when he got out.

(A Top Pick Oct 21/15.) He was interested to begin with, but then they did a 180° with their business. They were making cash flow loans to US doctors, which were receivables against Medicare payments. About 6 months ago they announced they were going to do software as a service and had bought a software company, but the reality was that the company was really a start-up and they were going to try and build software as a service business.

(A Top Pick Aug 19/15. Down 66.93%.) Originally they were going to be lending to doctors doing short-term financing. In the last few months they announced they were going to go into a software service business in order to provide billing software for the addiction rehab business in the US. That was a bit of a shock for him, so he exited his position. Since then, they have announced a dividend, but it hasn’t done much for the stock price.

He has a small position. They announced the quarter and it was a disappointment. They had been cash flow positive and now are not. They have a lot of cash in their business (about $.70). There is some value from that perspective, but you have to watch how they execute. Wait for the next quarter.

He would stay on the sidelines for now. The company is fairly new. They got into the business of lending to US doctors for working capital purposes, where insurance payments are getting smaller and taking longer to get paid. Found it wasn’t as easy as they had thought, so are fine-tuning their model. Until they figure it out, he wouldn’t buy it. Have lots of cash, so there are no worries of them going out of business.

Thinks the future is very bright. Unfortunately, they’ve been painted with the same brush as Patient Home Monitoring (PHM-X), because they came out of the same group, but they have done a job of building their own businesses independent of what Patient Home Monitoring has done. Great revenue numbers are coming out of them, and thinks that continues. You probably won’t see a lot from the marketing side, so you are going to have to focus on the numbers, which are going to have to speak for themselves. That could take a couple of quarters.

Provides revolving credit loans to doctors. Typically there is a payment process whereby US doctors have to wait 60-90 days to get their money from Medicare. This company takes over the receivables from Medicare and pays the doctors immediately. Have only been out for about a year, but are already cash flow and earnings positive. Likes the healthcare sector, because if there is a slower global economy, people usually don’t cut back on healthcare.

He owns and is happy to hold, but wouldn’t add any more in this market condition. Expects there will be a fairly good ramp up in their business over the next couple of years.

It has been in a tail spin lately. It partly started because of the PHM-T tailwind. But things are going fantastically for them. They are generating cash. The stock is trading at cash value right now. If you are patient and step in here with all the tax loss selling, it will be much higher down the road.

It is getting caught up in the health care meltdown because they are a lender to doctors. Doctors are finding it takes longer to get paid. LND-X has a large cash balance. It is high risk and high return. Wait until it gets closer to its cash balance before buying.

In spite of all the bad things that the street has said about Michael Dalsin, he has done a fantastic job with all 3 of his companies. This and the other 2 are fully cashed up. This one does short-term financing to doctors to pay for their accounts receivables. There will probably be some information coming out on their loan book fairly soon, and he expects it will be in the $55-$60 million range. This should trade at 2X or 3X loan book, and it is not. Super cheap and thinks it is going to be a real growth industry over the next few years.

Has good potential, but the high-quality, blue-chip companies are trading around 5X earnings right now. If you are going to go with a junior financial right now, there are better, more liquid names to go with that have more defined business plans. There are already mainstream liquid stocks that you could have at giveaway prices such as Rifco (RFC-X) or Home Capital (HCG-T).

The idea is to lend money to doctors. Patients are slow to pay. The company is risky but de-risked somewhat but a very large cash balance. He is hoping it will get traction.

They issued a lot of shares to get the deal done. It is a great business. The press release today said the loan book is growing. This is incredibly fast. They will have to raise more debt financing soon. You have an overhang from PHM-X with the same management. They just need a few quarters to prove out their thesis.