|Good day everyone,
Skylight Health Group Inc. (NASDAQ: SLHG) operates a multi-state primary care health network of physical practices offering primary care, sub-specialty, allied health, and laboratory/diagnostic testing.
Current price $1.09/share (+4.8% as of 10:07 EDT 5-3-22)
SLHG shares closed the Monday session at $1.04/share adding another 10% to the 25% gain achieved last Friday. Today’s pre-market indicated a strong open for SLGH and that is exactly what happened with a gapped open at $1.11/share. Trading volume exceeded the daily average by a factor of 5.0X with 551K shares traded by 10:00 a.m.
In news that just broke this morning, SLHG has announced of a definitive agreement to acquire NeighborMD (NMD), a private practice. NMD is based in central and southern Florida, NMD operates nine owned practices offering primary care services to over 5,000 patients. Of these, NMD has over 1,100 Medicare Advantage (MA) patients in full-risk contracts with two leading healthcare payors in Florida, Humana, and CarePlus. In addition, NMD provides complete management services for over 1,400 additional MA lives through its affiliated providers and practices.
NMD’s existing contracts offer competitive capitation fee schedules and allow for broad geographic coverage, with over 30 Florida counties. Of the Medicare Advantage lives at full risk, NMD currently sees an average reimbursement of $10,000 to $12,000, per member/per year, and Skylight expects to receive the same. With those reimbursement figures, SLHG could be creating the potential for over $20M in additional revenues.
Primary Care functions as the gatekeeper of all healthcare services and costs and directly influences more than $2 trillion of downstream healthcare spending. Up to 40% of all primary care centers operate independently and many of them find it difficult to remain financially viable.
SLHG offers them an alternative in joining a national platform that can provide them access to capital, technology, improved contracting, and participation in value-based care (VBC) programs. The move to VBC is being advocated by health insures both government and private. Skylight is a leader in the development and application of VBC programs.
The Traders News group
original report below
Skylight Health Group (SLHG) is Growing Rapidly Through Accretive Acquisitions in the Massive Primary Care Health Center Sector
Good day everyone,
Last year was a building year for Skylight Health Group Inc. (NASDAQ: SLHG) (TSXV: SLHG), a company operating a multi-state primary care health network of physical practices offering primary care, sub-specialty, allied health, and laboratory/diagnostic testing.
Last Friday, as the NASDAQ shed 536 points, SLHG gained 25%. The company bucked the market trend Friday because they put out some good news on their Health Research unit’s clinical studies growth (see below), and because the company shares seemed, and still seem, oversold. SLHG has a price to sales ratio that is only 1.30X, and a price to book value that is only 1.04X. Those ratios are AFTER Friday’s nice gain. And by the way, 2021 revenues were up 3800% over 2020 revenues.
Current price $1.05/share near market close 5-2-22
When I said 2021 was a building year for the company, this is what meant. the following are all accretive acquisitions:
On January 4, 2021, acquired 100% of Colorado based primary care services group Apex.
On February 3, 2021, acquired 100% of Florida-based RCMA with six clinic locations.
On April 5, 2021, acquired 100% of Colorado based Primary Care Clinic Group, Rocky Mountain.
On June 23, 2021, acquired 100% of Florida based primary care group Doctors Center Inc.
On September 16, 2021, acquired 70% of Pennsylvania based Primary Care Clinic Group, Aspire Health Concepts, Inc.
SLHG currently operates 24 primary care medical centers with 83 medical professionals. The primary care market is estimated to be over $290 billion or approximately 20-25% of the total spent on healthcare. SLHG is focused on acquiring small and independent practices and shifting them from a traditional fee-for-service (FFS) model to value-based care (VBC) through tools including proprietary technology, data analytics and infrastructure.
In an FFS model, payors (commercial and government insurers) reimburse on an encounter-based approach. This puts a focus on volume of patients per day. In a VBC model, the providers offer care that is aimed at keeping patients healthy and minimize unnecessary health expenditures that are not proven to maintain the patient’s well-being.
SLHG is in direct competition with Oak Street Health (OSH) and CanoHealth (CANO). I want to compare those companies with Skylight Health to give you an idea where the company could be headed.
Med. Centers Market Value Revenues
Oak Street 129 $4.35B $1.43B
Skylight 24 $37.0M $27.2M
CanoHealth 130 $1.10B $1.61B
As the comparison above shows, the potential for growth in revenues and value may be coming to SLHG as they develop the potential of medical centers they own and acquire more. I also note that institutions own 83% of CanoHealth and 93% of Oak Street, but at this point, institutions only hold 14% of Skylight.
