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QHR.v - QHR Corporation


Southpaw
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Following up here on one of the ideas I listed in the best ideas for 2016 thread, QHR.v.

 

QHR is an under-followed (no previous thread on this site or previous write-up on any buy-side website before including SumZero, VIC, Microcapclub, etc.), mission critical EMR (Electronic Medical Records) software provider with a long runway for growth and has emerged one of 2-3 winners in a rapidly consolidating industry.

 

QHR.v is at $1.18 today. The market cap is $60.5mm and the EV is $53.75mm. QHR has the single largest EMR software platform in Canada with ~18% market share overall of doctors already on an EMR.

 

This is about as high of quality as you can get for a business. Once a doctor is on the platform they rarely leave. They have 98% average customer retention year to year and currently 86% of revenue is recurring. The EV is at about 1.8x recurring revenue and they are growing recurring revenue about 7% sequentially and 19% year-over-year. We think the stock has upside to $1.66 just in a conservative "run-off scenario" as operating margins would sky-rocket to at least the mid 40s % in such a scenario.

 

More realistically, we think QHR is at least double over the next 2 years with upside potential to triple or more.    After divesting two non-core segments to become an EMR pure play, removing the old CEO for a far more communicative and hungry replacement, and giving board seats to a well-respected Canada investor (Pender Funds) who owns 16% of the company, we believe QHR is about to hit an inflection point on profitability and investor transparency while still maintaining a long runway for profitable growth.

 

Key Thesis Points

 

1) High Quality Business- mission critical to organizations, extremely low historical churn (<2%), capex light with very high gross margins, highly rated and regarded, supported by the government through various incentive programs

 

2) Strong Growth Drivers- a combination of doctors converting from paper to EMR (35% of doctor population still available), major consolidation among smaller players occurring to the benefit of QHR, and significant opportunity to increase Average Revenue Per Doctor (ARPD) by cross-selling, pricing power, and accelerating migration higher priced subscriptions for cloud delivery.  We view the growth for this company as about as safe as can get across the tech landscape.

 

3) Strong Operating Leveraging- the company’s strategy to have a loss leader in implementing the software makes the current depressed margins mask the underlying profitability and strong leverage inherent the business.  QHR operates a centralized support center, having recently completed two data centers on both sides of Canada, and made recent investments in sales, marketing, and implementation staff means the company has invested heavily ahead of demand (backed up by a backlog and high visibility in the pipeline) and margins have likely troughed in Q2 2015.  The company has hit at least a medium term cost cap and will now begin reaping the rewards.

 

4) Operational Messiness Clearing Up- Due to the combination of two aforementioned divestitures, a management and board shake up, a restructuring, and two tuck in acquisitions have made the P&L very messy, but the company has come out of all it stronger, cleaner, and will get more transparent over the next twelve months with improved investor reporting of KPIs.  The narrative of the company will transition to it being a steady 15-20% revenue grower with rapidly expanding EBITDA margins and material cash flow generation. The company's EBITDA margin target is 15% within a few quarters and at least 20% by about the end of 2016. The EMR division was already doing >20% just at the end of 2014 when it was broken out and disclosed separately before all of the restructuring initiatives muddied the financials. Longer term they can go 30%+ pretty easily.

 

5) Stronger Board, Management, Shareholder Base- The new CEO is a vast improvement over the old co-founder, communications wise, and recent board additions from an activist shareholder (Pender) along with some savvy board additions/subtractions are already bearing fruit, with better shareholder communication, new relevant KPIs that increase transparency, and better alignment of board/management incentives via recent option package issuances. The new Chairman, Neil McDonnell is very hands-on for a non-executive chairman and has helped build and exit 6 companies via sale previously.

 

6) The stock is priced for no growth at < 1.8x 2016 recurring revenues. I believe the company could stop growing right now and be worth $1.66 a share (~40% upside), based on relatively conservative run-off margins.  This also provides significant downside protection should growth initiatives not work out as anticipated.  Based on management commentary, acquiring, implementing, and training new customers costs $6 million a year, which is immediate run-off cash flow that could be added to the business.

