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LaRose held a grand total of 7,500 shares from her years of service. You should have bigger concerns than her selling.
She did have 10,000 options @ $2.32, but those expired in 2018 without being exercised. Tells you all you need to know about insiders' belief in company value :)
Barry Knott owned 64,125 shares. The rest were options never exercised. I would agree with you that he may be a seller.
Mark Lary's holdings have not been publicly reported since 2013 because his title changed from VP to Director. I would be surprised if he's selling given his 25 year history with the company.
GLXZ and DEQ valuations are roughly similar when you consider debt.
DEQ's EV at the 0.38 acquisition price is 26M for an EV/Sales of 2.7.
GLXZ's EV at 0.50 is 29M for an EV/Sales of 2.5.
Big Q1 coming. From the recently filed 10-K:
I think the most disappointing number in today's report was that revenue share is up to 53%. It was also stated in the Q, and reiterated on the call, that future quarters will be similar.
This is a drastic departure from last quarter when revenue share was just 37% and the following color was in the Q: "We expect revenue share expense to move back towards the 40% level as distributions increase as the result of the launch of new distribution channels."
I think it's safe to say most were already skeptical of that "40% level" given LDM's share, as even Merriman and Noble analysts used 45% for their modeling. Still, gross margins dropping below 50% for the first time was a surprise.
You can't believe the short interest on OTC stocks. I've seen cases where there is significant short interest reported where none exists.
XPEL's primary listing is on the TSX Venture (DAP.U) -- a USD-denominated Canadian listing. Management intends to uplist to a higher OTC tier or US exchange in the coming quarters.
Not every fresh food delivery service deserves the same multiple. Blue Apron is in the midst of rapid growth, whereas Fresh Diet's sales peaked in 2012 at over 30M versus the 24M TTM revenues cited in the PR. A new management team was brought in last summer and, from the EBITDA figure provided on last night's call (800k YTD), it sounds like they've traded sales for margin improvement. I think it's safe to assume Fresh Diet's production and delivery infrastructure is more valuable to IVFH than it would be to anyone else on a standalone basis, hence the attractive acquisition multiple. The ultimate value in this deal will come from synergies that could take many quarters to be realized.
As for the bonus structure, I think it's welcome change. EBITDA targets alone could be abused through dilution, but the additional use of share price targets aligns management incentives with shareholders.
Replay is available at http://public.viavid.com/index.php?id=110633
I agree it's unlikely, but I don't expect a split without it.
I'm rarely an advocate for splits but agree it would be beneficial for liquidity here. In the longer term it'll also be necessary for any uplisting -- NYSE MKT requires 500k public shares.
Some reach too far in search of public comps for microcaps. This PFHO/CRVL comp seemed to begin a few months ago on SeekingAlpha. A $500M/yr business with a 12% operating margin growing at 5-10% just can't be a reasonable comp for a $9M/yr business with 38% margins growing at 40%+. In my opinion, Corvel only enters the discussion here in terms of competition, M&A, or broader market dynamics. Even there the parallels are often a stretch given that workers comp is a highly fragmented business of largely private players and differs greatly between markets/states.
It's unfortunate that management has done a poor job of setting investor expectations. The fluff PR last month preannouncing "improved operating results" for the quarter is the latest example. Some of these operational issues may have been beyond management control, but overpromise and underdeliver enough times and you end up with the valuation we have now. At least we now know that Q3 will be more of the same and that operational and financial improvement should come in Q4 with the resolution of Allscripts issues (technical and opt-in), integration with new platforms (Quest, eHealthline, NextGen, LDM), and end of the excessive stock comp. It's also good to see the settlement with Physicians Interactive, as this removes the outside risk of another LDM-like royalty or worse.
I suspect the average revenue per distribution has declined a bit from the $4.25 a year ago. The release cited a 30% rise from Q1, while revenue increased just 10% sequentially. This was at least partially due to a higher share of setup fees in Q1 as indicated on the call. However, even if we were to assume that Q2 revenue was 100% distributions (it wasn't, as indicated by the gross margin), this would yield only 342k dists at $4.25. A 30% rise from last quarter would suggest just 263k in Q1. These numbers are low relative to the publicly stated figures last year, Allscripts issues aside. I mention this because we're no longer given distribution figures or revenue per distribution, yet the loose target of 1M dists for Q4 was reiterated on today's call. I know some (myself included) were previously modeling this guidance to mean a quarterly run-rate of $4M+ by Q4, but this is clearly no longer the case. On the positive side though, the gross margin of 63% (likely 60% on the distributions themselves) is considerably higher than I was expecting at the time of the LDM settlement.
On the macro front this quarter, I've only seen a few items impacting the copay coupon market.
- UnitedHealthcare rescinded their March plan to ban coupons, probably due to pushback from at least one of the national pharmacies (CVS, Walgreens?). I doubt such efforts will gain traction, as pharmacies have nothing to gain and plenty to lose by yielding to such a ban (loss of customers, potential loss of higher branded dispensing fees), nor does an insurer have any enforcement (or even knowledge of) coupons processed as secondary claims.
