Nobilis Health Corp. :HLTH-US: Earnings Analysis: Q2, 2017 By the Numbers : September 27, 2017

Nobilis Health Corp. reports financial results for the quarter ended June 30, 2017.

We analyze the earnings along side the following peers of Nobilis Health Corp. – Teladoc Inc and Healthway Medical Corporation Limited Unsponsored ADR (TDOC-US and HWYYY-US) that have also reported for this period.

Highlights

  • Summary numbers: Revenues of USD 79.96 million, Net Earnings of USD 1.59 million.
  • Gross margins widened from 56.64% to 61.48% compared to the same period last year, operating (EBITDA) margins now 13.25% from 5.01%.
  • Year-on-year change in operating cash flow of -59.21% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • Earnings decline largely a result of non-operational activity, pretax margins improved from 3.53% to 6.88%.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:

2017-06-30 2017-03-31 2016-12-31 2016-09-30 2016-06-30
Relevant Numbers (Quarterly)
Revenues (mil) 79.96 68.3 101.92 70.68 61.87
Revenue Growth (%YOY) 29.24 33.21 13.22 34.68 26.61
Earnings (mil) 1.59 -2.4 9.37 -2.76 4.81
Earnings Growth (%YOY) -67.02 51.7 -79.09 -125.21 1272.2
Net Margin (%) 1.98 -3.51 9.19 -3.9 7.77
EPS 0.02 -0.03 0.12 -0.04 0.06
Return on Equity (%) 1.02 -1.54 6.31 -1.96 3.42
Return on Assets (%) 2.05 -3.13 13.71 -4.66 8.34

Access our Ratings and Scores for Nobilis Health Corp.

Market Share Versus Profits

Revenues History
Earnings History

HLTH-US’s change in revenue this period compared to the same period last year of 29.24% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that HLTH-US is holding onto its market share. Also, for comparison purposes, revenues changed by 17.07% and earnings by 166.10% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Leader, Earnings Focus, Laggard, Revenues Focus

Earnings Growth Analysis

The company’s year-on-year earnings decline did not come as a result of a contraction in gross margins or because of any cost control issues. Both gross margins and operating margins (EBITDA) margins actually improved over this time frame. Gross margins went from 56.64% to 61.48%, while operating margins improved from 5.01% to 13.25% over this period. For comparison, gross margins were 55.37% and EBITDA margins -0.21% in the immediate last period.

Gross Margin Versus EBITDA Margin

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Commodity; Low Cost, Commodity; High Cost, Differentiated; High Cost

Gross Margin Trend

Companies sometimes sacrifice improvements in revenues and margins in order to extend friendlier terms to customers and vendors. Capital Cube probes for such activity by comparing the changes in gross margins with any changes in working capital. If the gross margins improved without a worsening of working capital, it is possible that the company’s performance is a result of truly delivering in the marketplace and not simply an accounting prop-up using the balance sheet.

Gross Margin History
Working Capital Days History

HLTH-US’s gross margin improvement has not produced any big difference in its working capital. Working capital days are currently 99.72, compared to last year’s level of 82.03 days. This leads Capital Cube to conclude that the improvements in gross margins are likely from operating decisions and not trade-offs with the balance sheet.

Gross Margin Versus Working Capital Days

Quadrant label definitions. Hover to know more

Customer Financed, Cash Starved, Supplier Financed, Cash Rich

Cash Versus Earnings – Sustainable Performance?

It is important to examine a company�s cash versus earnings numbers to gauge whether its performance is sustainable.

HLTH-US’s change in operating cash flow of -59.21% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.

Operating Cash Flow Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Cash Flow based Earnings, Likely Non-cash Earnings, Low Cash Flow Base, Likely Undeclared Earnings

Margins

The company’s earnings decline is largely a result of non-operational activity. As a matter of fact, the company showed increases in operating (EBIT) and pretax margins. EBIT margins improved from 1.69% to 9.74% and pretax margins widened from 3.53% to 6.88%.

EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables
EBIT Margin History
PreTax Margin History

Access our Ratings and Scores for Nobilis Health Corp.

Company Profile

Nobilis Health Corp. engages in the operation and development of outpatient surgery centers. The firm owns and manages ambulatory and acute care facilities to deliver innovative surgical services. It operates through Medical Services and Marketing Services segment. The Medical Services segment provides the operation of hospitals, outpatient facilities, and other various related health care services. The Marketing Services segment provides marketing services, patient education services, and patient care co-ordination management services. The company was founded on March 16, 2007 and is headquartered in Houston, TX.

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