Healthcare provision in the US is incredibly complex, made even more so by its continued evolution to cater for the ageing demographic, new insurance models and increasing healthcare needs. Medical services provider Constellation Healthcare (CHT) “is well placed to take advantage of this new paradigm”, according to chief executive Paul Parmar. The group has spent the past few years bulking up its operations through acquisitions and is now beginning to reap the rewards.
That acquisition strategy has been complemented by organic growth, which saw sales climb 22 per cent during the first half of the financial year. Constellation continues to increase the number of doctors using its medical billing platform and won 15 new clients in the period. Cost cutting, particularly in the medical billing division, helped to inflate adjusted operating profit margins, overall boosting operating profit by 92 per cent to $57m.
Investments in the first half of 2015 somewhat stunted free cash flow, despite the cash generative nature of the business model. But with those investments now yielding benefits, free cash flow has moved from a $4m outflow to an $11m inflow. Thus, Constellation has paid down its debt and moved into a net cash position.
Broker finnCap has upgraded 2016 full-year forecasts and now expects adjusted pre-tax profits of £31.6m and adjusted EPS of 22.1p (from £20m and 20.4p in FY2015).
CONSTELLATION HEALTHCARE TECHNOLOGIES (CHT) | ||||
|---|---|---|---|---|
| ORD PRICE: | 151p | MARKET VALUE: | £ 133m | |
| TOUCH: | 146-155p | 12-MONTH HIGH / LOW: | 180p | 125p |
| DIVIDEND YIELD: | NIL | PE RATIO: | 11 | |
| NET ASSET VALUE: | 127ȼ* | NET CASH: | $9.5m | |
| Half-year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (ȼ) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 32.0 | 4.2 | 4.0 | nil |
| 2016 | 57.0 | 15.4 | 11.0 | nil |
| % change | +78 | +268 | +175 | - |
Ex-div:na Payment:na *Includes intangible assets of $99m, or 112ȼ a share £1=$1.33 | ||||
