Viemed Healthcare gets price target raise at Beacon Securities

Beacon Securities analyst Doug Cooper says growth may be accelerating for Viemed Healthcare (Viemed Healthcare Stock Quote, Chart TSX:VMD), who just reported another record quarter. On Thursday, Cooper reiterated his “Buy” recommendation and upped his target price from C$9.50 to C$10.50, implying a 12-month return of 65 per cent at the time of publication.

On Wednesday, Viemed announced its financials for the three months and year ended December 31, 2018, reporting quarterly revenue and EBITDA of $18.5 million and $5 million, respectively. (All figures in US dollars unless stated otherwise.) Q4’s revenue growth was 37 per cent year-over-year and 7.8 per cent sequentially, while management’s guidance for the first quarter of fiscal 2019 was $20 to $20.5 million with a roughly 27 per cent margin.

For the year, revenue per patient was up four per cent from $11,881 in 2017 to $12,350 in 2018, with Cooper saying the increase shows the impact of the ancillary products that VMD is selling in addition to its core non-invasive ventilation offering.

As evidence of the company’s strong organic growth profile, Cooper notes that over the last eight quarters, including Q1/19, Viemed will have doubled its revenue.

“We know that there is a large opportunity with the entire non-invasive ventilation market at less than ten per cent of its potential. As physicians and care givers become aware of the clinical efficacy of the therapy, we believe referrals from them could snowball. The clinical study undertaken by KPMG has just been started to be marketed by Viemed. Dissemination of that report should dramatically accelerate awareness,” says Cooper.

The analyst notes that VMD has increased its infrastructure to handle the growth, hiring nine new sales reps last quarter and 18 in total for 2018, with plans to aggressively hire new reps and deepen coverage in existing geographic areas as well as expand into new territories. Viemed is currently licensed in 36 states (but only operating in 25) and expects to be in the remainder of the Lower 48 states over the next 12 months.

Cooper has revised his estimates, calling for 2019 revenue and EBITDA of $83.9 million and $22.8 million, respectively, (was $80.6 million and $21.9 million, respectively), as well as 2020 revenue and EBITDA of $109 million and $29.7 million, respectively.