Recent developments at SLHG:
This past Friday, the company gave updates on the status of the company’s research program, Skylight Health Research. In 2021, Skylight posted $300K in revenues for Health Research and they have already surpassed that amount this year. Since its inception, Skylight has been awarded ten clinical studies and has completed two to-date. The ten studies awarded range in indication and methodology and will each provide important contributions to evidence-based medicine including advancing knowledge of COVID-19, influenza patterns, cancer detection, major depressive disorder, and Lyme disease.
On April 18, the company declared, a dividend on its 9.25% Series A Cumulative Redeemable Perpetual Preferred Shares. In accordance with the terms of the Series A Preferred Shares, the Series A dividend will be payable in cash in the amount of $0.1927 per share on May 20, 2022, to the shareholders of record of the Series A Preferred Stock as of the dividend record date of April 29, 2022.
On April 5th, SLHG announced a joint venture partnership with Collaborative Health Systems, a population health management services organization and wholly owned subsidiary of Centene Corporation (NYSE: CNC), to integrate essential value-based care (VBC) services into Skylight Health’s growing enterprise of primary care practices. Skylight Health and CHS will partner to establish a VBC contracting framework across Florida, Pennsylvania, and Colorado.
On March 30, the company released their earnings report (CAD) for their FYE December 31, 2021, and I want to note some highlights (the company financial statement is available here):
Cash balance of $11.7 million.
Revenues for the year were $27.2 million (excluding revenue from discontinued operations of $10.6 million).
Gross profit was $15.1 million (excluding gross profit from discontinued operations of $8.1 million),Gross margin was 56% for the year.
Adjusted EBITDA loss of $14.6 million was driven by one-time expenses in infrastructure development and acquisition related expenses.
Current price $1.05/share
Book value $.90/share
Market cap $37M
Revenues (FYE2021) $27.2M
Outstanding shares 39M
Shares in Float 29M
52-week high $6.95/share
FYE December 31st
6-7-21, began trading on the NASDAQ.
I note again, in the statistics above, the relationship between the company’s share price and its book value, as well as its market value compared to revenues (keeping in mind that $10M in revenue from discontinued operations is excluded).
Outlook (from a company press release)
“The Company expects that by 2022, the large majority of investments made at the start of the year will result in both a higher growth of revenue driven organically and by acquisition and will also result in stronger EBITDA recognition. The Company is focused on revenue growth which it believes is how its peers are measured and expects to continue to compete aggressively for market share growth in three areas: acquisition of primary care practice groups, development of its single system of operation and clinical leadership, and conversion from fee-for-service to value-based-care. With the growing demand for accessible and affordable medical services in the US, Skylight Health is well positioned to meet this growing opportunity while creating significant shareholder value.”
The five analysts below offer a mixed bag of opinion, but the consensus target price is $5.50/share representing a potential upside of 485%.
4/1/2022 Lake Street Capital Lower Target $3.00
1/4/2022 Mackie Upgrade Buy
11/17/2021 Raymond James Downgrade Market Perform $4.50
11/1/2021 Echelon Wealth Reiterated Speculative Buy
10/14/2021 Northland Initiated Outperform $9.00
Note the triple bottom that has formed on the chart below. SLHG shares are trading below all their SMA levels but look ready to cross both their SMA20 and SMA50 $.96 and $.98/share, respectively. Thus far, in 2022 trading, SLHG shares would seem to have support at the $.70 level and resistance at $1.30. As the company revenues continue to grow because of their 2021 acquisitions the shares could find a higher resistance level. I believe the level of institutional investment could grow as well and those investors may have to compete for the company shares.
About Skylight Health Group
Skylight Health Group is a healthcare services and technology company, working to positively impact patient health outcomes. The Company operates a US multi-state primary care health network comprised of physical practices providing a range of services from primary care, sub-specialty, allied health, and laboratory/diagnostic testing. The Company is focused on helping small and independent practices shift from a traditional fee-for-service (FFS) model to value-based care (VBC) through tools including proprietary technology, data analytics and infrastructure. In an FFS model, payors (commercial and government insurers) reimburse on an encounter-based approach. This puts a focus on volume of patients per day. In a VBC model, the providers offer care that is aimed at keeping patients healthy and minimize unnecessary health expenditures that are not proven to maintain the patient’s well-being. This places an emphasis on quality over volume. VBC will lead to improved patient outcomes, reduced cost of delivery and drive stronger financial performance from existing practices.
We will have more on SLHG very soon,
The Traders News Group