Expect more acquisitions from Nobilis Health, says PI Financial

After a quarter that came in as expected, PI Financial analyst Sheila Broughton remains bullish on Nobilis Health (Nobilis Health Stock Quote, Chart, News: TSX:NHC, NYSEMKT:HLTH).

Yesterday, Nobilis reported its Q2, 2016 results. The company earned (U.S.) $2.51-million on revenue of $61.9-million, a topline that was up 26.6 per cent over the same period last year.

“Our second quarter results reflect a continuation of our growth and operating strategy, including strong growth in case flow and higher average revenue per case, driven primarily by acquisitions made in 2015,” said CEO Harry Fleming. “As we announced Monday, we have entered into an agreement to acquire Arizona Vein and Vascular and its affiliated clinics and ambulatory surgical centres (ASCs), adding five locations in the Phoenix and Tucson metropolitan areas and a new vascular brand. Looking ahead, we continue to seek potential acquisition opportunities in which we can leverage our marketing capabilities.”

Broughton points out that Nobilis has done away with the practice of providing guidance on acquisitions growth, but says she expects management will indeed complete further accretive acquisitions.

“Management updated its 2016 guidance focusing solely on organic growth which remains at 20% organic revenue growth to $275M and 21% organic Adj. EBITDA growth to $51M. The Company is no longer providing acquisitions growth guidance which had previously been for $45M of revenue growth and $14M of Adj. EBITDA growth in 2016.”

Broughton believes Nobilis’s 2016 revenue will come in at $318-million and will grow to $348-million the following year, but cautions that she has not included acquisitions in her 2017 forecast.

In a research update to clients today, Broughton maintained her “Buy” rating and one-year price target of (U.S.) $7.00 on Nobilis Health.

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