tombgrt Posted October 28, 2014 Share Posted October 28, 2014 Was down -3,60% actually! You are welcome Planet Earth! Link to comment Share on other sites More sharing options...
investor-man Posted October 28, 2014 Share Posted October 28, 2014 Was down -3,60% actually! You are welcome Planet Earth! nice work! do it again tomorrow ;) Link to comment Share on other sites More sharing options...
maybe4less Posted October 29, 2014 Share Posted October 29, 2014 Management has stated that maintenance capex will be $30M this year. Does anyone know how sustainable that number is? Is that a fairly accurate steady-state number or will it fluctuate upward whenever they have to replace a machine? Link to comment Share on other sites More sharing options...
tombgrt Posted November 6, 2014 Share Posted November 6, 2014 http://www.businesswire.com/news/home/20141106006663/en/Alliance-HealthCare-Services-Reports-Results-Quarter-2014#.VFvjp_mG8ZM Q3 out. Link to comment Share on other sites More sharing options...
investor-man Posted November 6, 2014 Share Posted November 6, 2014 I listened to the conference call. The only thing not in the release I felt worth mentioning is the reason for the lowered guidance is because some projects expected to begin generating revenue have been pushed out to early 2015. Link to comment Share on other sites More sharing options...
Laxputs Posted November 7, 2014 Share Posted November 7, 2014 Agreed. Nothing really to comment on. Business as usual. RO is growing nicely. 2015 pipeline sounds positive. Hopefully the market rerates them based on the underlying FCF. Lots of upside. Link to comment Share on other sites More sharing options...
Laxputs Posted November 7, 2014 Share Posted November 7, 2014 I saw that too. Seems weird to rewrite the definition of FCF, which should normally take into account Interest. I think they are relating it to how PE would think about the capital structure. I would just calculate it yourself and come up with a valuation from there--cash is cash and definitions don't change that. Link to comment Share on other sites More sharing options...
Packer16 Posted November 7, 2014 Author Share Posted November 7, 2014 I think debt financing fees are not interest but fees to originate debt so it is closer to what FCF is. Packer Link to comment Share on other sites More sharing options...
Guest JoelS Posted November 7, 2014 Share Posted November 7, 2014 I think I am asking an even simpler question. It seems that the def. of free cash flow as EBITDA - interest - tax - maintenance capex implies a much higher level of cash to an owner than the way they are defining it and guiding for (27m-37m). I am obviously missing something but my small brain is not quick enough to figure it out. Link to comment Share on other sites More sharing options...
Packer16 Posted November 7, 2014 Author Share Posted November 7, 2014 The difference is the changes in working capital item and they have typically beaten FCF guidance historically. Packer Link to comment Share on other sites More sharing options...
Guest JoelS Posted November 7, 2014 Share Posted November 7, 2014 Okay, thanks Packer. Link to comment Share on other sites More sharing options...
plato1976 Posted November 16, 2014 Share Posted November 16, 2014 ladies and gentleman RDNT rose 400% this year! so what's the catalyst on RDNT missing in AIQ? this is really confusing... yes, so we need to rise 400% to catch up with RDNT's valuation...? I know the stock is thinly traded and that markets can be inefficient at times but this is really something. If AIQ was valued at an equal EV/EBITDA as Radnet (now x8.6), the stock would trade around $80/share. I'm happy to take $50+ but Radnet after all has a much higher debt to ebitda ratio and as far as I can tell is the lesser business. What is the market expecting for Radnet? Guess I'm stubborn, added some today. Link to comment Share on other sites More sharing options...
Packer16 Posted November 16, 2014 Author Share Posted November 16, 2014 The primary difference is spin, communications and liquidity. Radnet is promotional, AIQ is not and AIQ has made statements like we are not for sale (which I think is unwise because everyone is for sale at a given price). The one fundamental factor is some of AIQ's project rollouts have been delayed due to approvals whereas to date Radnet's have not been. I believe AIQ should sell for a premium market cap to RDNT as its business has more cash flow and less debt than Radnet. Also, AIQ's trading volume is about 20 to 25% of that of Radnet but Radnet has market cap about 40% higher. I don't mind RDNT's price being higher as then it is a catch-up game for AIQ versus AIQ blazing a trail. Packer Link to comment Share on other sites More sharing options...
doc75 Posted November 16, 2014 Share Posted November 16, 2014 Could the different valuations simply result from superficial analysis? Example: AIQ has more debt than assets (ie. large negative book value), worsening YoY from 2009-2013, and a general trend of decreasing revenue over the past 5 years. Radnet "looks better" from a cursory bar-chart point of view. Those increasing revenues over the past 5 years look nice. Radnet being more promotional would just compound this effect. Link to comment Share on other sites More sharing options...
moody202 Posted December 10, 2014 Share Posted December 10, 2014 This one just keeps drifting lower! Any insight on what may cause a market re-evaluation anytime soon? Link to comment Share on other sites More sharing options...
kab60 Posted December 10, 2014 Share Posted December 10, 2014 This one just keeps drifting lower! Any insight on what may cause a market re-evaluation anytime soon? Not sure how much it'll make it move, but according to management some of the revenue from Q3 was moved to Q4. I don't suppose it'll be enough for a re-evaluation over night, but they're paying down debt pretty fast (there's alot though!). Link to comment Share on other sites More sharing options...
investor-man Posted December 10, 2014 Share Posted December 10, 2014 yeah no idea what will cause a rerating, but the business is doing well, which gives me a lot of confidence. There are other names I hold that are getting cheaper that I feel much more squeamish about than this Link to comment Share on other sites More sharing options...
