Stock Alert for Virtual Radiologic Corp. (VRAD)

Virtual Radiologic Corp. (NASDAQ: VRAD)

Virtual Radiologic Corp. (VRAD) is a radiology practice working in partnership with radiologists and hospitals to optimize radiology’s role in the delivery of patient care. Virtual Radiologic Professionals, LLC (VRP), is its affiliated physician-owned medical practice that contracts with independent contractor physicians for the provision of their services to fulfill customer contracts held by vRad or by the Professional Corporations, consisting of Virtual Radiologic Professionals of California, Virtual Radiologic Professionals of Illinois, Virtual Radiologic Professionals of Michigan, Virtual Radiologic Professionals of Minnesota, Virtual Radiologic Professionals of New York and Virtual Radiologic Professionals of Texas. It provides radiologic interpretations for a range of digital diagnostic imaging modalities, including computed tomography (CT), x-ray or plain film, magnetic resonance imaging (MRI), ultrasound, nuclear medicine and positron emission tomography (PET).

The Company was formerly known as Virtual Radiologic Consultants Inc. and changed its name to Virtual Radiologic Corp. in January 2006. VRAD was incorporated in 2003 and is headquartered in Eden Prairie, Minnesota.

Share Statistics (18-May-10) FY

2007

FY

2008

%

Chg

Q4 2008 Q4 2009 %

Chg

Symbol VRAD Revenue, $Mn 86.24M 106.6M 23.6% 28.30M 29.94M 5.8%
Current price $16.90 Gross marg. 49.4% 53.7% 8.7% n/a 49.0% n/a
52wk Range: $16.95-7.62 Oper. margin 10.7% 12.9% 20.6% n/a 5.8% n/a
Avg Vol (3m): 61,157 Net margin 4.1% 8.0% 81.8% n/a 3.7% n/a
Market Cap. 274.38M
Dil. Shares Outst. 16.3M EPS, $ -2.31 0.50 -121.6% 0.05 0.07 40.0%

Source: Reuters.com, SEC Filings.

Financial Summary

First Quarter Financial Highlights

  • • Read volume up 14% to 700,000
  • • Finals volume grew 37%, representing 32% of total volume
  • • Revenue up 8% to $30.8 million
  • • Adjusted EBITDA up 25% to $7.0 million and 23% of revenue
  • • Adjusted net income up 25% to $3.1 million; adjusted diluted earnings per share (EPS) up 27% to

$0.19

  • • GAAP net income up 40% to $2.0 million; GAAP diluted EPS up 33% to $0.12
  • • Cash of $52.4 million; the Company has no debt

Additional First-Quarter Highlights

  • • U.S. Patent Office approves patent covering several applications within VRAD’s technology portfolio
  • • Stevie award winner for technology-enabled customer service

First Quarter Results

Total revenue increased 8% to $30.8 million for the quarter ended March 31, 2010, compared to $28.6 million for the quarter ended March 31, 2009. The increase in revenue over the first quarter of 2009 resulted primarily from a 15% increase in the number of hospitals and medical facilities served to 1,205 as of March 31, 2010, representing approximately 21% of all hospitals in the United States.

Adjusted EBITDA increased 25% to $7.0 million for the quarter ended March 31, 2010, compared to $5.6 million for the quarter ended March 31, 2009. Adjusted EBITDA was 23% of revenue for the quarter ended March 31, 2010, compared to 20% for the prior year period.

Adjusted net income increased 25% to $3.1 million for the quarter ended March 31, 2010, compared to $2.5 million for the quarter ended March 31, 2009. This resulted in adjusted diluted EPS of $0.19 for the quarter ended March 31, 2010, compared to $0.15 for the quarter ended March 31, 2009.

GAAP net income was $2.0 million for the quarter ended March 31, 2010, compared to $1.4 million for the quarter ended March 31, 2009, resulting in diluted earnings per share of $0.12 for the quarter ended March 31, 2010, compared to $0.09 for the quarter ended March 31, 2009.

