Visicu, Inc.: An Undervalued Provider of Online ICU Monitoring Services

Dec. 3.07 | About: VISICU, Inc. (EICU)

VISICU (EICU) provides high-quality remote monitoring systems for patients in ICU hospital units, making top intensivists (ICU specialists) available 24-7 to ICU doctors and nurses in participating units. Lacking this service, only 13% of ICU patients nationwide will see a qualified intensivist during their intensive care stay. Started by two distinguished Johns Hopkins doctors (intensivists) who continue to be involved, the well-financed company is led by experienced business persons in all key positions. CEO is Frank T. Sample, a seasoned medical technology veteran.

Revenue increased 23% in the latest quarter, and management forecasts a further 20% revenue gain for '08. Software and other intellectual property are protected by patents, all of which have recently been reaffirmed by the U.S. Patent Office. Patent protection insulates the firm from copycat competition. Financials are very strong. The company has $3.95 in cash, meaning that at $8.50 per share one is paying only $4.55 per share for the company. The current ratio is a very strong 5.24. Enterprise value is $4.26. Since quality companies commonly sell for between 5 and 10 times enterprise value, EICU could conceivably trade for between $21.00 and $42.00 per share. Earnings were .26 per share in the most recent trailing twelve month period.

The stock sold for $25.00 after its IPO in 2006, then sank as low as $7.00. It has since built a solid base, forming a strong-looking ascending triangle even as its business continues to experience strong growth.

An ICU nurse in Little Rock wrote this on a message board: "We have had EICU for 18 months. We nurses thought it was an insult at first - like we needed babysitters. In reality, it's great to have. I work the night shift and I love having them at 2:00 a.m. if I need a tube placement checked, etc. EICU is way more than just a concept - it's the future of healthcare in the world."

There are other online services for hospitals, but no other that is built for the ICU from the inside out. With patent protections already tested and affirmed, and with a critical shortage of intensivists that will not be alleviated in the foreseeable future, EICU potentially has a moat around itself in an area where there are few practical limits to potential growth.

Disclosure: I have a position in EICU.