Premier Health of America Inc (TSXV: PHA) is a Canadian Health technology company that provides a comprehensive range of staffing and outsourced services solutions for healthcare needs to governments, corporations, and individuals through its proprietary platform.

Key Highlights

• Inaugurated non-ambulatory transport services: Following the granting of two long-term contracts in March 2021 comprising an anticipated 28,000 transport segments each year, the Corporation launched its transportation division operations in June. Expenses linked to the service's debut weighed on the Corporation's consolidated EBITDA for a while, but revenues for the division will be consolidated for a full quarter in the current fiscal year's fourth quarter.
• Robust performance: In comparison to the previous fiscal year, the company's nine-month performance during the current fiscal year has been outstanding. Its consolidated revenues for the first three quarters ended June 30, 2021, were CAD 49.0 million, up 255% from CAD 13.8 million in the previous comparable period. While EBITDA grew from CAD 1.5 million to CAD 4.2 million in pcp. The purchase of Code Bleu and organic growth were the main drivers of revenue and EBITDA growth in the first three quarters of 2021.

Source: Company 

• Registered higher income from operations: In the first nine months the company witnessed elevated income from operations at CAD 1.6 million compared to CAD 0.6 million in the previous corresponding period. The increase was primarily due to higher net income.

Financial overview of Q3 2021 (Expressed in CAD)

Source: Company

• In Q3 2021, the company’s revenue grew heavily to CAD 18.6 million against CAD 5.5 million in pcp, mainly attributable due to the consolidation of the Code Bleu and Solution Nursing acquisitions as well as organic growth.
• Gross income reported by the group stood at CAD 4.4 million against CAD 1.5 million in Q3 2020.
• The operating income registered by the company stood at CAD 1.1 million against CAD 0.4 million in pcp. Although, it registered higher administrative expenses.
• On the back of robust revenue, the company made healthy operating profit and reported a net profit of CAD 0.63 million V/s CAD 0.39 million in pcp.
  

Risks associated with investment

A scarcity of healthcare personnel may lead to higher recruiting and retention costs, as well as a loss of clients and revenue, all of which would be detrimental to the company. Regulatory risk, capital and liquidity restrictions, as well as financing problems, all affect the firm. Furthermore, investors are exposed to liquidity risk due to the company's small market size categorization. 

Stock recommendation

The firm is quickly developing organically and via acquisitions to maintain its growth trajectory. The Code Bleu and Solution Nursing acquisitions, which accounted for the majority of revenue and EBITDA growth in the first three quarters of 2021, had a significant impact on sales, which increased to CAD 49.0 million from CAD 13.8 million in the previous quarter. It also had a significant growth in its bottom line. The company has been busy introducing new features and applications, and it expects a 2% rise in annual income as a consequence of these changes, which is a big boost. In June, the Corporation began providing non-ambulatory transportation services. On the valuation front, the stock trades at a significantly lower EV/EBITDA multiple of 8.9x on Next Twelve Months (NTM) basis, compared to the industry median of 12.0x. Hence, considering the facts mentioned above, we recommend a “Speculative Buy” rating on the stock with a lower double-digit upside (percentage term) at the closing price of CAD 1.12 on October 06, 2021. 

Technical Analysis Summary

One-Year Technical Price Chart (as on October 06, 2021). Source: REFINITIV, Analysis by Kalkine Group

*The reference data in this report has been partly sourced from REFINITIV.

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