Look for solid organic growth from QHR’s Q1, says Laurentian

When QHR (QHR Stock Quote, Chart, News: TSXV:QHR) reports its first quarter results on May 12, Laurentian Bank Securities analyst Nick Agostino says he will be looking for strong recurring revenue and solid organic growth.

QHR’s Q1 results fall closely against the company’s fourth quarter and fiscal 2015 results, which it reported it late April. 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.

“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 following the release of the results. “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.”

Agostino says he expects QHR will earn $0.01 a share, post adjusted EBITDA of $1.0-million and deliver revenue of $7.5-million in the first quarter. He thinks the company’s already strong recurring revenue numbers will show improvement amidst the changes it has made in the past year.

“We model ~20% YoY recurring revenue growth to $6.5M and assume ~300 new physicians are added to the platform as inferred from the Q4/15 call, with the timing of their impact conservatively modeled for late Q1,” says the analyst. “We model Professional Services fees of $1M, down 29% YoY to reflect the new Q2/15 pricing model. Excluding an incremental 150+ Jonoke client contributions (est. $100k), we model EMR organic growth of 8% YoY.”

In a research update to clients today, Agostino maintained his “Buy” rating and one-year price target of $2.00 on QHR, implying a return of 21.2 per cent at the time of publication.

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

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