HTL - Hamilton Thorne

[Gregmal]

Hamilton Thorne represents what is possibly one of the most compelling investment opportunities I have ever come across and at a minimum expect a 5 bagger but would not be shocked to see 10-15x your money from today's prices over the next decade. This is a company that I believe has a very strong possibility to grow organically at a mid-high teens rate, grow further through savvy acquisitions, and also see further benefits from margin expansion. I believe HTL is immediately worth at least $200M USD or $1.85 a share for the OTC listed HTLZF currently trading around .72 cents. The TSX trading HTL in this case currently trading around .95 cents should trade for about $2.45.

 

Now that I have made that clear, I’ll explain the many facets of this company that are so interesting.

 

First. Why does this exist?

This is the type of company that at first glance deserves to be on the TSX. Myriad red flags and things one normally looks for in a short will easily defend the castle from less sophisticated and lazy shareholders. Examples include

 

Red Flag #1

-Company went public as reverse merger

Why it doesn’t matter- Nobody was going public, in any way during H1 2009, let alone a nano cap IVF company in early stage development

 

Red Flag #2

-Trades on TSX

Why it doesn’t matter-This was simply the bi-product of the company it merged with. Hamilton Thorne, from what I understand, expects to uplist a major US exchange in the next 12-18 months.

 

Red Flag #3

The company is a roll up

Why it doesn’t matter- HTL has a very selective and disciplined acquisition strategy and only swings big when it is a no brainer. Typical acquisitions involve paying between 4-5x EBITA for private businesses that trade at 6-8x multiples as public companies. Private to public arbitrage. They also seek to retain top talent of the acquired company and often have gotten unique deals because of this. For instance, Gynamed, they were not even the highest bidder however where chosen because two Gynamed partners wanted out and the third wanted to keep running the business. HTL provided an attractive option that accommodated all 3 and thus got the business IMO 25-35% cheaper than it should have sold for.

 

Red Flag #4

Shares trade under $5

Why it doesn’t matter-I typically avoid single digit stocks and I know most institutions do as well. However this is simply the result of how the company went public it upon an uplisting a reverse split is likely occurring.

 

Red Flag #5

Company recently hired an investor awareness firm aka a “stock promoter”

Why it doesn’t matter- I have been following this for a while and this was all part of management’s plan to raise awareness leading into an eventual up listing. The “awareness” company was also instructed to promote HTL to only institutional business, not retail as is typically the case with stock promotion. My understanding is that it was only a two month campaign and was less than $8,000 a month cost, not anywhere near the levels or costs of dirty promotion activity.

 

Additional Confusion Causing Flag

Because HTL is an American company trading on the TSX, many times revenue figures that are USD get reported in CAD and thus mask how cheap the company is.

 

Now, why is it attractive?

 

First, I’ve always thought IVF had a massive runway. People are getting married and having children(not always occurring in lockstep) at older and older ages. Additionally fertility issues and health problems continue to increase on a percentage of population basis which will provide a long a fertile runway for Assisted Reproductive Technologies. If there is one area of healthcare where there isn’t a massive rain cloud of political animus and price gauging fury, it is IVF. Because, well, poor people with fertility issues should be able to have babies too… We are seeing increased coverage for these things and many employers(for example SBUX offers full coverage for even part time employees) are now promoting pro IVF healthcare plans.

 

David Wolf and management are lights out. The returns since Wolf took over in 2011 are outstanding. I’d be hard pressed to find a better performing equity. He is highly experienced in the M&A field, and highly discipled. He is not likely to acquire money losing business, make acquisitions just to grow the size of the company, or do anything out of boredom like many management teams do.

