GreeneStone Healthcare Corp. (OTCQB:GRST) shares have had an excellent run this month, gaining nearly 20%. The rally in GRST shares has come as the company continues to make strong progress.
Based in Canada, GreeneStone Healthcare operates medical clinics in the province of Ontario. The clinics offer addiction treatment, cardiology and endoscopy procedures. GreeneStone's mission is to add capacity to the stretched provincial healthcare system. The company also seeks to provide alternatives to publicly available healthcare services. GRST has four medical clinics, including three in Toronto and one in Muskoka.
Castelli Clinic Acquisition
In August, GreeneStone Healthcare announced that it reached an agreement to acquire the operations of Castelli Clinic, which is an endoscopy and gastroenterology practice based in downtown Toronto. The clinic was established by Dr. Mario Castelli in December 2008. Under the terms of the agreement, Dr. Castelli will continue to work at the clinic. In addition, he will also provide service at the company's other facilities.
Commenting on the acquisition, Shawn Leon, CEO of GreeneStone, said that he is pleased to add the Castelli Clinic to GRST's growing list of locations. Leon noted that the addition of Dr. Castelli's list of referring physicians and patients will be an added boost to the company's current operations.
Q2 Results Highlight Improvement
Last month, GreeneStone Healthcare also announced its financial results for the second quarter. The results highlighted the progress GreeneStone has been making, with the company seeing growth in overall revenue.
For the quarter, GreeneStone's overall revenue rose 13% to $1,528,944. The increase in overall revenue was driven by a 37% increase in the company's endoscopy practice. For the six-month period ended June 30, 2013, GreeneStone reported revenue of $2,973,268, compared to $2,605,993 reported for the same period in the previous year.
GreeneStone also managed to narrow its losses for the quarter. The company's loss for the quarter was $241,348, down from $298,733. The company's losses narrowed even as its facility costs rose by $42,894. This is certainly an encouraging sign, and with the company adding new clinics to its portfolio, which will boost revenue in the future, one can expect GRST to turn profitable soon.
This was also noted by CEO Leon following the release of quarterly results. Leon said that the company expects to continue reporting increases in revenue and reduced operating costs in the coming quarters. Leon added that by completing its recapitalization, along with the anticipated purchase of the Muskoka facility, the company will complete its start-up phase and focus on accelerated growth and strong performance in all of its operating units. These changes are expected to significantly improve GRST's balance sheet and income statement, according to Leon.
A Growth Story
GreeneStone Healthcare is certainly a growth story. The company has been increasing its revenue, while at the same time it has been successful in bringing down costs. As a result, GRST is expected to be profitable in the near future. In addition, the company has been strengthening its balance sheet. GRST has already engaged Colebrook Capital to work on raising equity investment. If successful, this will certainly help GRST in funding its growth.
But the most attractive thing about GRST right now is the stock price. GRST shares are currently trading at around $0.10, which given the company's growth potential is very cheap.
The significant progress this year, the expected growth in the future, and the cheap valuation make GRST a compelling investment option.
Disclosure: I am long OTCQB:GRST. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.