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Patient Home Monitoring 2016 guidance is disappointing, says Mackie

Patient Home Monitoring

Patient Home MonitoringNew guidance from Patient Home Monitoring (Patient Home Monitoring Stock Quote, Chart, News: TSXV:PHM) is sending Mackie Research Capital analyst Russell Stanley back to the drawing board.

In a press release issued yesterday, Patient Home Monitoring provided guidance for its current quarter and the rest of 2016. The company said it expects that Q2 revenue will come in at better than $32-million, and that growth in the third and fourth quarters will exceed 10 per cent.

Shares of the company fell sharply Thursday on the news.

“Because of Medicare reimbursement cuts and other market factors, this quarter has been a reset quarter for us,” said CEO Casey Hoyt. “We continue to restructure our operations to reflect the new market reality. We see multiple growth opportunities in the respiratory business that we feel can reestablish our pattern of generating record quarters of revenues and profits. In the end, we are completely committed to this path. And we do believe that our return to solid and predictable performance will be driven by organic growth, strong cost management and limited capital investment to protect our strong balance sheet. The days ahead will be challenging, but exciting relative to PHM’s future. Lastly, contrary to recent speculation, the management team and board of directors are committed to recapturing the revenue growth and margins we expected when we joined PHM through the sale of Viemed and we are not currently seeking to sell the company.”


Stanley says the new guidance from Patient Home Monitoring is well below his estimates.

“Management has guided to revenue of $32.0 million with limited Adjusted EBITDA for the quarter ending March 31st (PHM has a September 30 FYE),” he says. “Our prior estimates were for revenue of $39.1 million and adjusted EBITDA of $6.7 million. Management cited reimbursement rate reductions from Medicare, and market dynamics impacting PHM and its peers. Our estimates had already contemplated a sequential decline from Q1/16 levels (revenue of $40.2 million and adjusted EBITDA of $7.7 million) to reflect reimbursement rate pressure on the Company’s ventilator products, partially offset by organic growth in other products, as well as the benefit of currency translation. It is clear that the sequential decline in revenue/adjusted EBITDA was greater than we expected.”

In a research update to clients today, Stanley said he would review his estimates on the company after he had spoken with management.

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About The Author /

Cantech Letter founder and editor Nick Waddell has lived in five Canadian provinces and is proud of his country's often overlooked contributions to the world of science and technology. Waddell takes a regular shift on the Canadian media circuit, making appearances on CTV, CBC and BNN, and contributing to publications such as Canadian Business and Business Insider.
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