A record revenue quarter from QHR (TSXV:QHR) has analyst Pardeep Sangha feeling good about the Kelowna-based company’s future.
This morning, QHR reported its Q3, 2015 results. The company lost $1.14-million on revenue of $7.1-million, a 13 per-cent bump over last year’s third quarter topline of $6.2-million.
“This quarter delivered increases in both sales and installation volumes which are leading indicators of growth for QHR,” said CEO Mike Checkley. “We are seeing record levels of electronic medical records system adoption across the country and, as the largest single platform EMR in Canada, our momentum continues to build.”
Sangha says with a comprehensive restructuring nearly complete, there are a number of positive catalysts for QHR, including the potential for new acquisitions, improved profitability, more physicians using its Accuro solution, and the fact the QHR itself is an attractive acquisition target.
“We believe QHR is at the end of its restructuring process,” says Sangha. “QHR has gone through substantial change over the past year including a chnage of leadership, material changes to its Board of Directors, divestment of the unprofitable RCM division, and an increased focus on profitability and the company’s core EMR business. We view the divestiture as a positive step towards sustained profitability; and focuses the Company on the EMR market in Canada, which will lead to a stronger company in FY16 and FY17. We like QHR as an investment opportunity because of the company’s high recurring revenue model, steady grwoth profile, potential for M&A activity and healthy balance sheet.”
In a research update to clients today, Sangha maintained his “Buy” rating and one-year target price of $1.75 on QHR, implying a return of 42% at the time of publication.
Disclosure: QHR is an annual sponsor of Cantech Letter and Editor Nick Waddell is a shareholder.