- In June, NJ courts denied Merck's motion to dismiss so the case against their use of copay coupons may proceed. However, similar cases have been heard and none (to my knowledge) have succeeded.
- The more worrisome news is this month's formulary announcements from CVS and Express Scripts. There are a number of new exclusions targeted at drugs with the most prevalent coupon programs. Worst case scenario, it's important to remember that only about half of coupon programs target drugs with generic competition.
I was unfortunately a buyer at higher prices earlier this year but see no rush to accumulate more. The bottom may be in at $1.10 but I expect we'll be rangebound for a few months. After the past two disappointing quarters, I believe investors (including myself) are going to want to see results before bidding this materially higher.
I agree. The language has been in their filings for several years, including the 2013 K. Looks to me like it was simply missed in Q1.
My overall take is positive. Revenue growth was a bit better than I expected thanks to the exceptionally strong UR revenues. Margins were slightly weaker than I expected (37.3% vs 37.7% Q1 and 30.5% Q213), but I suspect the recent hiring will mitigate the rising outsource fees. This will certainly be a factor to watch over the next couple quarters.
Enrollee growth continued its steady march higher to 621k and we're now getting $3.70 per enrollee. Few companies deliver such consistent quarter-over-quarter growth at these rates. The most similar in my portfolio is Biosyent and that's valued 50%+ higher on nearly every metric. PFHO needs to consolidate again in my opinion (seeing too many 15%+ spreads in recent days) but I still see significant upside in the quarters ahead.
Interesting to see 11 new hires for UR, a service that Medex has traditionally outsourced. From the Q:
I picked up 35k @ $0.1751 on that trade. Happy to accumulate below 0.20 and glad we have a nervous seller willing to take the bid.
40k was sold into the 0.19 bid at 15:08.
What's the saturation point of the expanded comic con schedule? WIZD looks cheap annualizing Q1 numbers which seems possible given the schedule of 4 events/quarter. It looks even cheaper if you assume similar profitability on 2015's slate of 23+ events. Historically only a few cities have been profitable (Chicago, Philly) and the losses from the rest have more than offset those gains, but Q1 results hinted at improvement. A more aggressive schedule amplifies the risks (untested/smaller markets, less ideal seasonal dates, cannibalization of existing markets) but also allows the company to sign bigger names, form larger media partnerships, attract more national vendors, advertise nationally, etc.
I just wonder, beyond the next few quarters, how many of these events can individual markets support? For example, Wizard is adding Indianapolis next year. There are already four other cons announced next year for the same venue alone (Indiana Comic Con, Indiana PopCon, Awesome Con, Gen Con), and plenty more in neighboring cities. This is the case in many of the cities Wizard is expanding into. Wizard may have advantages over all of them as the only national player, but that's still a lot of competition at a single venue in a smaller market. Is the demand for these events increasing a rate high enough to support all of these? If so, is it sustainable? If not, can Wizard use their greater financial and marketing resources to effectively supplant the established local event sponsors -- profitably?
Although I've done some due diligence, I'm admittedly not in tune with the trends of popular culture. I see the potential for a trade on the next couple quarters' results, but I'm not yet comfortable on the longer term thesis. Thoughts appreciated.
An updated investor presentation is available at: http://www.villagefarms.com/InvestorRelations/Presentations.aspx
An investor presentation is available at: http://ir.nv5.com/phoenix.zhtml?c=251703&p=irol-investorkit
The company is targeting 94-104M revenue ($0.80 - $0.90 EPS) for 2014 and 300M revenue (12-15% EBITDA margins) by 2016.
I didn't say $3.20 for the year. As Rawnoc noted, I said run-rate -- or 80 cents in Q4. For the year I've modeled 9.1M rev and 5.4M opex, which with a consistent tax rate yields roughly $2.70 eps. I'm assuming minimal increases in salary expense, as I'm unaware of any additional hiring YTD.
PFHO is a bit of an oddity for my investment style. I tend to favor microcaps with higher barriers to entry and ideally a disruptive technology (like Kelso Tech which I recently exited, or OptimizeRx which I recently entered) that make multi-year financial modeling a bit more reliable. Still, it seems reasonable that PFHO could get to 20M in revenues in 3 years which would likely yield more than $8 in EPS, and that's before even considering acquisition opportunities with the increasing cash flows.
I was attracted to PFHO last year for its consistent growth, operating leverage, clean share structure, CEO ownership, and increasing revenue diversity both in customer count and service offerings. All of these factors remain true today, while still relatively undiscovered with a reasonable valuation. The volatility like today just provides for some profitable trades along the way.
Agree with your sales cycle thesis for sequential quarters. We should be at an annual run-rate of 10M+ revenue and $3.20+ EPS by Q4.
I reopened a trading position today. My larger core holding remains unchanged since last summer.
