4 acquisitions and deals in 4 months, Akumin has been making some moves. But are they worth buying?

Akumin is a TSX listed company specializing in diagnosing imaging centers located in the us. After their latest acquisition, they now have 90 centers in 6 states. What intrigues us about Akumin is a mix of 3 things- their fairly clean balance sheet, the area of the market (imaging and healthcare) and their ability to make accretive acquisitions

The Numbers

Let’s start with their financials, which involve top line growth more than doubling year over year, from 18 million to 37 million in their latest report. this is very good growth, especially for a company that is only trading at 24x projected 2018 earnings and 13x projected 2019 earnings, all this year over year growth this growth has not been to the detriment to their balance sheet, as well. With a strong current ratio above 2.5x, and debt at less than 3x projected EBITDA, their balance sheet looks sturdy enough to handle anything that comes their way.

The Sector

Next thing that we like about Akumin is their market segment and operating area. We are bullish on healthcare as a whole, with aging demographics and innovations happening in that space everyday. Akumin gives Canadian investors a way to buy fully US exposure with their Canadian dollars through the TSX. For an industry almost entirely filled with pot stocks, it gives investors a more pure play option at health care stocks in Canada. Since they are in health care, much of their pay comes from insurance companies, isolating them from any consumer related problems, making their revenue streams fairly reliable.

Roll up

Finally, what intrigues us is their ability to grow by acquisition. Their ability to purchase and roll up the fragmented imaging industry in the US has been fairly impressive to say the least. This is evident by their latest acquisition of 11 Florida imaging centres at less than 6x year end EBITDA. Since 2015, they have grown from 14 to 89 imaging centres, and that number should continue. With thousands and thousands ripe for roll up, their market to grow is huge.