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

• Robust performance: In comparison to the previous fiscal year, the company's performance during FY2021 has been outstanding. Its consolidated revenues in the reported period stood at CAD 66.6 million, up 222% from CAD 20.7 million in the previous comparable period. While EBITDA grew from CAD 2.1 million to CAD 5.9 million in pcp. The purchase of Code Bleu and organic growth were the main drivers of revenue and EBITDA growth.

Source: Company Filing 

• Higher cash from operations: In FY2021 the company witnessed elevated income from operations at CAD 1.9 million compared to CAD 0.8 million in the previous corresponding period. An increase was primarily due to higher net income.
  

• Strong bullish technicals: Recently, the stock witnessed a healthy rally on the daily price chart and has moved close to the upper band of the Bollinger band, along this the price also leaped its 50 days moving average, which is a positive indicator. Furthermore, 14-day RSI is hovering in a strong zone with bullish bias at 60.99.
  

Source: REFINITIV, Analysis by Kalkine Group 

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.  

Financial overview of FY 2021

Source: Company Filing 

• In FY 2021, the company revenue grew heavily to CAD 66.6 million against CAD 20.7 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 16.2 million against CAD 5.7 million in FY 2020.
• The operating income registered by the company increased to CAD 3.4 million against CAD 1.9 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 1.4 million V/s CAD 0.02 million in pcp.
  

Valuation Methodology (Illustrative): EV to EBITDA based

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 most of the revenue and EBITDA growth in FY 2021, had a significant impact on sales, which increased to CAD 66.6 million from CAD 20.7 million in the previous period. It also had a significant growth in its bottom line, which is a significant advantage. Moreover, many long-term contracts were renewed in the normal course of business during the period, along this the company provided 991,076 hours of services during FY 2021, compared to 307,020 hours in FY2020. Hence considering the rationales mentioned above and the valuation, we recommend a “Speculative Buy” rating on the stock with a double-digit upside (percentage term) at the closing price of CAD 0.91 on December 24, 2021. 

*Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached.

Technical Summary Analysis

One-Year Technical Price Chart (as on December 24, 2021). Source: REFINITIV, Analysis by Kalkine Group

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

Disclaimer

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