Clarus Research on Nightingale quarter
Nightingale reported Q1/08 (ended June-30) results which included two months of VantageMed that were in-line with our expectations. Total revenue grew by 78.8% sequentially to $6.1 million, in-line with our $6.2 million forecast. We note that forex negatively impacted the top-line by approximately 3.6%. In the quarter, EBITDA was $0.1 million, or ~1.7% margin, compared with our $0.2 million and 4% margin estimate. Reported EPS FD was ($0.02) compared to ($0.07) per share last year and our ($0.01) expectation. The Company will hold a conference call today at 8:30AM EST (Dial-in 416-644-3414 or 1-800-732-9307). In terms of valuation, NGH is currently trading well below peers at 0.9x EV/S on our FY08 estimate. US based comparables Quality Systems (QSII-Q) and Allscripts (MDRXQ) are trading at 4.9x EV/S on FY08e (ending Mar-08) and 4.3x FY07e, respectively. Our target price of $1.10 per share is based on a 2.5x EV/S multiple applied to our FY08e.
We maintain our SPECULATIVE BUY recommendation.
(disclosure – Fund III holds warrants in NGH)