 

Base Case: Company adds 1,000 doctors to its platform per year over the next few years, well below 2015 levels, and is able to raise ARPD by 5% a year through a combination of price increases, cross-selling, and migration to cloud.  Target is $2.50 (112% upside) based on 3.25x 2018 recurring revenues and 15x FCF. 

 

There are several recent transaction comps that give us a lot of conviction in the great value we are paying.

 

Firstly, MRGE - Merge Healthcare was bought by IBM in August 2015. The setup was eerily similar to QHR's now. We were intimately familiar with MRGE and it is my largest winner ever.

 

As late as the summer of 2014, Merge was trading at $2.00 as they were dealing with all kinds of operational messiness, ranging from a plunge in license sales because of a SaaS transition and the ICD-9 deadline hurting sales as it shifted health providers IT focus to ICD compliance. Also the CEO had stepped down and at one point the company came dangerously close tripping debt covenants.

 

Like QHR, Merge had a highly regarded product (#1 in KLAAS for cardiology and radiology imaging), a communicative CEO (Justin Dearborn) was promoted from within the company, they had restructured some and cut cost, and they exited a couple smaller unprofitable businesses.  Within a few quarters of all of this, Merge’s EBITDA margins had risen dramatically, while revenue growth flattened out and ultimately went positive in the last couple quarters before being acquired.  Savvy buyers had a triple with Merge around the time of the operational messiness and I believe the valuation paid by IBM is instructive for a stable niche leader within healthcare IT.  Merge was pretty heavily levered and was growing under 10%, but it had a dominant position within its niche (radiology/cardiology), so one can argue QHR is in a much better financial  position with no debt, higher recurring revenue as a percentage of total revenue, a better operating and market share position, and has much more greenfield growth opportunities than Merge does as EMR penetration continues within Canada. If QHR today were acquired at Merge’s EV/Sales multiple, it has 85% upside. And to reiterate, MRGE had a lower percent of sales recurring than QHR does. If acquired at the same EV/Recurring revenue multiple the upside is 388%.

 

Next, MedAssets (MDAS), was acquired on November 2nd, 2015. This is not as good of a comp, as its focus was revenue cycle management and growth had slowed to a crawl, less than 2% projected over the next several years. At 3.6x sales it is still very instructive to highlight the value QHR which is only being ascribed 2x.

 

Another recent one: Quality Systems, ticker QSII, announced they were purchasing HealthFusion also on November 2nd for between $165 million and $190 million in all cash. HealthFusion is a cloud based EMR system in the US. While Quality Systems did not state this year’s revenue, they said they recently gotten “above $30 million annualized” in the most recent quarter with double digit sales growth. Taking the minimum purchase price at $165mm and dividing by $30mm  implies an Enterprise Value to revenue multiple of 5.5x.  However, there is a contingent earn-out of an additional $25 million if HealthFusion hits $43 million in sales next year, or roughly 43% revenue growth from the latest quarter run-rate. So if HealthFusion gets that additional $25 million earn-out and hits $43mm in sales, QSII is paying 4.43x Forward Sales. If QHR received 4.4x it’s latest quarterly run-rate of revenue, it would fetch a 117% premium from the $1.18 level.

 

HealthFusion is a good comp because it is a subscription based EMR service for smaller doctor groups, just like QHR. Its revenue base (~$30 million) is similar to QHR and the total doctors on the platform (6,000) is similar to QHR as well.  I believe the 5x+ multiple is an aspirational goal for QHR, and certainly not the base case, but we have several transaction comps in that range just in the last 3-4 months.

 

Hope that is enough to give you a rough idea of the situation at QHR. We have done a couple hundred hours of research on this one, so happy to answer any questions on the competitive landscape, etc.

 

 

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  • 1 month later...

Southpaw,

 

Three questions:

 

1) I tried to piece together financials for the EMR business, but it's hard to do from the historical financials because of the various transactions and the changing segments over time.  Have you developed a back-of-the-envelope income and cash flow estimate for 2016 that bridges from the reported 2015 numbers?

 

2) Off-topic for this thread, but I'll ask anyway:  Have you looked at RSI International?