GrizzlyRock Posted December 11, 2014 Share Posted December 11, 2014 Hello again fellow Corner of BRKs! As mostly a "lurker" on the board, please allow me to a few thoughts and ask a question as we've done a fair bit of work on Alliance recently: - Yes, AIQ is poised to grow next year with images volume overwhelming expected decrease in revenue per image. WRT the SRS / LINAC biz, volumes are strong mostly from new contract wins (MUSC, California, etc). reimbursement changes are a modest negative yet the Company claims their specific code price changes are benign. - Strong FCF, strong mgmt, clearly statistically inexpensive (assuming AIQ isn't a value trap) - Mostly ignored by institutional investors due to the control groups led by Oaktree (explains discount in valuation metrics to RadNet) - My main question on Alliance is their reason for existence. Most hospitals and radiologists we spoke with indicate imaging and oncology as profit centers. With lease financing abundant, why are hospitals outsourcing to Alliance? What is the incentive? Note: we haven't yet spoken with AIQ customers. Has anyone done so? Link to comment Share on other sites More sharing options...
investor-man Posted December 11, 2014 Share Posted December 11, 2014 - Mostly ignored by institutional investors due to the control groups led by Oaktree (explains discount in valuation metrics to RadNet) This is interesting. Care to expand on this? Link to comment Share on other sites More sharing options...
GrizzlyRock Posted December 11, 2014 Share Posted December 11, 2014 - Mostly ignored by institutional investors due to the control groups led by Oaktree (explains discount in valuation metrics to RadNet) This is interesting. Care to expand on this? The "syndicate" of Oaktree, MTS and GE own 52% of the stock and control the board, capital allocation, and eventual sale (if any). Thus the probability IMHO is this goes fully to a strategic or PE buyer as that is the only way Oaktree can monetize. With that in mind, sell side doesn't care as biz won't be public indefinitely and (more important) won't be churning a ton of inv. banking fees (other than the potential sale) Plus the last two big competitors went BK and the fact this biz hasn't yet sold to PE tells us a lot... Link to comment Share on other sites More sharing options...
Packer16 Posted December 11, 2014 Author Share Posted December 11, 2014 Historically, AIQ has provided mobile imaging centers that allowed hospitals to share equipment amongst themselves thus cost less than buying themselves. They have long-term contracts with hospitals for imaging. Recently, they have developed imaging centers and oncology centers with hospitals providing the equipment, financing and consulting (best practices). A similar company is Radnet which provides similar services in a non-hospital environment. You are correct about profitability for a hospital part of which is higher re-imbursement. An older company overview briefing on AIQ's website lays out the profitability story nicely. When we have seen hospitals buy stand alone facilities they pay up to 7x EBITDA. Another interesting aspect for a debt investor is the trading price of the debt implies a large spread between the debt rate of return and the equity FCF. Packer Link to comment Share on other sites More sharing options...
Packer16 Posted December 11, 2014 Author Share Posted December 11, 2014 The reason it did not sell was Oaktree at the time did not want to lose money on it and they saw a lot more value than the market was giving them credit for. They purchased the equity from KKR about 7 or 8 years ago. When you see transactions at 7x EBITDA and a weaker competitors (Radnet, Digirad and Fonar) selling for 8x EBITDA in the market are you going to sell for 5x EBITDA? Oaktree is smarter than that. Packer Link to comment Share on other sites More sharing options...
yadayada Posted December 11, 2014 Share Posted December 11, 2014 unrelated, but what do you think of their large investment in star bulk? I think it is lower then the price htey bought in now? Link to comment Share on other sites More sharing options...
investor-man Posted December 11, 2014 Share Posted December 11, 2014 - Mostly ignored by institutional investors due to the control groups led by Oaktree (explains discount in valuation metrics to RadNet) This is interesting. Care to expand on this? The "syndicate" of Oaktree, MTS and GE own 52% of the stock and control the board, capital allocation, and eventual sale (if any). Thus the probability IMHO is this goes fully to a strategic or PE buyer as that is the only way Oaktree can monetize. With that in mind, sell side doesn't care as biz won't be public indefinitely and (more important) won't be churning a ton of inv. banking fees (other than the potential sale) Plus the last two big competitors went BK and the fact this biz hasn't yet sold to PE tells us a lot... I would have said institutional investors are uninterested due to this being less liquid, but I see your angle. Thanks for the response. Link to comment Share on other sites More sharing options...
GrizzlyRock Posted December 11, 2014 Share Posted December 11, 2014 An older company overview briefing on AIQ's website lays out the profitability story nicely. When we have seen hospitals buy stand alone facilities they pay up to 7x EBITDA. Packer Packer - thanks for your comments. Might you provide a link to the specific presentation? Link to comment Share on other sites More sharing options...
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