 

HTL is incredibly well diversified with next to no large customer concentration risk. Additionally from the clinical end, business tends to be sticky with lots of selling synergies as HTL continues it’s bolt on acquisition strategy. For the end user, IVF is also very sticky. Initial runs can cost between $15,000-$30,000 and subsequent ones $5,000-$10,000. Further, the success rate is also increasing(currently in the ballpark of 40% but this varies based on age), but it is not uncommon for significant repeat business simply because the pregnancy fails, or the parents want to have another child, or both. Also, over 60% of current revenue is now higher quality and recurring. Regulatory wise, there are utterly massive barriers to entry here.

 

This is a company with essentially no listed competition in the US and globally the only peer is Vitrolife which trades at over 3x the multiple HTL does. HTL will likely grow minimum low teens organically for the next decade and margin expansion should continue in the same manner it did for Vitrolife as they grew there business line and benefited from acquisition synergies. Continued acquisitions of profitable, tuck in businesses at outstanding multiples will only further fuel the rocket ship. But until then it is still substantially undervalued on a “today’s valuation” basis largely because of all the red flags mentioned above and once removed and the US uplisting occurs, I believe the party just starts.

 

My apologies for the poor format. I’ve been meaning to write this up for months but have been tied up with other stuff and possibly spending too much time in the Politics section…

 

FD: I am obviously long this stock

[maybe4less]

Hamilton Thorne represents what is possibly one of the most compelling investment opportunities I have ever come across and at a minimum expect a 5 bagger but would not be shocked to see 10-15x your money from today's prices over the next decade. This is a company that I believe has a very strong possibility to grow organically at a mid-high teens rate, grow further through savvy acquisitions, and also see further benefits from margin expansion. I believe HTL is immediately worth at least $200M USD or $1.85 a share for the OTC listed HTLZF currently trading around .72 cents. The TSX trading HTL in this case currently trading around .95 cents should trade for about $2.45.

 

Now that I have made that clear, I’ll explain the many facets of this company that are so interesting.

 

First. Why does this exist?

This is the type of company that at first glance deserves to be on the TSX. Myriad red flags and things one normally looks for in a short will easily defend the castle from less sophisticated and lazy shareholders. Examples include

 

Red Flag #1

-Company went public as reverse merger

Why it doesn’t matter- Nobody was going public, in any way during H1 2009, let alone a nano cap IVF company in early stage development

 

Red Flag #2

-Trades on TSX

Why it doesn’t matter-This was simply the bi-product of the company it merged with. Hamilton Thorne, from what I understand, expects to uplist a major US exchange in the next 12-18 months.

 

Red Flag #3

The company is a roll up

Why it doesn’t matter- HTL has a very selective and disciplined acquisition strategy and only swings big when it is a no brainer. Typical acquisitions involve paying between 4-5x EBITA for private businesses that trade at 6-8x multiples as public companies. Private to public arbitrage. They also seek to retain top talent of the acquired company and often have gotten unique deals because of this. For instance, Gynamed, they were not even the highest bidder however where chosen because two Gynamed partners wanted out and the third wanted to keep running the business. HTL provided an attractive option that accommodated all 3 and thus got the business IMO 25-35% cheaper than it should have sold for.

 

Red Flag #4

Shares trade under $5

Why it doesn’t matter-I typically avoid single digit stocks and I know most institutions do as well. However this is simply the result of how the company went public it upon an uplisting a reverse split is likely occurring.

 

Red Flag #5

Company recently hired an investor awareness firm aka a “stock promoter”

Why it doesn’t matter- I have been following this for a while and this was all part of management’s plan to raise awareness leading into an eventual up listing. The “awareness” company was also instructed to promote HTL to only institutional business, not retail as is typically the case with stock promotion. My understanding is that it was only a two month campaign and was less than $8,000 a month cost, not anywhere near the levels or costs of dirty promotion activity.

 

Additional Confusion Causing Flag

Because HTL is an American company trading on the TSX, many times revenue figures that are USD get reported in CAD and thus mask how cheap the company is.

 

Now, why is it attractive?