 

3)  You seem to have a good handle on smaller Canadian enterprise software companies.  Which are your favorites right now?

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KJP, just now saw this, thanks for the questions.

 

1) 2016 estimates for QHR is as follows:

 

Revenue: $31-32 million

Recurring Revenue: $28-29 million

EBITDA: $4.5-4.6 million (14-15% margin)

FCF: $3.4-3.9 million

 

2) Have not looked at RSY.v. Kind of small even for me, but will make it a point to check it out, thanks.

 

3) Favorites are by far QIS.v (See Quorum thread) and QHR.v, followed by ABT.to.

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Obviously I think it gets more interesting in the out years as the recurring revenue builds and operating leverage kick in with scale. So for 2020 base case we're at $51+ million in recurring revenue and $13 million + in unlevered FCF with incremental margins improving each year thereafter. Since we're talking about sticky/recurring, growing, high margin FCF from oligopolistic/monopolistic markets this should be worth 15x+ pretty easily, giving the stock about 300% upside over a few years.

 

 

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what's the downside on the story? seems like relatively clean B/S and some recurring CF which will provide some protection in some sort of weaker operating environment

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I agree that there is solid downside protection around this level. A valuation under 2x recurring revenue is typically found in <5% of listed of software companies and those are usually either levered, burning cash relentlessly, have negative growth and are structurally challenged (e.g. Support.com)...none of which apply to QHR. Take a look at Nightingale, NGH.v, which is at ~1.3x recurring revenue but has many years of negative growth, cash burn, and high leverage (similar highly distressed multiple gives QHR ~20% downside--but each quarter that goes on the recurring base will continue to build at mid single digit % sequentially, continually "raising the valuation floor").

 

I think QHR can go into run-off and be worth $1.65+. The downside case would revolve around increased price competition from Telus or OSCAR, an open-source platform, a large multi-national (Cerner or Epic) all of a sudden reaching down the market size ladder (small doctor groups) and absorbing losses to take Canadian market share, or some other start-up software firm I'm not aware of with a better and cheaper mouse trap. We can generally get a good sense of the competitive landscape as each Province has a set or fixed number of certified vendors. A downside scenario could manifest via increased competition and aggressive ongoing discounting leading to perpetually depressed cash flows if they choose to continue growing at a fast rate. Doctor growth could not pan out. They could fail to raise ARPU as we expect. R&D could sky-rocket to keep up with regulations and competition. Various government incentive programs could end all together (as they already have in many cases over the last two years) or the government could do something else entirely unforeseen (more of a black swan type of scenario).

 

Additionally, the new CEO was promoted internally and is a first time CEO of a public company. Another risk would be the company once again strays from their core Canadian EMR business via acquisition, or makes an overpriced acquisition with leverage, etc.

 

Right now the risk has been market cap size and trading liquidity. There has been a steady seller putting a ceiling on the stock at $1.25. I know...I've done more than my fair share of buying there, being a large % of buying volume for weeks on end.

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  • 1 month later...

Today ORCL announced they are  buying TXTR at 9.5x TTM recurring revenue with 24% expected revenue growth in 2016. TXTR was slightly below EBITDA breakeven in 2015 with -$10.3mm EBIT on $87mm in revenue. While obviously not a direct comp for QHR, the transaction does highlight how much strategic buyers continue to pay for niche SaaS players. QHR's Q4 results are out today. I will post some updated notes and thoughts soon.

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1. Isn't there a concern regarding lack of premium paid for Canadian technology companies?

2. There has been a 30% run up is price since your initial post(though still below 52 week high), is there still value here?

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Can you please clarify what you mean by lack of premium paid for Canadian technology companies? I would think this is a good thing they are not currently getting a premium if I was trying to acquire shares.

 

Take a look at my attached trading comps table. There are several high quality, high recurring revenue/low churn Canadian software companies fetch 8x+ recurring revenue or 20x EBITDA, what I would call a premium valuation.

 

Yes, there is still value here. Shares are still slightly below our run-off valuation. In other words, just the current customer base should be worth more than the current EV. I've still been buying at the current level. My base case price target is still in the $2.60 range.

