QHR Technologies (TSXV:QHR) is a good investment because it combines an attractive growth profile with defensive qualities such as a high recurring revenue base and a strong balance sheet, says Cantor Fitzgerald Canada analyst Justin Kew.
Yesterday, QHR reported its Q1, 2014 results. The company earned $96,433 on revenue of $6.8-million, a 16% bump over last year’s Q1 topline.
CEO Al Hildebrandt summed up the period for the Kelowna-based company.
“March 31, 2014, marked the completion of the first quarter that QHR focused on the EMR and RCM divisions of the company after the divestiture of the enterprise management solutions (EMS) business unit during December, 2013,” he said. “We are pleased with our overall results for the quarter especially the growth and positive financial contribution of the EMR division. With our strong balance sheet, we remain focused on developing our strategy of expanding services to our current client base and capitalizing on new opportunities for growth in the health care market.”
Kew says QHR’s numbers bested his expectations across the board and he has raised his forecasts as a result. He now believes the company will post EBITDA of $4.1-million on revenue of $27.2-million in 2014, and will top that the following year, with EBITDA of $5.6-million from a topline of $30.8-million.
The Cantor analyst says QHR, which is the largest Electronic Medical Records platform in Canada, has a real opportunity to further consolidate the industry as overall EMR penetration rates rise.
In a research update to clients yesterday, Kew maintained his “Buy” rating on QHR, but raised his one-year target on the stock to $1.90, up ten cents from his previous $1.80 target. At press time, shares of the company were even at $1.33.