Cantor Fitzgerald analyst Tom Liston says QHR Technologies (TSX:QHR) is starting to fire on all cylinders.
This morning, QHR reported its Q4 and fiscal 2012 results. The company earned $431,640 on revenue of of $29.5-million, which was a 23.5% increase over fiscal 2011.
CEO Al Hildebrandt said the company gained momentum in the latter half of the year.
“Two thousand twelve was a significant revenue growth year for QHR. Our No. 1 goal was to integrate the new Healthscreen assets acquired in October, 2011, into the company and prove out our ability to be scalable with acquisition growth opportunities,” he said. “Although we did have integration costs effecting first quarter, second quarter and third quarter margins, we returned to stronger margins in fourth quarter. We are excited about 2013 and look forward to both top- and bottom-line growth during the year.”
Liston says he is encouraged by the growth in QHR’s annualized recurring revenue, which was $22.0 million at the end of the quarter or 75% of trailing-twelve-months revenue, a number that was up sharply from the less than 60% the company posted at the end of 2011. The Cantor Fitzgerald analyst says the strong numbers underscore his original investment thesis on the company; that QHR has a growing Electronic Medical Records business that already has a national footprint in Canada and is well positioned to secure a position in the U.S. healthcare transaction processing market.
In a research update to clients this morning, Liston maintained his BUY recommendation and increased his 12-month target on the stock to $1.10 from $1.00.
QHR Technologies has become an aggressive consolidator in the Canadian electronic medical records space. Last summer’s pickup of Vancouver-based Open EC Technologies was the company’s twelfth acquisition in just nine years. QHR’s success mirrors larger trends: a recent 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 his target is based on 12× his fiscal 2014 EPS estimate for QHR.