QHR_Trading_Comp_Table.png.b80e65586dc51a162bc307084b7fbfff.png

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See attachments for some more framework on valuation. Just in our base case that assumes an 18% revenue growth rate this year, 16% next year, and 15% in 2018 gives a PT of $2.50+ at just 3.2x sales and 3.4x EV/Recurring revenue. Pretty much every trading and transaction comp trades at many turns higher than this. QHR traded at >3x sales for much of its history when the business was less profitable and not an EMR pure play. CapEx is minimal, they recently completed two data centers. They have $15mm in NOLs and won't pay taxes for a while.

QHR_DCF_Basse_Case_Projections.png.f0f47a15405f1c424cc00520970e10a9.png

QHR_DCF_Input_Summary_Table.png.9493abf5f8075f6e059f617cbac18a46.png

QHR_DCF_Valuation_Summary.png.eceacf0b72187d9f83f205600bf5be5d.png

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To lay out a scenario of even more upside, here is my Blue Sky Upside Scenario where the stock would be a six bagger at 14x on 2020/2021 numbers. To achieve this they need to juice ARPD growth...this would likely come from quicker adoption of cloud option and quicker penetration of Medeo, as these are essentially left out of our base case. We have ARPD rising ~5% p.a. versus ~15% in this Blue Sky Scenario.

QHR_Blue_Sky_Upside_Scenario.png.53441966a50420f7626a0986221ec808.png

QHR_Blue_Sky_Upside_Scenario_-_2.png.b86e119e5586c282db560a0a64c07c63.png

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fyi

I just noticed that a company I used to own owns a big slug of QHR - 2,624,000 shares I believe.

PTF, Pender Growth Fund.  It is more or less in liquidation.

http://www.pendergrowthfund.com/sites/default/files/PGF%20NAV-03.24.16.pdf

I sold all my PTF before it's recent run, but I had a nice gain.

 

NAV now up to $2.39. QHR is good but what is really driving this is D-Wave holding - could make PTF worth multiples of the current share price.

 

http://www.pendergrowthfund.com/sites/default/files/PGF%20NAV-04.29.16%20-%20Portfolio.pdf

 

http://www.cantechletter.com/2016/04/d-wave-systems-disruptive-company-ever-seen-says-paradigm/

 

 

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Overall, the quarter is not thesis changing and the thesis is progressing on track.

 

Some minor disappointment stems not as much from the numbers themselves (which were all good), but from the data points they put out which were a little behind forecasts and some "read between the lines" implications that Q1 was a bit weaker than Q4 (he talked about needing to "replenish pipeline" at the beginning of the year and also made clear points about the trajectory of the business not being as good as it appeared due to some one time items).

 

Further, because of some of the lag effect between implementations and turning on recurring revenues, Q1 will still be very strong.  It will be Q2 I will be a little more worried about.

 

Here is a valuation snapshot at $1.64:

 

EV/Recurring Revenue Run Rate: 2.8x

EV/LTM Recurring: 3.1x

EV/2016 Recurring: 2.65

EV/2017 Recurring: 2.25

 

EV/EBITDA, 2016 estimates, assuming 15% margin: ~15x

EV/EBITDA, 2017 estimates, assuming 20% margin: ~10x

 

FCF multiples are slightly higher but not by much, given lower cap-ex recently, no taxes or interest.

 

Good

 

1) EBITDA and Cash Flows: Clearly a breakthrough quarter on profitability and cash flow, although there are a couple weird qualifiers (see questions 1 and 2) that deserve better explanation.  But nevertheless, the margin story is clearly picking up steam and it sounds like they will continue to allow margins to rise, with EBITDA margins moving above 15% and closer to 20% in the back half of the year.  Our base case of 14.5% in 2016 and 18% in 2017 seem very attainable.

 

[see attachment #1]

 

Another nice thing is they commented they will move back to straight up EBITDA reporting rather than Adjusted EBITDA, as the two numbers were really close and are expected to remain so. If we break down cash flows, there is clear improvement for both Q3 and Q4 and Q4 y/y, but some of the improvement in both is from improved receivables collection.  Still, there is a $1.6 million y/y quarterly improvement in underlying Funds from Operations, with lower capex, and a 50% sequential improvement.  Adjusted EBITDA matches up remarkably closely to cash flow Funds from Operations now.