 

First, I’ve always thought IVF had a massive runway. People are getting married and having children(not always occurring in lockstep) at older and older ages. Additionally fertility issues and health problems continue to increase on a percentage of population basis which will provide a long a fertile runway for Assisted Reproductive Technologies. If there is one area of healthcare where there isn’t a massive rain cloud of political animus and price gauging fury, it is IVF. Because, well, poor people with fertility issues should be able to have babies too… We are seeing increased coverage for these things and many employers(for example SBUX offers full coverage for even part time employees) are now promoting pro IVF healthcare plans.

 

David Wolf and management are lights out. The returns since Wolf took over in 2011 are outstanding. I’d be hard pressed to find a better performing equity. He is highly experienced in the M&A field, and highly discipled. He is not likely to acquire money losing business, make acquisitions just to grow the size of the company, or do anything out of boredom like many management teams do.

 

HTL is incredibly well diversified with next to no large customer concentration risk. Additionally from the clinical end, business tends to be sticky with lots of selling synergies as HTL continues it’s bolt on acquisition strategy. For the end user, IVF is also very sticky. Initial runs can cost between $15,000-$30,000 and subsequent ones $5,000-$10,000. Further, the success rate is also increasing(currently in the ballpark of 40% but this varies based on age), but it is not uncommon for significant repeat business simply because the pregnancy fails, or the parents want to have another child, or both. Also, over 60% of current revenue is now higher quality and recurring. Regulatory wise, there are utterly massive barriers to entry here.

 

This is a company with essentially no listed competition in the US and globally the only peer is Vitrolife which trades at over 3x the multiple HTL does. HTL will likely grow minimum low teens organically for the next decade and margin expansion should continue in the same manner it did for Vitrolife as they grew there business line and benefited from acquisition synergies. Continued acquisitions of profitable, tuck in businesses at outstanding multiples will only further fuel the rocket ship. But until then it is still substantially undervalued on a “today’s valuation” basis largely because of all the red flags mentioned above and once removed and the US uplisting occurs, I believe the party just starts.

 

My apologies for the poor format. I’ve been meaning to write this up for months but have been tied up with other stuff and possibly spending too much time in the Politics section…

 

FD: I am obviously long this stock

 

It's an intriguing company and thesis. The roll-up aspect concerns me though. I was all set to give them the benefit of the doubt until they announced this acquisition last month:

 

"Hamilton Thorne Ltd. (TSX-V:HTL), a leading provider of precision instruments, consumables, software and services to the Assisted Reproductive Technologies (ART) and developmental biology research markets, today announced that it has completed the acquisition of the ZANDAIRTM line of air purification equipment and related consumables and services business from Zander Scientific, Inc.

 

“The ZANDAIR line of air purification systems are proven performers in the ART market, with installations in hundreds of laboratories worldwide,” stated David Wolf, President and CEO of Hamilton Thorne. “It is well known that maintaining a clean environment in the ART lab, free of Volatile Organic Compounds (VOCs) and other contaminants, is essential to embryo health. The addition of the ZANDAIR product line is consistent with our commitment to quality in the ART laboratory.”

 

https://globenewswire.com/news-release/2018/07/19/1539862/0/en/Hamilton-Thorne-Acquires-ZANDAIR-Air-Purification-Products-Business.html

 

 

Pretty bogus IMO to suggest that air purification has natural synergies with IVF/ART. IT's a small acquisition to be sure (although then why put out a press release?), but it suggests to me they are not (no longer?) very disciplined in their acquisition strategy.

 

[Lakesider]

I dont know about bogus. Seems that they are air purification systems for labs.

 

If they are supplying the other lab equipment its not so bogus that they sell the air purifiers too? If they sell the units they can also sell the consumables for them too.

[Gregmal]

My first thoughts were a little similar. But then I realized that this acquisition is pretty symbolic of the company as a whole. On the surface some kind of fuzzy looking stuff and some question marks. But after diving in deeper you kind of see more of what there is to like about this company. This is a sub $1m deal at a reasonable multiple. They already have a significant global network where they can plug in this product and instantly ramp sales. It's not like these are Home Depot air filters. They are a leading brand for clinics and research labs.

