VitalHub earns price target raise from Beacon analyst Leung

Beacon Securities analyst Gabriel Leung raised his price target on VitalHub (VitalHub Stock Quote, Chart, News, Analysts, Financials TSXV:VHI) to C$14.50 from C$14.00 on June 19, following the company’s completion of its acquisition of UK-based Induction Healthcare Group.

While the deal is expected to temporarily weigh on margins during integration, Leung said he remains confident in management’s track record and forecasts improved EBITDA performance by Q4 and into fiscal 2026.

“As a reminder, VitalHub paid £9.7M in cash for Induction (which was a publicly-traded company),” Leung said. “For the six-months ended September 30, 2024, Induction generated revenues of £5.4M (including £0.2M from discontinued operations), gross margins of 78.2% an Adjusted EBITDA loss of £0.9M.”

Leung said Induction is expected to temporarily reduce VitalHub’s EBITDA margins in the short term (Q2/Q3) as integration efforts continue. These include eliminating public company costs, reducing overlapping administrative expenses, and moving R&D to VitalHub’s Sri Lankan operations. He also noted that the company is still integrating Strata Health, its largest acquisition before Induction.

“However, given management’s strong integration track record, we believe EBITDA margins should improve in the Q4 timeframe and into CY26,” he said. “We would also note that pro-forma, the company still has ~$73M in cash and $65M in available credit facilities for additional M&A (although we expect things to slow over the near-term as management digests the latest transaction).”

Leung expects VitalHub Corp to generate $22.2-million in Adjusted EBITDA on $95.5-million in revenue for fiscal 2025. He projects those figures will improve to $30.0-million in EBITDA on $110.3-million in revenue in fiscal 2026.

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