Eight Capital analyst Christian Sgro is feeling secure about VitalHub (VitalHub Stock Quote, Chart, News, Analysts, Financials TSXV:VHI), reiterating his \u201cBuy\u201d rating and target price of $5.00\/share and projected return of 57 per cent in an update to clients on Thursday. Founded in 2015 and headquartered in Toronto, VitalHub is an enterprise software company offering case management and operational workflow solutions to over 300 health and human service providers across Canada, the EU, the Middle East, the US and Australia. Sgro\u2019s latest analysis comes after VitalHub reported its second quarter financial results, with Sgro noting the results were largely in line with projections. VitalHub reported $5.8 million in revenue for the quarter, an 8.8 per cent quarter-to-quarter increase and a 132 per cent year-over-year increase despite Sgro noting company management\u2019s point that the second and third quarters are typically VitalHub\u2019s slowest due to seasonality relating to government year-ends and reduced commercial and procurement activity. The company also reported quarterly increases in gross margin ($4.47 million and 77 per cent margin, 10.5 per cent quarter-to-quarter increase) and adjusted EBITDA ($1.05 million and 18 per cent margin, 21.7 per cent quarter-to-quarter increase). Sgro noted that VitalHub is likely to remain in the market for small acquisitions in the range of $5 million to $7 million with $17.5 million in cash available, though a more transformative acquisition could be possible if the right situation comes. VitalHub has been busy on the acquisition front recently, most recently acquiring UK-based Alamac Limited, which provides technological and advisory solutions that assist healthcare organizations across the NHS diagnose and monitor performance daily to improve outcomes and bring health and social care teams together. Meanwhile, the company\u2019s ongoing $2.5 million ARR case management deal in Nova Scotia is still in progress, with company management targeting 20,000 external clients on top of 2,000 internal clients. \u201cWith the constraints of COVID-19 in the background, we are very happy with the progress of the Company over the last four quarters. With the acquisition of Alamac Limited, our Annual Recurring Revenue (\u201cARR\u201d) now exceeds a run-rate of $21 million,\u201d said VitalHub CEO Dan Matlow in the company\u2019s August 24 press release announcing the financial results. \u201cNotably, over the last four quarters the Company has added over $3.4 million in ARR organically. This represents a 46 per cent growth in organic annual recurring revenue over and above the $8.8 million annual recurring revenue purchased through acquisitions. The Company is approaching our target of 20 per cent Adjusted EBITDA, with 18 per cent Adjusted EBITDA reported in Q2 2021. We continue to work on integrating our acquired companies to generate increased synergies both from a revenue and cost perspective," Matlow said. Sgro has made adjustments to his projections for VitalHub\u2019s financial picture, putting an uptick on subscription revenue for the third quarter ($5.5 million versus $4.9 million) to push the overall revenue projection to $6.7 million while further increases in gross margin ($5.2 million, 78.1 per cent margin) and adjusted EBITDA ($1.2 million, 18.1 per cent margin) are also forecast. Sgro has also altered his annual projections, as he now projects VitalHub will reach $24.5 million in revenue instead of $23.4 million to produce a potential 77.5 per cent year-over-year increase, with a smaller jump of 17.6 per cent year-over-year forecast into 2022, which indicates a forecast of $28.8 million in revenue instead of the initial projection of $27.5 million. The company\u2019s gross profits are now forecast to be $19 million and 77.3 per cent margin instead of $17.8 million and 76.2 per cent margin for 2021, with another forecasted spike to $22.3 million and 77.2 per cent margin in play for 2022 instead of the initial projection of $21 million with a 76.6 per cent margin. Sgro has VitalHub\u2019s adjusted EBITDA remaining at $4.4 million for 2021, but increased revenues reduce the margin to 17.9 per cent from 18.8 per cent, with a slight dip to $5.8 million and 20 per cent margin now forecast for 2022. Valuation projections also paint a promising picture for VitalHub, with Sgro forecasting a drop in the EV\/Sales multiple from 7.2x in 2020 to a projected 4x in 2021 and a projected 3.4x in 2022, while also forecasting the EV\/EBITDA multiple to drop from 43.8x in 2020 to a projected 22.5x in 2021, then to a projected 17.1x in 2022. \u201cWe believe VitalHub is pursuing large and sticky market opportunities across its case management and patient flow portfolios, informing our thesis that VitalHub is a high-quality SaaS company with a strong fundamental outlook,\u201d he said. We expect continued success cross-selling across customers and geographies to support growth as products are integrated and M&A continues.\u201d At press time, VitalHub was trading at $3.09\/share on the Canadian Venture Exchange, down nine cents from its previous close of $3.18\/share. Overall, VitalHub has produced a slight year-to-date return on investment at 8.4 per cent, with the stock price peaking at $3.71\/share on June 3.