[kab60]

Thanks for the writeup, couple of questions;

How do you value this?

Are interests aligned? How much does management own? How is comp set up/incentives? (I think it is very important - espescially in rollsups, since they usually blow up)

Thanks

[Spekulatius]

I dont know about bogus. Seems that they are air purification systems for labs.

 

If they are supplying the other lab equipment its not so bogus that they sell the air purifiers too? If they sell the units they can also sell the consumables for them too.

 

Air purification is a huge field with many large players. There is nothing specific about air purification related to IVF. I don’t think the consumables follow the razor/bode model either. the consumables are mostly HEPA filters and there are a bunch of well established players (MMM etc) and the sizes are standardized.

[Gregmal]

Thanks for the writeup, couple of questions;

How do you value this?

Are interests aligned? How much does management own? How is comp set up/incentives? (I think it is very important - espescially in rollsups, since they usually blow up)

Thanks

 

I think at this point HTL should be valued with a weighting reflecting it's value as an M&A target. Last couple deals I've seen for similar companies have taken place in the 5-7x revenue range. For instance, the recent acquisition of Lifeglobal, took place at 7x.

 

http://investor.coopercos.com/news-releases/news-release-details/cooper-companies-acquires-lifeglobal-group-expanding-fertility

 

"LifeGlobal had annual revenues of approximately $24 million in calendar 2017, and is forecasted to grow in the mid to upper single digits over the coming years. "

 

Whereas HTL will eclipse $30M easily this year and is growing at more than twice what Lifeglobal is.

 

Management is very well aligned here. Insiders own more than 25% of the company and many have put their life work into this. The current management team IMO has a tremendous mix of scientific/R&D and capital markets/public company experience. The board has a similar composition.

[KJP]

Thanks for bringing up this company.  For those interested, there's more background on the industry and M&A at the writeup available here:  https://www.altafoxcapital.com/research/

[writser]

Hamilton Thorne represents what is possibly one of the most compelling investment opportunities I have ever come across and at a minimum expect a 5 bagger but would not be shocked to see 10-15x your money from today's prices over the next decade. This is a company that I believe has a very strong possibility to grow organically at a mid-high teens rate, grow further through savvy acquisitions, and also see further benefits from margin expansion. I believe HTL is immediately worth at least $200M USD or $1.85 a share for the OTC listed HTLZF currently trading around .72 cents. The TSX trading HTL in this case currently trading around .95 cents should trade for about $2.45.

 

How do you arrive at immediately 'at least' $1.85? I see 116m diluted shares, a small net debt position so that's around $215m EV for a EV/sales valuation of ~7x? Seems rich. It's more or less the bull case for a 2020 acquisition price in the Alta Fox presentation from a few months ago.

 

Interesting idea. Insiders own a decent amount of shares, business seems decent and I'd guess in a good sector. Air purification systems was only a small transaction and might make sense if you want to offer a 'complete' solution. But I wouldn't exactly call it cheap.

[Gregmal]

Hamilton Thorne represents what is possibly one of the most compelling investment opportunities I have ever come across and at a minimum expect a 5 bagger but would not be shocked to see 10-15x your money from today's prices over the next decade. This is a company that I believe has a very strong possibility to grow organically at a mid-high teens rate, grow further through savvy acquisitions, and also see further benefits from margin expansion. I believe HTL is immediately worth at least $200M USD or $1.85 a share for the OTC listed HTLZF currently trading around .72 cents. The TSX trading HTL in this case currently trading around .95 cents should trade for about $2.45.

 

How do you arrive at immediately 'at least' $1.85? I see 116m diluted shares, a small net debt position so that's around $215m EV for a EV/sales valuation of ~7x? Seems rich. It's more or less the bull case for a 2020 acquisition price in the Alta Fox presentation from a few months ago.

