PI maintains (U.S.) $7.75 price target on Nobilis Health

A mixed bag of a quarter isn’t shaking PI Financial analyst Bob Gibson’s optimistic take on the future of Nobilis Health (Nobilis Stock Quote, Chart, News: TSX:NHC).

This morning, Nobilis Health reported its Q3, 2016 results. The company lost (U.S.) $2.75-million on revenue of $70.7-million, a topline that was up 34.7 per cent over the same period last year.

“Nobilis made significant progress in the third quarter both financially and operationally. We continued our strong revenue performance for the year, realizing organic revenue growth as well as growth at the hospitals acquired in 2015,” said CEO Harry Fleming. “Our new credit facility, announced in October, significantly strengthens our balance sheet and substantially increases our financial resources, giving us the flexibility we need to help us achieve our acquisition goals. We also made significant progress integrating recently acquired facilities, including the five clinics and four surgery centres acquired as part of our acquisition of Arizona Vein and Vascular Clinics and our new Galveston-area surgery centre. We remain on track to deliver the full-year 2016 financial guidance we previously provided.”

In a research update to clients today, Gibson maintained his “Buy” rating and one-year price target of (U.S.) $7.75 on Nobilis Health.

Gibson notes that Nobilis Health’s third quarter revenue came in well ahead of the consensus estimate of $65.7-million, but EBITDA of $4.3-million was well below the consensus of $10.3-million and his estimate of $9.9-million. The analyst points out that management reiterated its guidance, but is also no longer providing acquisitions growth guidance. He says that changes the way he arrives at his numbers.

“For 2017, we had been forecasting a very aggressive acquisition program,” he says. “We have scaled that back, assumed an aggressive roll out of vascular in Texas, boosted the margin slightly to incorporate the more profitable vascular business to arrive at revenue of US$343.6M and Adj. EBITDA of US$67.7M.”

Gibson is modeling EBITDA of $58.2-million on a topline of $281.1-million in fiscal 2016.

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