Nobilis Health Corp. (HLTH)
Houston based Nobilis Health, after a 2-year gradual decline, may be reaching a bottom. A bearish descending wedge pattern is still intact with the 52-week low reached in April. The stock nearly doubled to $2.10 by June, before continuing a slow grind downward.
Nobilis Health operates owns and manages ambulatory surgical centers (ASCs), and acute-care and surgical hospitals, a segment in the healthcare industry not known for awarding high multiples in terms of stock performance.
At some point, whether now, $1, $.75 or $.50 per share, HLTH will reach a bottom. It may make sense to average down into this opportunity, as ratios are becoming more attractive.
The forward P/E is around 6 with a PEG ratio of .48. The price to book value is .73. EV/EBITDA is around 5.
On 11/16/2017 Nobilis announced the acquisition through a majority ownership interest in Elite Surgical Affiliates' Portfolio of 3 ASCs and 1 Surgical Hospital. Key benefits from the purchase include:
⦁ Trailing twelve months revenue and adjusted EBITDA for the period ended September 30, 2017, were $49.0 million and $30.3 million, respectively. ⦁ Nobilis projects approximately $2 million of operating efficiencies resulting from the consolidation of one Elite ASC with one existing Nobilis ASC currently co-located at the same address. ⦁ Nobilis expects increased productivity, lower staffing requirements, and reduced operating costs over time as it leverages its expanded platform of facilities.
This transaction is significantly larger than any of Nobilis’s previous acquisitions. CEO Harry Fleming commented on the purchase “…a major stride toward the Company's goal to derive most of its revenue from in-network managed care contracts. Not only is this transaction accretive to earnings, the expanded platform of facilities and high-quality providers also enhances the Company's ability to deliver outstanding, cost-effective healthcare to our patients and communities.”
The current financial ratios could deviate significantly from norms depending on the timeline and execution of the integration. I anticipate future quarters to reveal a much stronger Nobilis with stock performance reflecting a larger, healthier company. As always, perform your own due diligence to independently reach such a conclusion.