 

Quarterly Cash Flow Breakdowns

 

[see table as attachment #4]

 

2) Excellent recurring revenue growth, even ex-$200,000 true up, was strongest y/y growth since we've been able to break out Accuro and now two consecutive quarter of 6+% sequential growth.  The below chart shows sequential growth AFTER taking out the $200,000 "true up."

 

[see attachment #2]

 

And Y/Y (again, excluding the $200k true up):

 

[see attachment #3]

 

3) Alberta is now allowing some (limited) virtual care visits, and QHR has about 1,000 docs in Alberta.  Sounded like they were optimistic that more provinces would be jumping on board reasonably soon. Sounded like uptake and usage of Medeo was on the rise, although they didn't give any real numbers and said that from a revenue line item standpoint Medeo was still small.

 

4) Expected to hear more about the patient portal and monetization potential in the next couple weeks.  This is part of the Medeo/Accuro integration they have worked on recently.  Could be substantial and be the driver of higher ARPU.

 

5) Sounded like no impending acquisitions, but they are still on aggressive alert for the 500-1,500 doctors, like Jonoke.  I didn't view the talk on "health care tech" acquisitions as a major problem.  It sounded like it was in the context of how it would integrate with Accuro, e.g. it would be another Medeo type acquisition as opposed to something further out of bounds.  Nevertheless, Medeo did disrupt short term profitability, so this remains something to watch.  To management's credit, they seem pretty aware of all this.  Checkley said something like "we will watch carefully how such an acquisition will affect our other major goal of raising margins throughout the year."  Paraphrasing, but something like that.

 

Other interesting tid bit is they said they basically don't see Nightingale in competitive situations, or very rarely.  That is surprising.  Why?

 

6) Professional services actually increased sequentially again, and have seemed to stabilize at $1 million a quarter, which is significantly higher than I had been modeling. 

 

7) ARPU keep rising.  Excluding the $200k true up, ARPU rose sequentially from ~$295 to ~$308.  The reason I say about is I don't think we have an exact Q3 number on doctors. Also, there is some Jonoke revenue in there. But, I think Jonoke revenue would have been the same in Q3 and Q4, so that is a fair ARPU comparison. Our Base Case Model is for $310 for 2016, which seems very achievable given they ended Q4 at $307 and rising.

 

ARPU Estimate

 

2015 Q2: $289.17

2015 Q3:  $294.99

2015 Q4:  $307.23

 

8 )  Looks like they have started adding more stuff on their IR page:

 

http://www.qhrtechnologies.com/investors/stock-financials/financial-releases/

 

This wasn't laid out like this before.

 

Bad

 

1) At 7,300 doctors now (as of earnings date), they are behind the pace that we  would have hoped for.  They have 190 in their backlogs which is normal, and talked about a "replenished pipeline" from early in the year.  Our model is for 1,100 net adds this year, and that assume one small Jonoke type acquisition of which they have not announced any yet.  I still think 1,100 is very attainable but they will have to pick up the pace throughout the year.

 

2) At 1,100 doctors for the year they were about 100 doctors short of what I had estimated for 2015. 

 

3) They didn't set a more aggressive doctor target, but implied it would be above 1,000, and reading between Mike's comments it sounded like he was targeting 1,200-1,300.  He said they could do that right now, said they had good pipeline momentum, and also said they could quickly expand capacity if need be.

 

4) I'm a bit disappointed they haven't seemed to embrace the basics KPIs of their business.  While they do answer when asked about them, they aren't actively reporting number of doctors on the platform, or ARPU, etc.

QHR_adjusted_EBITDA_Margin_up_to_Q4_2015.png.1824041efc071a5cdda95f423c5bdf24.png

QHR_Recurring_Revenue_Sequential_Growth.png.62b901ddfe6be4507849b59bb6179091.png

QHR_Recurring_Revenue_Year_over_Year_Growth.png.ccd35ef4580abe08224f5ee2edeb35f1.png

QHR_Quarterly_Cash_Flow_Breakdown.png.610e75d813ab7c326404146f52495d7c.png

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fyi

I just noticed that a company I used to own owns a big slug of QHR - 2,624,000 shares I believe.

