Centric Health is a Buy, says Byron Capital’s Douglas Loe

Centric Health (TSX:CHH) today reported its Q1, 2012 results. Due mostly to what the company calls “seven notable acquisitions ” revenue was up a whopping 353% to to $104.3-million from $23.0-million in the prior-year.

The company’s bottom line improved, too. Adjusted EBITDA increased 350% to $11.7-million from the $2.2-million the company reported in Q1 2011.

Byron Capital Healthcare analyst Douglas Loe says that although Centric’s margins grew to 11.2% from 8.1% in Q4, they remain below the industry average of 12.5% to 13%, and well below the 15% margins Loe expects the company to post by the second half of 2013. Still, the Byron analyst believes that the numbers are solid, considering the feverish pace of Centric’s acquisition spree. In a research update to clients today, Loe Maintain BUY rating and $2.00 target price.

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Founded in 2001, Toronto’s Centric Health provides a range of healthcare services including medical assessments, rehabilitation management and physiotherapy. The company has quietly become a player in the Canadian healthcare services field, having grown its revenue from $15.7-million in fiscal 2008 to more than $200-million in 2011. The physiotherapy market has become a focus for Centric. In Q1 alone, the The company expanded its national physiotherapy footprint through the acquisition of five physiotherapy businesses.

Loe says physiotherapy, having generated $45.1 million in revenue at a 15.5% margin, is a bright spot for Centric. The company’s performance in that area, he says, is covering for softer margins in the company’s surgical and medical centers, and in pharmacy.

Share of Centric Health closed today down 5% to $1.13.

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