Constellation Healthcare Share Discussion Threads

[flagon] 23/9/2016 08:33

From Proactive this morning ...

The purchase is expected to be earnings enhancing in its first full year.


Constellation Healthcare bags VEGA in US$24mln deal

The company specialises in medical billing.
Constellation Healthcare Technologies (LON:CHT), the US-focused medical billing services specialist, has unveiled its fifth deal since listing – the acquisition of VEGA Medical Professionals for up to US$24mln in cash and shares.

The purchase is expected to be earnings enhancing in its first full year with EBITDA expected increase from US$800,000 at the last results to around US$7mln within 24 months thanks to the synergies between the two businesses.

A specialist in hospital based billing, VEGA has offices in New York, New Jersey, Texas, and Pennsylvania.

The nuts and bolts of the acquisition are that 78% will be paid out in cash from Constellation’s reserves and debt facility, with remainder satisfied in shares. The takeover is subject to an earn-out agreement and VEGA hitting certain financial targets.

Financially, VEGA is in the same order of its last acquisition – MRDX Medical Billing, which cost an initial US$28mln.

Both are part of a buy and build strategy that will help consolidate the fragmented US medical billing sector.

“The acquisition of VEGA provides further evidence of CHT's ability to identify and acquire quality businesses that have significant operational synergies that are accretive to our shareholders,” said chief executive Paul Parmar.

[eezymunny] 23/9/2016 08:26

Related party loan at 7.5% to fund acq. Hmmmm!!!

Issued shares for acq at 140p. Hmmm!!!

I think the additional EBITDA prediction (which looks optimistic to me) is spread over 24 months, not annual.

An odd one, to be sure...

[rivaldo] 23/9/2016 08:23

Agreed. This is a very good, earnings-enhancing - and large - acquisition, which will add almost $8m EBITDA at a cost of just $24m assuming the synergies come about, which they surely will given what's been achieved to date.

The only quibbles are the share price used, which as bb2 says presumably relate to the date that negotiations commenced given the share price just three weeks ago, and the CEO's convertible loan at 7.5% with an undefined conversion price.

The benefits of the deal in earnings enhancement terms are certainly persuasive overall.

Forecasts for next year will probably increase from 18.84p EPS now I'd have thought.

[battlebus2] 23/9/2016 07:57

Yes adding $7 mm to EBITDA. Only slight disappointment is part of the acquisition paid in shares at 140 but probably in talks before the recent rise from that level.

[deltrotter] 23/9/2016 07:52

I like that a lot.

[battlebus2] 23/9/2016 07:15

Acquisition of VEGA.

[battlebus2] 22/9/2016 13:05

Yes very good to see Rivaldo, we have real momentum now.

[rivaldo] 22/9/2016 12:44

Nice - an £11,500 buy at 185p just reported, way above the published 182p offer price.

[rivaldo] 22/9/2016 10:58

Up again - good to see a smaller 5p spread now.

[melody9999] 21/9/2016 23:41

Dave - I got 3.5K today having left an order on the table for a couple of days.

[dave2608] 21/9/2016 15:42

Cheers PJ. However now gone down the spread bet route.

[pj 1] 21/9/2016 15:36

There's the change on L2 Dave, favouring the Bid now.

[pj 1] 21/9/2016 14:52

Possibly Dave although L2 favours the offer slightly, so Id guess at this stage its more that ther are a couple of small buy orders placed at the same time. All IMO

[dave2608] 21/9/2016 14:43

Just tried to top up. I kept getting the message "The order size cannot be filled at this price at the moment". I was only asking for 3,500 shares at the quoted price. At the risk of sounding ridiculous, I take it that means stock is in short supply.

[rivaldo] 21/9/2016 09:33

Further small buying yesterday and today, and another tick up. Plenty more to come imho.

[rivaldo] 19/9/2016 15:56

Rising again - must almost be on a double-figure ex-cash P/E now. Though not for next year yet, with 18.84p EPS forecast and $10m in the bank.

[battlebus2] 19/9/2016 08:16

Yes good to see something going on the right direction this morning :))

[rivaldo] 19/9/2016 08:14

Nice start to the week - a single 1k buy has led to a 3.5p increase (and a welcome slight closing of the spread).

[santangello] 16/9/2016 12:17

Strategy is to acquire up to around 200p in the short term, which I see as value and leaves future blue sky long term.

[deltrotter] 16/9/2016 09:37

Hopefully we will get above 185p on this push and into break out territory.

[rivaldo] 16/9/2016 09:28

A £5k buy has caused another tick up - seemingly moving up on each buy at present.

[battlebus2] 15/9/2016 13:36

This has been long awaited but all the more enjoyable :))

[rivaldo] 15/9/2016 12:58

Nice one :o))

Up again now on another £2.5k buy. Evidently not much stock around.