QHR Technologies is a Buy, says Versant’s Tom Liston

Versant analyst Tom Liston, who began coverage of QHR in January 2011, is still a believer in the company and its fiscal 2011 results underscored his assessment that QHR remains undervalued. In a research update to clients today, Liston said the numbers were “were well ahead” of his forecast, especially electronic medical records revenue derived from the company’s recent acquisition of Healthscreen. Liston maintained his BUY recommendation and twelve-month target price of $1.40.

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Although still small, Kelowna’s QHR Technologies has become an aggressive consolidator in the electronic medical records space. Last August’s acquisition of EMIS Inc, the Canadian division of the Leeds based Egton Medical Information Systems, the U.K.’s largest vendor of electronic medical records, was the company’s eleventh acquisition in just eight years. QHR is clearly gaining critical mass; its revenue has grown from just $5.89 million in 2007.

QHR’s growth is mirroring larger trends. A report from MarketResearch.com said the U.S. EMR market is expected to grow from $2.17-billion in 2009 to more than $6-billion in 2015; an estimated compound annual growth rate of 18.1% .

Liston says QHR has an important first mover advantage, pointing out that the Healthscreen acquisition alone made the company Canada’s leading EMR vendor with over 9,000 physicians. He says the Healthscreen deal was an example of impressive execution because QHR acquired approximately $3.5 million in annual revenue and approximately $1.0 million in annual EBITDA for a reasonable $5.8-million price tag. Acquisitions such as this are much of the reason QHR management is projecting 26.7% growth for fiscal 2012, without factoring in any additional acquisitions.

Shares of QHR closed today down 3.5% to $.55 cents.

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