PTF, Pender Growth Fund.  It is more or less in liquidation.

http://www.pendergrowthfund.com/sites/default/files/PGF%20NAV-03.24.16.pdf

I sold all my PTF before it's recent run, but I had a nice gain.

 

NAV now up to $2.39. QHR is good but what is really driving this is D-Wave holding - could make PTF worth multiples of the current share price.

 

http://www.pendergrowthfund.com/sites/default/files/PGF%20NAV-04.29.16%20-%20Portfolio.pdf

 

http://www.cantechletter.com/2016/04/d-wave-systems-disruptive-company-ever-seen-says-paradigm/

Nice catch Sculpin! I was wondering why the big run up in PTF. Maybe we should take this discussion over to the multi-bagger thread in consideration for QHR...but that piece looked rather promotional and fluffy though I am not sure what the analyst gets out of it.

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Paradigm led the private placement that D-Wave recently completed. So the analyst gets a cut of the banking fees from this financing. Also if D-Wave works out, he will have major cred as being the first analyst to launch coverage on it. And especially if it goes on to have a multi-billion dollar market cap. I'm happy holding the PTF - still trading at a discount with great upside not only in D-Wave but in QHR and several of their other private holdings.

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We have two more transaction comps to add to our software M&A database in the last week. While certainly no where close to perfect apples-to-apples comparisons with QHR or QIS, they highlight the multiples being paid for small, niche SAAS software companies.

 

ORCL is buying TXTR at 9.5x TTM recurring revenue. TXTR has 24% expected revenue growth in 2016. TXTR was slightly below EBITDA breakeven in 2015 with -$10.3mm EBIT on $87mm in revenue.

 

Secondly, ORCL is buying OPWR. They are paying 4x TTM EV/subscription revenue, but OPWR has only 8% projected growth and is burning lots of cash (-$23 million last year, and that's with a lot of stock comp).

 

QIS is at about 1.6x forward recurring revenue (growing 20%+) and QHR is at 2.3x (also growing 20%+). They could easily both rise to 4x or get bought out in excess of 4x EV/Recurring revenue.

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  • 2 weeks later...

QHR reported Q1. It was a good quarter with a few positive surprises plus some commentary that cleared up some of our concerns from last quarter.

 

Sequential recurring revenue growth remains very strong at +7.1%, accelerating from last quarter's 6.4%.

 

At $1.80 the stock (now with >$10 million in net cash, building quickly) has the following multiples:

 

EV/Recurring (Base Case 2016) 2.6x

EV/Recurring (Base Case 2017) 2.2x

EV/EBITDA (Base Case 2016) 15.2x

EV/EBITDA (Base Case 2017) 10.3x

EV/FCF (Base Case 2016) 17.5x

EV/FCF (Base Case 2017) 11.5x

 

This is very cheap given all the positive characteristics and 20%+ recurring revenue growth, rapidly expanding margins and free cash flow generation. 

 

Notes from the call:

 

1) The 7,300 doctors number:  On the Q4 call the CEO Mike Checkley made it sound like he had an up to the minute number, but on this call he made it clear that 7,300 was the number of doctors at the end of Q1...so we don't know what Q2 is at but probably materially above 7,300.  If they get to 7,500 by Q2 they will be on pace for 1,000 adds in 2016, but we are still looking for +1,100 in a Base Case as we think they will make at least one small Jonoke-esque acquisition to add a couple hundred doctors.  1,100 could be conservative.

 

2) ARPU:  ARPU shot up to $319 dollars and is pretty clearly going to blow away our original forecast of $310 by the end of 2016.  It could be closer to $325-$330. 

 

3) Professional services:  Remains at about $100,000 a quarter, which is higher than we had been forecasting.  Don't want to count on this too much but nice to get this extra revenue.

