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Medical Transcription Billing Corp (NASDAQ:MTBC) Is A Big 2017 Runner

Medical Transcription Billing Corp (NASDAQ:MTBC) Is A Big 2017 Runner
Written by
Jarrod Wesson
Published on
October 6, 2017
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We need to talk again about Medical Transcription Billing Corp (NASDAQ:MTBC), which provides web-based solutions, together with related business services to health-care providers.Our readers will remember well that we mentioned in our last article that it was a name to be checked closely. We had several reasons that included strong expected 2017 results beside the fact that many funds had bought large stakes in the company.We were not wrong, as good news came out after we published our article. The company repaid some of its debt reducing the financial risk of shareholders and obtained financing from non-convertible preferred stock. Additionally, the company distributed big returns recently as a result of the launch of its next-generation, voice-enabled electronic health records (EHR) solution, and talkEHR™. The new innovation, which uses natural language processing and artificial intelligence, brought buyers into the stock.Have a look at it: 1 year chart for MTBCThe share price went from trading close to $1.5 to cross the $3.15 share price level. That is more than a 110% return in less than one day. We will provide more details in this article.First, let's revisit the company's business model for those who had not read the previous report. The company is a SaaS (software as-a-service) provider helping clients reduce costs and enhance revenues.The amount of people employed and the location are the most significant factors; 1,700 employees in Pakistan and 100 employees in Sri Lanka as well as others in Poland and other parts of the world. Thus, the key in this company is that it is able to design innovative solutions at a very competitive price as the technical labor comes from outside the US. MTBC LogoWhat's new?In our opinion, the most significant developments are the following.On August 9, 2017, MTBC announced that it successfully completed its phase one launch of talkEHR. talkEHR utilizes "natural language processing and artificial intelligence to allow providers and staff to rapidly learn, implement, and successfully run their medical practices." Additionally, the device was said to include an "integrated suite of mobile apps allowing a reduction in phone calls and repetitive tasks, making practice easier." We believe that it is quite an innovative development and expected that its release would make the share price increase.Additionally, it was noted that in order to increase the word of mouth strategy, the company was offering the base talkEHR application free to all providers. A full-service package, which includes medical billing, for 2.95% of a physician's collections was also noted. We believe that the marketing strategy seems very well planned.Furthermore, we could get to know that SeeThruEquity had increased the company's target price to $4.00. We appreciate the report and believe that we needed to note it in this article. The report highlighted the astonishing YoY growth shown in the last quarter; 49%.Additionally, the research firm appreciated that the Chairman, Mahmud Haq, was expecting full year revenues in a range $31 million - $32 million, with adjusted EBITDA expected to be between $2.0 million - $2.5 million.Using these assumptions, the past performance and the EV/Revenue ratio, the target was increased to $4.00. This is what you need to know:

"MTBC has been a strong performer in our coverage universe, rising 84% over the last twelve months as of the recent price of $1.45 on August 8, 2017. The target of $4.00 represents a valuation of approximately 2.1x 2017E EV/ revenues, which we view as fair taking into account growing Adjusted EBITDA and the financial leverage at the company." Source

On September 11, 2017, the company announced the repayment of $8 million term loans from Opus bank. The CFO of the company, Bill Korn, celebrated the news:

"We're pleased to have repaid Opus well ahead of the maturity date. With the term debt repaid, we've reduced our debt servicing cost and positioned ourselves to pursue other exciting matters, which we hope to announce as we move forward." Source

We believe that the business executive was referring to the financing received from the sale of non-convertible preferred stock, which was announced later. On September 26, 2017, the company noted that it was offering 240,000 shares of its non-convertible Series A Cumulative Redeemable Perpetual Preferred Stock for $25 per share for gross proceeds of approximately $6.0 million. Regarding this announcement, the company was able to close the offering on September 28, 2017.What's the reason for the recent share price spike?The share price increase that occurred in October seemed to be caused by the launch of the talkEHR™. As we expected, the release of this solution seduced the market. Karl Johnson, MTBC SVP Sales and Marketing, explained:

“We’re very pleased to have already signed new talkEHR clients representing 30 unique specialties, spanning across 42 states plus Guam and Puerto Rico. talkEHR is a phenomenal addition to our fully integrated, industry leading, cloud-based and mobile platform and we expect it to play an important role as we continue to expand our customer base.” Source

On October 4, 2017, the market again pushed the share price when it got to know that one of the 10 largest insurance carriers in the United States agreed to leverage MTBC’s EnrollmentPlus™ software-as-a-service (SaaS) solution. The fact that the company is able to work with big companies is always very well regarded by the market. It shows that the company's products are competitive and are able to meet the requirements of the best players in the industry.ConclusionCurrently trading with a market cap of $46 million, MTBC is an exciting story among small caps. With $5.8 million of pure cash, $12 million in goodwill and only $15 million in total liabilities, the company is well-positioned for growth. Overall, we expect the MTBC bull run to continue.Be sure to check out our coverage on MTBC!We will be updating our subscribers as soon as we know more. For the latest updates on MTBC, sign up below!Image courtesy of FlickrDisclosure: We have no position in MTBC and have not been compensated for this article.

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