VitalHub Corp. (VHI-T)

A large position for him. They bring tech to the healthcare industry, like software. They had a previous business that they grew, then sold to private equity and finished their non-competes, and now they're doing that again with a new product that is starting to produce cash. Margins have risen to 24%, and they target 40%. It's becoming a cash engine that they're using to reinvest in products. They have a ton of cash as they grow 10-15% organically.

Its software makes health care more efficient. It is in the U.K., Canada and Australia and growing rapidly with lots of upside in the U.K. With $100 000 cash and lots of upcoming acquisitions, its valuation should be cut in half once it starts deploying its capital. Should be a $20 stock a year from now.
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Amazing job. Underlying metrics on profitability are incredible, but can it continue? If yes, will be a multi-compounder for years to come. As they keep delivering, so does confidence that they can keep doing so. Vast addressable market. Savvy management. 

You have to watch carefully that numbers back up the story. Safe to accumulate.

VHI’s EBITDA margin has improved in recent quarters to 26% in Q2-2024 compared to last year’s 23%. EBITDA Margins have improved gradually due to a business model with highly favourable operational leverage, where most of the growth flows straight to the bottom line due to the limited capex required. The recent acquisition of Strata Health marks VHI’s largest acquisition ever. We have comments on the recent acquisition here. 

VHI will fund the acquisition for a total up-front consideration of $32.3M through a combination of cash ($18.6M) and 1,480,726 shares. On the trailing twelve-month basis, Strata Health generated $12.7M in revenue and has an annual recurring revenue (ARR) of $12.3M, the deal is valued at 2.6x ARR. We think the deal is highly accretive to VHI as VHI itself is trading at around 10x ARR. We like the deal, we think VHI can continue to execute its acquisitive growth strategy in an efficient way going forward.
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Still loves it, one of his largest positions, high quality, growing. All-time high today. Benefitting from rate-hike sentiment. Healthcare scheduling software. Excitement around raising money to make acquisitions, which have yet to come to pass. Very good acquirers. Still reasonable at around 20x.

He has big expectations. Sitting on a pile of cash to make acquisitions. Thinks it will be a $10 stock in a year. Exceptionally good company.

Margins are 22% and the company projects 40%. Trades at 18-19x PE. Will grow topline at 15-20% annually for the next 5 years as profits grow faster. Is the next Descartes.

2Q sales rose 38% to $13.1M; margins dipped to 81% from 83% due to an increase in lower margin service revenue. EBITDA nearly doubled to $1.9M. Net income was $0.72M from a loss last year. Cash was $22M. Results look good to us; Cormark raised its target price slightly. EPS is predicted to double in 2024, with slower growth following the next year. 
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Healthcare tech company.
Has owned on and off over the past few years.
Very strong management team.
Multiple is high given current share price.
Defensive software name.

Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. Sales growth has restarted. Margins contracted slightly. Revenues increased by 36% from the same quarter a year prior. They overall missed their quarter but growth prospects still look pretty good. Unlock Premium - Try 5i Free

Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. Competition in the space has increased. The valuation has reached above 6x sales. Valuation is more reasonable at 3x sales. The company also has small cap risk but sales growth has been strong. A 5+ years time horizon. Unlock Premium - Try 5i Free