Initiating Coverage On Major ObamaCare Beneficiary University General Health Care System (UGHS) with Strong Buy $2.50 Target on @$600 Million Revenues by year end 2015
Initiating Coverage On Major ObamaCare Beneficiary University General Health Care System (UGHS) with Strong Buy $2.50 Target
At NBT we LOVE cash flow accretive acquisitions…and one of the most interesting aspects of the UGHS ObamaCare Strategy is how they turn low reimbursement physician-owned outpatient facilities into higher reimbursement “HOPDs”…hospital outpatient department.
Medicare and Medicaid…as well as most 3rd party healthcare payors and plans…rightfully recognize significant value added for MRI/Bariatric Surgery/Pain Management/PT outpatient facilities run to the MUCH higher standards of hospitals than physician owned outpatient centers.
Because of the higher standards of safety/infection control/outcome management and staffing hospitals are held to…they justifiably earn higher reimbursement rates from health care payors.
Remember…the ObamaCare angle is significant here for our UGHS investment thesis. Fee-for-service reimbursement rates to physician-owned outpatient centers are up to 50% LESS than HOPD reimbursement rates. This policy…and the rules against physician owned hospitals (and/or restrictions on expansion of physician owned hospitals) embedded in ObamaCare work to the extreme advantage of UGHS and its strategy of building regional hospital centric healthcare hubs or “ecosystems” where hospital admissions are produced largely from their embedded referral network of HOPDs and specialty surgeons.
For every $1 million of recurring EBITDA UGHS adds from these accretive HOPD acquisitions, shareholders (including NBT and our affiliates) should expect to see 3-5 TIMES that cash flow in increased private market value of UGSH.
For every $10 million in accretive EBITDA acquired…that’s $30-$50 million in additional value.
UGHS has been the winner we forecast when we initiated coverage at .36 a share in January…62 cents today…but like I said in the beginning…HOLD onto your shares and let the UGHS team keep building and building the company to $1 billion in revenue and $500-$750 million in market cap on their way to $1 billion+.
Sky is the limit for UGHS…hold on tight.
- Toby
Source
MarketWire
Founder and Editor-in-Chief for NBTEquitiesResearch.com. Contributor and Anchor for the Fox News Channel and Fox Business Network 2000-2013. Chairman & CEO of NBT Group, Inc., a boutique private capital investment bank and investor relations organization.
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