 

Between items #1-3 we've raised 2016 numbers a bit, although still think they are conservative.  To hit our numbers they would need only a $318 ARPU (below current) and 1,100 adds (below current add cadence).

 

4) Margins/Cash Flow:

 

EBITDA/Adjusted EBITDA continues to rise and is already above management's 2016 goal of 15%:

 

Once again we may been conservative in projections.  At a 15.5% EBITDA margin in 2016, that works out to a bit over $5 million in EBITDA on the year.  If they continue improving throughout year it could easily be much closer to $6 million.

 

Cash flow was again excellent, they generated $2.3 in CFO.  However, a lot of this was getting the receivables balance down.

 

I likely won't consider trimming any until it hits at least 4.0x 2017 our recurring revenue estimate given all of the recent transaction comps.

 

Our Base Case price target from DCF is $3.38 now, with still over 87% upside.

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  • 3 weeks later...

QHR issued a press release after the bell on Friday.

 

http://www.qhrtechnologies.com/investors/news/press-releases/stories/article06031602.aspx

 

Essentially QHR and Telus (#1 and #2 market share by far) are partnering on inter-operability initiatives and will integrate some of their software products.

 

One big risk in our QHR thesis has been that Telus would become more aggressive on the competitive front.  This press release seems to suggest the opposite...in fact we would argue it increases the odds that Telus eventually buys out QHR and then integrates all their disparate platforms onto QHR.  At the very least with this collaboration the two biggest players seem to be boxing out the smaller players and the open source OSCAR platform.

 

Although it's a bit vague on specifics, the paragraph that is most interesting to us regards their telemedicine product, Medeo:

 

"As part of the proposed collaboration, QHR customers would also get access to the TELUS Online Benefit Check service, which provides information about a patient’s drug insurance coverage to a physician as they are prescribing, helping the physician to make the most cost effective drug choices for their patients.

 

TELUS Health customers would also get access to Medeo, a QHR patient accessible web portal, and mobile app, that allows for online booking, messaging, and video-conferencing between healthcare providers and their patients."

 

Recall that Medeo is a $100/month/doctor product.  Adding Telus' doctor base of 15,000 doctors or so significantly ups the potential value of Medeo, assuming this is the economic arrangement (which is unclear). Our base case assumptions include very low penetration assumptions of Medeo just within QHR's doctor base and definitely no licensing or third party revenue.

 

Overall, the announcement from Friday could prove to be a very positive development.

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This is a strange question given my understanding that sharing ideas and information is the entire purpose of these forums. I enjoy talking about stocks and this is one of my best ideas, so I've try to get a dialogue going. In sharing info, I have been hoping people would reciprocate and share something I don't know or present smart analysis I hadn't considered. I like to my thoughts written and recorded in real time with no hindsight bias.

 

You have 830+ post. Why do you post and share?

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I didn't mean for the question to be hostile. I think it was a fair question, all things considered. I've been following your threads closely and I am very interested. I'm not asking just to be a jerk.

 

From my point of view as the reader, I see two potentially attractive/lucrative ideas, with a one-sided conversation, from what appears to be an entity that owns a large stake in at least one of the companies. I thought it would be essential to understand why you were willing to share so such valuable research despite the fact you weren't receiving much dialogue in return. I ultimately thought it would be more valuable for myself to ask publicly as opposed to a pm.

 

I hope I am not discouraging you from posting more about either company or anything else. I think your posts and collective thought process have been very valuable. I've been interested in both companies but I haven't had anything constructive to add thus far. Probably a testament to the amount of valuable info you've provided.

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Thanks. When put into that context, its a good question and one I have been increasingly asking myself. My intention has been to give back to this community after being a pure consumer of the comments for so long, but I certainly didn't expect the conversation to be so one-sided. I have been giving funds and investors lengthy write-ups and presentations on my best ideas for years with hardly any interest taken or comments, so I guess I have grown to treat it also as a social experiment and sentiment gauge. When no one is interested yet also doesn't have any counter arguments to share it slowly builds my conviction.

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Southpaw:

 

Someone did an analysis here which basically said: the longer the thread, the worse the posted idea has done.

 

I really think you are on the right track on these ideas. FWIW.

 

 

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