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Protech Home Medical has tons of upside, Beacon Securities says

Quipt Home Medical

Look for a strong 2019 from Protech Home Medical (Protech Home Medical Stock Quote, Chart TSXV:PTQ), says analyst Doug Cooper of Beacon Securities. In a client update on March 13, Cooper reiterated his “Buy” rating and C$3.00 target price, which represents a projected 12-month return of 237 per cent at the time of publication.

US-based in-home medical monitoring company Protech released its first quarter 2019 financials on February 26, coming in with revenue of $21.7 million, a 17.1 per cent year-over-year increase, and Adj. EBITDA of $4.4 million, a 186 per cent year-over-year jump. (All figures in US dollars unless where noted otherwise.)

The results were better than expected, with Cooper calling for $21.7 million in revenue and $3.9 million in Adj. EBITDA. The analyst estimates that Protech’s Q1 saw organic growth of about 15 per cent, which he pegs at approximately twice the growth rate industry-wide.

Cooper says the quarter shows the company’s improvement in its operations, noting that patient growth for the company was 4.2 per cent over the quarter, which implies an increase of 13 per cent in total revenue per patient. As well, the company’s EBITDA margin shows a marked ramp-up, according to Cooper, who puts the margin over the last five quarters as eight per cent, 11.9 per cent, 18.3 per cent, 19 per cent and 20.3 per cent, respectively.

“Given the better than expected Q1/FY19 results, we are raising our forecasts for this year. We now estimate revenue/EBITDA of $88.7 million/$16.8 million (was $84.8 million/$16.1 million). We are maintaining our current FY20 forecast of $104.1 million/$20.8 million. We note that we believe our forecasts have an upward bias given its improved balance sheet and the potential for acquisitions,” says Cooper.

“We continue to be very impressed with management’s operational execution. The industry should continue to see above average growth rates driven by positive demographic trends,” he says.

Cooper notes that as of the end of Q1, PTQ had “the best balance in its history,” with about $12 million in cash, giving the company ample funds to grow both organically and inorganically.

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About The Author /

Jayson is a writer, researcher and educator with a PhD in political philosophy from the University of Ottawa. His interests range from bioethics and innovations in the health sciences to governance, social justice and the history of ideas.
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