 

Interesting idea. Insiders own a decent amount of shares, business seems decent and I'd guess in a good sector. Air purification systems was only a small transaction and might make sense if you want to offer a 'complete' solution. But I wouldn't exactly call it cheap.

 

Your are right. As I mentioned I'd been working on this for a while and as it's gone up had to make adjustments so the exact figures are just quick, kind of lazy "in the ballpark" figures. I think a lot of the report you mentioned is good, but I don't think it gives enough credit. I've looked at a lot of the comp M&A deals and the Lifeglobal IMO is easily the most appropriate in terms of asset mix and business composition. I would definitely think closer to the 7x number than the lower end of 4-5x other not as comparable deals have taken place.

 

My main focus as an investor is and would be this, You have two layers of undervaluation here. There is the "what it is worth now" scenario which should become apparent once all the masking agents dissipate. That number IMO is easily double the current share price and just needs time to correct. That should be your base figure. Then, on top of that, you have the high teens annual growth rate and significant margin expansion to be excited about, IMO for the next 5-10 years.

 

The reasons some of these businesses are tricky is because its in many cases about management, execution, and scale. I look at it like this. Say you are looking at a gigantic 15,000 sq ft, state of the art mansion in the middle of an Oklahoma farm district. Its worth $5m. Say you had the ability to buy it for that and then drop in on the shoreline in South Beach Miami. Value creation just by bringing the product to a different location. With some of these smaller businesses, provided you have robust execution and grade A management, that is what you can do through acquisitions. David Wolf is a champ and I have no reason to believe he can't keep ding this.

[Cigarbutt]

My main focus as an investor is and would be this, You have two layers of undervaluation here...

 

The reasons some of these businesses are tricky is because its in many cases about management, execution, and scale...

 

Thanks for sharing this interesting and relatively low liquidity idea.

 

After the first dive, there is a lot to like about this opportunity.

 

The positives:

-growing market with solid "fundamentals"

-well positioned as a Tier 2 player to grow profitably (cross-selling and new products)

-structure and size of company makes it relatively neglected

-with the new CEO, operating and financial "story" has been on the spot

-remarkably, even if quite early in the growth phase, the company is profitable and significantly cashflow positive

-high level of NOLs

 

The negatives:

-operative moat is only moderate especially for the consumables and services

-moat that is projected has a lot to do with the management capacity to carry out their financial strategy

-acquisition mistake or surprise (selection and/or integration) may really hurt especially in an unfavorable debt/cash position

 

Valuation:

-challenging

-first assume low acquisition activity and continued operational success

-I try to project revenues in 5 years (double from now) and take a 25% EBITDA margin. Using both targets (multiple as an acquisition candidate and on ongoing operations) and discounting at 15%, I get close to present market value.

-when adding the risk and reward associated with the planned acquisition strategy, the outcome could be MUCH better and also MUCH worse.

-need to do more work on this to assess competitive landscape (Cooper Surgical, which I looked at years ago and Vitrolife)

 

Note:

Right now, a leap of faith is required as it is conceptually difficult to justify the ability to buy entities at 1,5 to 2x revenues, turn around and sell the same entities at 5x revenues or more. For instance, I understand that recently (2016) Vitrolife bought two German operations who had growing and profitable laser equipment units at 1,5x revenues.

 

For interest, here are some references for the customer and industry perspectives:

https://www.reproductivefacts.org/globalassets/rf/news-and-publications/bookletsfact-sheets/english-fact-sheets-and-info-booklets/art.pdf

http://healthland.time.com/2013/05/30/frontiers-of-fertility/

https://www.harriswilliams.com/sites/default/files/content/fertility_industry_overview_-_2015.05.19_v10.pdf

 

 

 

 

 

[Gregmal]

My main focus as an investor is and would be this, You have two layers of undervaluation here...

 

The reasons some of these businesses are tricky is because its in many cases about management, execution, and scale...

