QHR is on the right track, says PI’s Sangha

PI analyst Pardeep Sangha says he is encouraged by QHR Corp. (TSXV:QHR) management’s broad vision that includes tackling the U.S. market.

Yesterday, QHR held its AGM in Toronto and provided a strategic corporate update. He says management is committed to fixing its stateside business. Although its RCM business in the U.S. is losing money, Sangha says management expects that cost containment measures and revenue growth will reverse the trend. The analyst says he expects that could happen by the Spring of 2015.

Sangha notes that QHR is currently evaluating acquisitions in the Canadian market and plans to look at U.S. acquisitions in the future.

The analyst says management presented a vision of a “connected platform” at the centre of patient care. The company says its intends to capture greater healthcare spending from each client from offerings that include EMR, billing, scheduling, clearinghouse, transaction processing, eReferrals, and electronic prescriptions.

Sangha says management said its goal is to add a thousand new healthcare providers this year. The company said it intends to accomplish this goal by winning business from competitors, through acquisition, by signing up new doctors, and through being approved as an ASP vendor in Ontario.

In a research update to clients this morning, Sangha maintained his “Buy” recommendation and one-year target of $2.00 on QHR. This target, he says, is based on an EV/Sales multiple of 2.6x and an EV/EBITDA multiple of 15x his fiscal 2015 estimates.

Disclosure: QHR is an annual sponsor of Cantech Letter.