QHR gets price target raise at Haywood

A quarter that was better than he expected has Haywood analyst Pardeep Sangha raising his price target on QHR (QHR Stock Quote, Chart, News: TSXV:QHR).

Yesterday, QHR reported its fourth quarter and fiscal 2015 results. In the fourth quarter, the company earned $318,070 on revenue of $7.7-million, a topline that was up 19 per cent over the same period last year, and a record for the company.

“We finished the year in a very strong position, both in market share and financial run rates which are now profitable, driven by recurring revenue growth from our EMR platform,” said CEO Mike Checkley. “The market continues to embrace electronic medical records, and our single platform strategy sets us apart from our competition as the primary choice for both health care providers and partners as we grow our network across the country.”

Sangha says QHR’s Q4 bested his estimates for revenue and was in-line with consensus EBITDA. The analyst says the substantial changes the company made in fiscal 2015, including the appointment of Mike Checkley as new CEO, the sale of its RCM division, and the acquisition of Jonoke assets, mean the outlook for QHR is 2016 is positive, and could include a healthy dose of M&A.

“We believe the company is now well positioned to be a consolidator in the industry with a healthy balance sheet of $9.4-million in cash and no debt,” says Sangha. “Management has identified 15 other EMR vendors in Canada who could be potential targets.”

In a research update to clients today, Sangha maintained his “Buy” recommendation, but raised his one-year price target on QHR from $1.75 to $2.10, implying a return of 20.7 per cent at the time of publication.

Disclosure: Cantech Letter Editor Nick Waddell owns shares of QHR and the company is a sponsor of Cantech Letter.

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