Medical Transcription Billing Corp (NASDAQ:MTBC) Rockets Up The Charts

Medical Transcription Billing Corp (NASDAQ:MTBC), the vendor of Software-as-a-Service (SaaS) platforms for the healthcare sector, recently announced that it had signed new agreements with two new clients. Traders celebrated this news by pushing up shares from $0.43 to $1.93 in a short period of time. Additionally, the 1Q earnings are expected to be released on Wednesday, May 10, 2017. Thus, many traders became excited about this name. Have a look at the Yahoo Finance forum and check it by yourself. Consequently, the editorial team believed that an article about this ticker was necessary. This is the jump. We will explain it to you in just a minute:SourceBusinessThe SaaS provided by MTBC helps clients push up revenues, streamline workflows as well as decide better and reduce costs. The company employs a team with expertise in the US healthcare sector and designers in other countries, such as Pakistan (1,700 employees), and Sri Lanka (100 employees). In total, the company employed, as of February 2017, 2,050 full-time workers. The product offered is called PracticePro. It is a flexible solution for big and small companies that includes the following features:

• Practice management solutions for the day-to-day operations.
• Electronic health records.
• Revenue cycle management services, including billing and analytics.
• Mobile Health solutions, such as smart phones applications.

The company seems to have a small market capitalization, but in terms of the number of clients reported in the annual report, this is not at all a tiny business. As of December 31, 2016, the company served 1,080 customers and offered billing services to 830 medical practices and 2,800 doctors, nurses and other healthcare professionals. Some of the most relevant corporate developments in the history of the company were the IPO on July 23, 2014, the acquisition of assets from three medical billing companies on July 28, 2014, and some more asset purchases in 2015 and 2016.Our takeThe Software-as-a-Service sector was exposed in the period 2008-2014. Investors were very positive about the future of this business and many companies sold shares in the open market in those years. However, in 2015 and 2016, traders saw how corporate profitability decline and the large amount of money invested in R&D was not going to be returned. In our opinion, there were too many players. When bankers saw the numbers reported by the companies, they tried to increase the M&A activity before the market could destroy even more value. Many companies were liquidated. The companies that did survive, such as MTBC, bought assets in the liquidation process and seem to have an interesting future, in a more mature market with fewer players. The following text from the annual report of MTBC resumes very well our rationale and the strategy of the company:

"Our growth strategy includes acquiring smaller revenue cycle management companies and then migrating the customers of those companies to our solutions. The revenue cycle management service industry is highly fragmented, with many local and regional revenue cycle management companies serving small medical practices. We believe that the industry is ripe for consolidation and that we can achieve significant growth through acquisitions. We estimate that there are more than 1,500 companies in the United States providing revenue cycle management services and that no one company has more than a 5% share of the market. We further believe that it is becoming increasingly difficult for traditional revenue cycle management companies to meet the growing technology and business service needs of healthcare providers without a significant investment in information technology infrastructure." Source

The recent developmentsIn our opinion, the most relevant announcements made by MTBC were the following:On Apr 27, 2017, it announced a new contract with two new clients that are expected to generate more than $1 million in total revenues starting in the 3Q 2017. This represents 4% of the total revenue obtained in 2016. Thus, the contract is important. The Sales and Marketing representative said the following about the deal:

"We're very pleased to welcome these new clients, who are regional leaders in their respective specialties of pain management and orthopedics. Yesterday was a record day of closings for us and we'll continue expanding our reach into new markets as we enable healthcare providers to optimize revenues, while reducing operating costs." Source

In addition, in this press release, the words of the MTBC President, Stephen Snyder, were remarkable:

"We believe we're positioned to achieve significant year-over-year revenue growth during 2017, while generating positive adjusted EBITDA for full year 2017." Source

In our opinion, the fact that the company is able to obtain new deals and the words of the CEO, who claimed to be prepared to release a good 2017 EBITDA figured, excited traders. Hence, these two facts caused part of the jump in the following days.In addition, on April 25, 2017, the company released another deal, this time a partnership with Health Compliance Network, LLC, a compliance solutions provider to hospitals in the US. This deal did not have a large impact on the share price as compared to the other one, but it is more proof of the ability of MTBC to find partners.Institutional HoldersThe company was able to pass the due diligence of several big investment funds operating in the US markets. This is a list of them:Adage Capital Partners GP L.L.C.1,005,000Dec 30, 20169.64%728,625KCG Holdings, Inc.51,382Dec 30, 20160.49%37,251PanAgora Asset Management, Inc.30,081Dec 30, 20160.29%21,808Silverback Asset Management, LLC25,000Dec 30, 20160.24%18,125JW Asset Management, LLC22,903Dec 30, 20160.22%16,604Goldman Sachs Group, Inc.16,775Dec 30, 20160.16%12,161SourceAmong them we researched Adage Capital, which is large hedge fund with $36 billion under management according to this website.Conclusion MTBC announced several deals recently and traders pushed up the share price. In addition, the President of the company said that the EBITDA for the year 2017 was going to be significant contributing to the jump. Additionally, several funds registered relevant stakes in the company, which is always positive. The next quarterly earnings will be soon and many traders are expecting a big number, according to the investment forums. We will definitely be there to explain the results. We will be updating our subscribers as soon as we know more. For the latest updates on MTBC, sign up below.Disclosure: We have no position in MTBC and have not been compensated for this article.