The lobby of the BLVD Treatment Center, in Los Angeles. A better than expected quarter has prompted Mackie Research Capital analyst Russell Stanley to upgrade Convalo Health (Convalo Health Stock Quote, Chart, News: TSX:CXV). Yesterday, Convalo Health reported its preliminary Q3, 2015 results. The company said it posted adjusted EBITDA of more than $1-million on revenue would exceed $5.6-million, up from $2.3-million in the previous quarter. "This quarter is a turning point for Convalo," said Chairman Michael Dalsin. "Two of the three months of this quarter represent a fully integrated addiction services company, or what we call a pod, in the heart of Los Angeles. That includes a detox centre, a men's and women's residential centre, and an outpatient centre. We have finally moved from the start-up phase to the fast-growth phase of this company. We have systematized our growth plan, bolstered our executive team and have visibility into the next few years of our business. We have launched our second pod in west Los Angeles and expect to launch our third pod in San Francisco very soon. I expect the impact of these investments to be reflected in next quarter's financials." Stanley notes that Convalo's run rate is now at $30-million. He expects that both organic growth and growth through acquisitions will continue for the company, ultimately ramping to $53.6-million in revenue in fiscal 2016. "We continue to view CXV as an undervalued play on anticipated demand growth for substance abuse treatment in the United States." says Stanley. "The growth in Q2/15 was driven solely by the continued ramp up of the Company’s first outpatient facility, while the growth in Q3/15 was further supported by the acquisition of the detox and inpatient facilities in June. With those acquisitions expected to make a full quarter contribution, we expect additional revenue and EBITDA growth in Q4/15." In a research update to clients today, Stanley upgrading his recommendation on Convalo Health to "Buy" from his previous "Speculative Buy", and maintained his one year target price of $0.90 per share, implying a return of 186% at the time of publication.