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Strategies & Market Trends : Value Investing

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To: E_K_S who wrote (55919)	8/21/2015 9:51:51 PM
From: Graham Osborn	Read Replies (1) of 78652

Hi EKS, thanks for pointing this one out again. I look at it as a broken GARP play which could be interesting as a value play later on, but I really don't want to spend EV/ Rev > 1, EV/ EBITDA > 10, P/ TB > 5 at this point. What a stock to own in the 2000s! I'm interested in why their growth stymied in the early 2010s: Looking at that last article in SA I thought maybe the reason had to do with penetration across functionalities (e.g. EMR, RCM) for the practices they serve. ATHN could be cutting into their billing business. They may be having trouble competing with the big boys (have a look at Cerner's rev trend recently) as the smaller practices get bought out. In any case I don't think of it as a growth play anymore. I don't agree with the article the price decline had much to do with the proxy fight or Hussein's margined shares, the growth difference was just being discounted in. Mirth sounds like an interesting play if they can allow hospitals to access multiple EMRs - I used a system like that (can't remember if it was Mirth) as a resident and it was incredibly useful. But again the challenge is integrating with the existing enterprise systems and Epic/ Cerner own inpatient which is where those systems are really powerful. Collaborative care is a fragmented space but ultra-competitive. As far as the FCF yield I think FCF after acquisitions is more appropriate as they've had a whole lotta them. This is where I like looking at tangible book and it's fallen off 50M or so since rev started levelling off. This makes me think their cash flow is less good than depicted. I could see buying this later on at EV/ Rev < 0.75/ EV/ EBITDA < 7 as a good value buy. Despite the big price decline it may have further to fall. Or maybe IBM will buy them :)

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