 

Thanks for sharing this interesting and relatively low liquidity idea.

 

After the first dive, there is a lot to like about this opportunity.

 

The positives:

-growing market with solid "fundamentals"

-well positioned as a Tier 2 player to grow profitably (cross-selling and new products)

-structure and size of company makes it relatively neglected

-with the new CEO, operating and financial "story" has been on the spot

-remarkably, even if quite early in the growth phase, the company is profitable and significantly cashflow positive

-high level of NOLs

 

The negatives:

-operative moat is only moderate especially for the consumables and services

-moat that is projected has a lot to do with the management capacity to carry out their financial strategy

-acquisition mistake or surprise (selection and/or integration) may really hurt especially in an unfavorable debt/cash position

 

Valuation:

-challenging

-first assume low acquisition activity and continued operational success

-I try to project revenues in 5 years (double from now) and take a 25% EBITDA margin. Using both targets (multiple as an acquisition candidate and on ongoing operations) and discounting at 15%, I get close to present market value.

-when adding the risk and reward associated with the planned acquisition strategy, the outcome could be MUCH better and also MUCH worse.

-need to do more work on this to assess competitive landscape (Cooper Surgical, which I looked at years ago and Vitrolife)

 

Note:

Right now, a leap of faith is required as it is conceptually difficult to justify the ability to buy entities at 1,5 to 2x revenues, turn around and sell the same entities at 5x revenues or more. For instance, I understand that recently (2016) Vitrolife bought two German operations who had growing and profitable laser equipment units at 1,5x revenues.

 

For interest, here are some references for the customer and industry perspectives:

https://www.reproductivefacts.org/globalassets/rf/news-and-publications/bookletsfact-sheets/english-fact-sheets-and-info-booklets/art.pdf

http://healthland.time.com/2013/05/30/frontiers-of-fertility/

https://www.harriswilliams.com/sites/default/files/content/fertility_industry_overview_-_2015.05.19_v10.pdf

 

Good stuff.

 

I will point out that the two laser businesses purchased by Vitrolife are typically considered low quality businesses. In fact, this is essentially what Hamilton Thorne was, prior to David Wolf, and how they generated NOL's. The high margin recurring consumable and service revenue, that is the 5-7x stuff. From what I've seen, laser biz goes from 1-2x.

[Gregmal]

https://seekingalpha.com/pr/17251014-hamilton-thorne-announces-record-revenue-ebitda-quarter-ended-june-30-2018

 

Record numbers across the board as expected. Organic growth as expected, margins got a bump, and Zandair acquisition more or less indicated to follow the same playbook as thought. Cash pile continues to grow as well. They continue to execute flawlessly.

[Cigarbutt]

https://seekingalpha.com/pr/17251014-hamilton-thorne-announces-record-revenue-ebitda-quarter-ended-june-30-2018

 

Record numbers across the board as expected. Organic growth as expected, margins got a bump, and Zandair acquisition more or less indicated to follow the same playbook as thought. Cash pile continues to grow as well. They continue to execute flawlessly.

 

Agreed.

 

The long term "drivers" for IVF are strong and perhaps not fully appreciated. IMO, the age when pregnancies occur will continue to climb and the male component somehow will play an increasing role.

 

Puzzling reference which corroborates multiple other studies:

https://www.ncbi.nlm.nih.gov/pubmed/28981654

 

IMO the clinical lasers will continue to play a significant, growing and complementary role. Results achieved at IVF clinics are variable and relatively poor. New techniques are evolving and some are promising, especially when couples go for additional cycles after a first attempt. For nonspecific infertility, laser-assisted hatching has potential and for male-based infertility (where HTL plays a diagnostic role with its software), intracytoplasmic sperm injection may become more common. I assume that IVF results will continue to improve by a better selection and match of existing techniques to infertility profiles and by newer techniques.

https://www.hamiltonthorne.com/index.php/applications/clinical-laser-applications/clinical-laser-assisted-hatching

http://americanpregnancy.org/infertility/intracytoplasmic-sperm-injection/

 

Looking now at Vitrolife.

