"Our number one priority is to deliver shareholder value," insists Constellation Healthcare Technologies (CHT) chief executive - and controlling shareholder - Paul Parmar in the company's results statement for the six months to June. Judging by the 27 per cent increase in first-half cash profits, underpinned by strong organic growth as well as acquisitions, Mr Parmar appears to be doing both himself and other investors a favour.
As promised, CHT continues to scale up its healthcare insurance outsourcing model, and trailed these results with news it had bought Northstar First Health for up to $18m (£11.6m). That deal, alongside contract wins and the purchase of Physicians Practice Plus in March, has increased the number of doctors using Constellation by more than 50 per cent to 5500. The day after the results the company announced yet another acquisition for $14m.
Unsurprisingly for a buy-and-build company, Constellation talks more about cash profits - which exclude interest costs - than dividends. $17.2m of debt taken on before last year's IPO comes with an eye-watering interest rate of at least 11 per cent. However, Mr Parmar now believes the company should be able to borrow at half that rate, and expects steady cash generation to reduce financial liabilities to $16m by October.
Corporate broker finnCap is forecasting full year adjusted pre-tax profits of $15.6m and EPS of 15.6¢ (2014: $9.8m and 10.9¢).
CONSTELLATION HEALTHCARE TECHNOLOGIES (CHT) | ||||
|---|---|---|---|---|
| ORD PRICE: | 144p | MARKET VALUE: | £ 93.6m | |
| TOUCH: | 140-148p | 12-MONTH HIGH: | 188p | LOW: 131p |
| DIVIDEND YIELD: | 1.3% | PE RATIO: | 60 | |
| NET ASSET VALUE: | 86¢* | NET DEBT: | 0.7% | |
| Half-year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢)^ | Dividend per share (¢) |
|---|---|---|---|---|
| 2014 | 25.3 | 3.2 | 3.3 | nil |
| 2015 | 32.0 | 4.2 | 4.1 | nil |
| % change | +23 | +30 | +24 | - |
Ex-div: na Payment: na £1=$1.55 ^Pro-forma figure for 2014, pre-IPO. *Includes intangible assets of $43.8m, or 67¢ a share. | ||||
