QHR’s (TSXV:QHR) high levels of organic growth, margins and recurring revenue is a “compelling combination”, says Cantor Fitzgerald Canada analyst Justin Kew.
This morning, QHR reported its Q3, 2014 results. The company earned $60,635 on revenue of $6.9-million, a 16% increase over last year’s $6.0-million topline.
“We are pleased with our progress in Q3 and the key milestone events that occurred during the quarter,” said CEO Al Hildebrandt. “At our annual general meeting in September, we outlined our future direction and we are committed to driving the business forward with these themes as our guide. We continued to attract and add new clients in the quarter both organically, and through competitive take-aways, further strengthening our market leadership position.” Mr. Hildebrandt further commented: “Becoming ASP funding eligible in Ontario opens up new opportunities for QHR and for Ontario physicians. We look forward to utilizing our Eastern Canada data centre to host clients in Ontario and Nova Scotia.”
Kew says the quarter was essentially in-line with his expectations. He notes that the company’s recurring revenue run-rate increased to $23.0 million, which is a healthy 83% of its total revenue. He thinks QHR’s recent acquisition of Medeo demonstrates that it has an opportunity to become the go-to connected platform for healthcare providers.
“We view the high organic EMR growth, high EMR EBITDA margins and high recurring revenue as a compelling combination that is not found in many businesses.” says Kew.
In a research update to clients this morning, Kew maintained his “Buy” recommendations and one-year target price of $1.90, implying a return of 54% at the time of publication.
Disclosure: QHR is an annual sponsor of Cantech Letter. Cantech Letter Editor Nick Waddell recently purchased shares of QHR in the open market.