 

 

 

[Cigarbutt]

Analyzing recent acquisition activity by larger players, I looked at LifeGlobal (acquired recently by CooperSurgical, as Gregmal included in a link). The price paid was high (about 5x rev) but LifeGlobal is a leader in media (not the fake news type, more in the sense of a culture medium for the fertilized eggs), which is an enduring and significant part of the products market for IVF clinics.

 

I'm sharing here an interesting source of info for those who want to take a deep dive. The publications are promotional but contain many relevant articles.

 

https://www.lifeglobalgroup.com/fertmag.shtml

 

For instance, there is an article about ventilation ("air purification") in IVF clinics in volume #22 (pages 8-10) that corroborates other publications indicating that air filtration systems are relevant if not for objective reasons (although there is reasonable objective data), at least as a factor pointing to a marketing quality differentiating factor for IVF clinics.

 

Also, for those interested in the long term "story" part, volume #23 has a featured article (pages 11-21) that covers well the entire historical evolution of ART. Some time ago, a piece of whale bone was used to re-open clogged Fallopian tubes. Didn't work...Humility required because future generations will look back at present technology with perhaps a similar sense of absurdity. The field is moving very rapidly which is a double-edged sword.

[Gregmal]

https://seekingalpha.com/pr/17251014-hamilton-thorne-announces-record-revenue-ebitda-quarter-ended-june-30-2018

 

Record numbers across the board as expected. Organic growth as expected, margins got a bump, and Zandair acquisition more or less indicated to follow the same playbook as thought. Cash pile continues to grow as well. They continue to execute flawlessly.

 

Agreed.

 

The long term "drivers" for IVF are strong and perhaps not fully appreciated. IMO, the age when pregnancies occur will continue to climb and the male component somehow will play an increasing role.

 

Puzzling reference which corroborates multiple other studies:

https://www.ncbi.nlm.nih.gov/pubmed/28981654

 

IMO the clinical lasers will continue to play a significant, growing and complementary role. Results achieved at IVF clinics are variable and relatively poor. New techniques are evolving and some are promising, especially when couples go for additional cycles after a first attempt. For nonspecific infertility, laser-assisted hatching has potential and for male-based infertility (where HTL plays a diagnostic role with its software), intracytoplasmic sperm injection may become more common. I assume that IVF results will continue to improve by a better selection and match of existing techniques to infertility profiles and by newer techniques.

https://www.hamiltonthorne.com/index.php/applications/clinical-laser-applications/clinical-laser-assisted-hatching

http://americanpregnancy.org/infertility/intracytoplasmic-sperm-injection/

 

Looking now at Vitrolife.

 

Good stuff, thanks.

 

Vitrolife is a good investment as well IMO. I just think HTL is following the same playbook and has a longer runway in terms of rolling up the space in a meaningful way. HTL management had indicated they have active discussions with over 150 companies regarding strategic transactions. Simply a law of large numbers thing but many of these companies wouldn't move the needed for Vitrolife but can be very accretive for HTL.

[mwtorock]

Analyzing recent acquisition activity by larger players, I looked at LifeGlobal (acquired recently by CooperSurgical, as Gregmal included in a link). The price paid was high (about 5x rev) but LifeGlobal is a leader in media (not the fake news type, more in the sense of a culture medium for the fertilized eggs), which is an enduring and significant part of the products market for IVF clinics.

 

I'm sharing here an interesting source of info for those who want to take a deep dive. The publications are promotional but contain many relevant articles.

 

https://www.lifeglobalgroup.com/fertmag.shtml

 

For instance, there is an article about ventilation ("air purification") in IVF clinics in volume #22 (pages 8-10) that corroborates other publications indicating that air filtration systems are relevant if not for objective reasons (although there is reasonable objective data), at least as a factor pointing to a marketing quality differentiating factor for IVF clinics.