I believe Rawnoc is making the case that a 15-20% rise in expenses is bullish given the leverage of the business model. This was mentioned in a recent SeekingAlpha article as well. Note, however, that the 15-20% reference in the recent Q is specific to G&A expenses (rent, licenses, travel, office supplies, etc.), not overall operating expenses. G&A was just 123k of the 1.3M expenses last Q. A forecasted increase in salaries, for example, would be a better predictor of revenue growth.
The 15-20% reference is specific to G&A, which was just 10% of overall opex last Q.
You make a good point concerning a changing price per voucher. It's entirely possible that they have negotiated different pricing (volume incentives, etc.) with various pharma companies. Likewise, the revenue share may vary by EHR platform. The "competitive reasons" cited may be flexibility with their own partner and client contracts rather than strictly competition.
I appreciate your voicing of concerns. I became aware of this story last year and started accumulating shares with the Vicis buyout. For the past year I've been weighing the enormous potential of this business with the execution risk of a fairly inexperienced management team. My confidence has ebbed and flowed here more than any other company I follow, mainly due to a lack of proactive communication. As examples, I felt that they could have been more transparent/timely about the Stastney situation, the LDM suit/settlement, and now, as you've pointed out, the Allscripts and Novartis delays that they were fully aware of on the April 1st call. However, each of these issues seems to have reached a positive resolution, and I've been impressed by just how quickly new partner and pharma relationships have developed.
In management's defense, they've been operating without a CFO, so I have hope communication will now improve going forward. They've always been pretty responsive to concerns raised on the quarterly calls (we even got a PR today after it was recommended!). I've never gotten the sense that they're trying to mislead investors, but rather just aren't always familiar with best practices.
It was a very positive call, in my opinion.
The Allscripts tech issue is already resolved and distribution is expanding with the transition from opt-in to opt-out. It's hard to quantify the Q1 impact but it was clearly significant.
Novartis (second largest customer?) paused distributions January to April. The study/audit they commissioned proved SampleMD's ROI, causing Novartis not only to resume distributions (perhaps at increasing levels?) but also highlight these results at the CBInet conference. The Q1 impact was around $300k.
I think it's abundantly clear that Q1 revenues would have reached $2M without these two issues.
Management reiterated a target of doubling distributions in 2014 (implying 2.4M). Also targeting 1M/quarter by year-end. I agree with you that their citing of competitive reasons for the lack of Q1 disclosure if rather confusing, though this may be related to the LDM settlement terms. However, with the Q1 top-line being nearly exclusively distributions, it's rather easy to calculate at the 2013 rate of roughly $4.00 - $4.50/distribution.
Other positive items from the call and Q:
- Operating expenses ex-LDM and stock comp were just 650k
- More pharma wins (Baush & Lomb and AstraZeneca)
- More EHR integrations (eHealthLine and Quest), with target to double network by year-end
- Consulting revenues expected to ramp in balance of 2014
- Harrell & Lester both offered color around recent stock sales
- Experienced CFO hired at reasonable salary and bonus
- Uplisting considered within next year (not really news, but nice to know it's on their radar as fundamentals allow)
I wouldn't be surprised to see some continued selling pressure from the one-time revenue and expense impacts in Q1. I was happy to pick up more shares at $1.60 today. By year-end we should be at an annual run-rate of $16M revenue (distributions only), or $8M after revenue share (40%) and LDM (10%). Even if cash opex increases significantly to $3.5M, you have an adjusted EBIT run-rate of $4.5M. Consider growth and 14M in NOLs in assigning your target EBIT multiple, but I find the risk/reward very compelling here.
The transcript is available in the 8K at: http://www.sec.gov/Archives/edgar/data/1360565/000138713114001777/ex99-2.htm
Q1 results out next week.
Any of the free SEC filing sites will alert you to Form 4s.
secfilings.com is good, and the e-mail alerts usually come a few minutes before they're even available on edgar.
Harrell's sale was on an options exercise, so I'm not too concerned. Per today's 13G, it appears the shares were picked up by Harvey Poppel. Poppel acquired 551,500 shares in the recent offering and now holds 1,235,650.
Management indicated on the last call they weren't preannouncing monthly distribution figures. I would assume the quarterly revenue preannouncement is discontinued as well. It will always raise some near-term questions when a company stops preannouncing, but they've reached a revenue scale where this is unnecessary.
I agree with your general concerns surrounding management communication. There has been a lack of positive PRs (e.g. Quest deal), lack of clarity surrounding significant events (e.g. LDM settlement), errors in their filings and websites, and in general a failure to tell their compelling story to potential investors. This may be largely responsible for the continued share price weakness even after the Vicis buyout and bullish 2014 outlook. To their credit, management has been transparent and forthcoming when asked, and has hosted quarterly calls earlier than most at their stage. I expect communication will improve with the hiring of a CEO this year.
Yes, most of the volume is on the TSX, ticker VFF.
They've typically posted most new hires on Facebook, and more recently Twitter as well. If you don't already follow these, you may want to for ongoing due diligence:
https://www.facebook.com/medexhco
https://twitter.com/Robyn_Medex
https://www.linkedin.com/company/1300441 (you'll only see the employee list if you're signed in)