Following its most recent acquisition, Ventum Capital Markets analyst Stefan Quenneville has maintained his “Buy” rating on Nova Leap Health (Nova Leap Health Stock Quote, Chart, News, Analysts, Financials TSXV:NLH).
On October 15, Nova Leap announced it had acquired the assets of an unnamed home care services business in Florida that has annual revenue of approximately $3.1-million.
“As mentioned in previous shareholder communications, we have been actively working on acquisition opportunities since re-engaging our M&A program,” CEO Chris Dobbin said. “We have been looking for opportunities in Florida for quite some time given the long-term prospects for the market. We are looking forward to supporting the existing management team, a talented group who have been successful in growing this agency.”
The analyst characterized the development.
“This morning, Nova Leap announced the signing of a definitive agreement to acquire an undisclosed home care service company located in the state of Florida for US$1.6M,” he wrote. “The deal is expected to close in November, and be immediately accretive with the target company reporting annualized first eleven months F2024 revenues of ~US$3.1M and EBITDA of ~US$345K, representing multiples of 0.5x and 4.6x, respectively. We are pleased to see the Company continue with its rekindled M&A program, which we expect to persist for the foreseeable future given the attractive demographic growth trends and fragmented market that characterize the home care industry.”
In a research update to clients October 15, Quenneville maintained his “Buy” rating and price target of $0.60 on NLH, implying a return of 150% at the time of publication.
The analyst thinks NLH will post Adjusted EBITDA of $1.8-million on revenue of $26.7-million in fiscal 2024.
“Given our forecasts had already contemplated M&A in the back half of 2024, we are not making any material adjustments to our estimates,” he added. “Therefore, we are maintaining our BUY rating and target of C$0.60. NLH currently trades at 9.3x our forecasted 2024E adj. EBITDA versus peers at 14.4x and 30.3x at the high end. We value NLH based on the average of a DCF valuation (11% WACC, 3% terminal growth) and 15x 2024E EV/EBITDA multiple. We believe a higher-end multiple is warranted due to NLH’s lower-risk payor mix, faster-expected growth, and the pure-play nature of its operations.”
About The Author /
Cantech Letter founder and editor Nick Waddell has lived in five Canadian provinces and is proud of his country's often overlooked contributions to the world of science and technology. Waddell takes a regular shift on the Canadian media circuit, making appearances on CTV, CBC and BNN, and contributing to publications such as Canadian Business and Business Insider.
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