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Assure Holdings Corp (IOM.V)

The company (IOM.V) recently started trading publicly on May 29, 2017. Based on Q1 results, I believe they are extremely undervalued.

The first quarter results were absolutely outstanding. Net Income was approximately 4.3 M CAD in the first quarter. From correspondence with the management team, much of the activity from expansion should materialize in Q3 and Q4. With strong performance in Q1 alone, I anticipate strong growth in the second half of the year.

Below is a quick summary I put together from the Q1 results.

Net Income (Q1 2017) 3,212,797 4,322,336.27
Annualized Net Income 12,851,188 17,289,345.08
Cash 1,160,278 1561095.98
Accounts Receivables 6,117,196 8230381.07
EPS 0.09 0.12
Diluted EPS 0.07 0.10

The balance sheet is extremely strong with approximately 1.5 M CAD in cash and 8.2 M CAD in Accounts Receivables. At first glance, 65% of total assets being in accounts receivables was a bit worrisome. However, the companies account receivables are generally payable by large insurance companies who have high credit worthiness. The cash cycle is generally lengthy for businesses in the insurance billing industry, and bridging the long cash cycle is one of the reasons why the company raised capital in the public markets.

Number of Shares (May 26, 2017)  
Shares issued and outstanding 34,928,393
Fully-diluted basis 44,587,993

Assuming a run rate of 4.3 M CAD for annual net income, and using a 2.05$ CAD share price to calculate enterprise value , the EV/Net Annual Income Ratio is as follows:

EV/ Annual Net Income Ratio
4.9 (Fully diluted basis)

IOM.V is trading quite cheap even without taking into consideration the growth prospects. To be conservative, I typically use a EV multiple of 8 with venture companies.

Management seems to be quite optimistic on future expansion, and I believe it's a table pounding buy under 2$. I believe the company will be trading over 3.50 $ CAD by next year.

Disclosure: I am/we are long IOM.V.

Disclosure: I am/we are long IOM.V.