 

Also, for those interested in the long term "story" part, volume #23 has a featured article (pages 11-21) that covers well the entire historical evolution of ART. Some time ago, a piece of whale bone was used to re-open clogged Fallopian tubes. Didn't work...Humility required because future generations will look back at present technology with perhaps a similar sense of absurdity. The field is moving very rapidly which is a double-edged sword.

 

Good stuff. Thanks

[mwtorock]

https://www.hamiltonthorne.ltd/index.php/news/press-releases/222-hamilton-thorne-pr-aug-28-2018

 

Good job to whoever got into this deal.

[Gregmal]

https://www.hamiltonthorne.ltd/index.php/news/press-releases/222-hamilton-thorne-pr-aug-28-2018

 

Good job to whoever got into this deal.

 

Yup, great move for many reasons.

[Cigarbutt]

https://www.hamiltonthorne.ltd/index.php/news/press-releases/222-hamilton-thorne-pr-aug-28-2018

 

Good job to whoever got into this deal.

 

Yup, great move for many reasons.

 

Have made up my mind about the relevance of a rollup strategy beating the odds in this specific industry.

 

The criteria I have used and will use are:

1-operational capacity to create value

2-premium paid for acquisitions

3-financing strategy for the shareholders already on board

 

@Gregmal,

Obviously, the 3 criteria above are interdependent but, if your fair value of the shares now is at least between 1.85 and 2.45, what to you mean by "great move" if new shares are issued at 1.10?

[Gregmal]

https://www.hamiltonthorne.ltd/index.php/news/press-releases/222-hamilton-thorne-pr-aug-28-2018

 

Good job to whoever got into this deal.

 

Yup, great move for many reasons.

 

Have made up my mind about the relevance of a rollup strategy beating the odds in this specific industry.

 

The criteria I have used and will use are:

1-operational capacity to create value

2-premium paid for acquisitions

3-financing strategy for the shareholders already on board

 

@Gregmal,

Obviously, the 3 criteria above are interdependent but, if your fair value of the shares now is at least between 1.85 and 2.45, what to you mean by "great move" if new shares are issued at 1.10?

 

I place greater importance on the company being able to execute on it's longer term growth initiatives than I do on shaving a few percent off of the current FV. They will need to raise funds, and given the run this has had and the willingness of an institutional shareholder to step up(in certain ways, this is essentially a strategic partner) all in all this is a good move. If for instance, they find another Gynamed, well then you justify doing this deal every single time.

[Gregmal]

I will also point out that there are certain internal goals that the company is looking to achieve in order to uplist. This likely includes getting a greater institutional presence, specific market cap, and in general awareness within the capital markets. This deal certainly helps that goal.

 

I would also point out, that there is a good liklihood that this deal was struck at a premium to the then current market price of HTL. These deals typically take at least a few weeks to work out. At the time of my write up a couple weeks ago, this was trading at .94 CDN.

[Cigarbutt]

Given the concurrent discussion on stock blogs and low liquidity issues, there may be an incentive to blend into more generic discussions or anecdotal evidence as owner-operators of certain IVF clinics may show an unusual inclination to maximize the outcomes. IVF comes with its own set of ethical questions.

 

http://www.wilx.com/content/news/Doctor-accused-of-inseminating-patients-491688201.html

 

Don't we look for partners with skin in the game?

[Jurgis]

Given the concurrent discussion on stock blogs and low liquidity issues, there may be an incentive to blend into more generic discussions or anecdotal evidence as owner-operators of certain IVF clinics may show an unusual inclination to maximize the outcomes. IVF comes with its own set of ethical questions.

 

http://www.wilx.com/content/news/Doctor-accused-of-inseminating-patients-491688201.html

 

Don't we look for partners with skin in the game?

 

;D ;D ;D 8)

[Gregmal]

https://www.technologyreview.com/s/612258/are-we-designing-inequality-into-our-genes/