Financial Strength (18-May-2010) Company Industry Sector S&P 500
Quick Ratio (MRQ) 5.41 1.57 2.64 0.78
Current Ratio (MRQ) 5.41 1.76 3.16 0.94
Long-Term Debt to Equity (MRQ) 48.26 23.20 133.49
Total Debt to Equity (MRQ) 57.26 29.83 199.39

Source: Reuters.com, SEC Filings.

Analyst Consensus

Buy Outperform Hold Underperform Sell No Opinion

This is the consensus forecast amongst three polled investment analysts. Against the Virtual Radiologic Corp company.

Analyst Detail Buy Outperform Hold Underperform Sell No Opinion
Latest 0 1 2 0 0 0
4 weeks ago 0 1 2 0 0 0
2 months ago 0 1 2 0 0 0
3 months ago 0 1 2 0 0 0
Last year 0 1 2 0 0 0

The three analysts offering 12-month price targets for VRAD have a median target of 14.50, with a high estimate of 17.00 and a low estimate of 13.00. The median estimate represents a -14.20% decrease from the last price of 16.90.

Source: www.ft.com

Consensus Estimates Analysis

# of Estimates Mean High Low 1 Year Ago
SALES (in millions)
Quarter Ending Jun-10 4 32.62 33.98 31.60 31.96
Quarter Ending Sep-10 4 34.32 34.70 34.16 33.99
Year Ending Dec-10 4 129.90 130.40 128.47 126.04
Year Ending Dec-11 4 140.67 147.50 133.42 120.95
EARNINGS (per share)
Quarter Ending Jun-10 4 0.14 0.17 0.11 0.09
Quarter Ending Sep-10 4 0.17 0.19 0.15 0.15
Year Ending Dec-10 4 0.51 0.53 0.49 0.41
Year Ending Dec-11 4 0.57 0.60 0.55 0.54
LT Growth Rate (%) 2 20.00 25.00 15.00 20.00

Source: http://www.reuters.com/finance/stocks/financialHighlights?symbol=VRAD.W

Investment Highlights

VRAD and Providence Equity Partners, a leading global private equity firm that manages more than $22 billion in equity capital, recently announced that they have entered into a definitive agreement under which Providence will acquire all of the outstanding common stock of VRAD for $17.25 per share in cash.

The offer price represents a premium of 41.7% over the 30-day average closing stock price of $12.18 as of May 14, 2010, and a premium of 54.9% over the three-month average closing stock price of $11.13. Based on the per share consideration, the transaction is valued at approximately $294 million.

VRAD’s board of directors unanimously approved the agreement and recommends that shareholders vote in favor of the transaction. VRAD’s co-founder and chief medical officer, Dr. Eduard Michel, who owns 6.0% of the Company’s outstanding common shares, and Generation Partners, which owns 25.3% of the Company’s common shares, have executed Voting Agreements pursuant to which they have agreed to vote in favor of the transaction. The transaction is expected to be completed in the third quarter of 2010, subject to customary closing conditions, and regulatory and shareholder approvals. Upon completion, VRAD will become a private company, wholly owned by Providence.

VRAD is ranked No. 1 in the 2009 KLAS® Teleradiology Services Category for Second Consecutive Year

Goldman, Sachs & Co. is serving as financial advisor and Oppenheimer Wolff & Donnelly LLP is serving as legal counsel to VRAD. Weil, Gotshal & Manges LLP is serving as legal counsel to Providence Equity Partners.

VRAD announced a summer release of the third generation of vRad® Enterprise ConnectSM, its radiology workflow software platform. vRad Enterprise Connect 3.0 will include the viewer component of vRad’s proprietary PACS; vRad® VaultSM, an image storage solution; a client-controlled version of technology used in VRAD’s award-winning Operations Center to self-manage workload; and vRad® ResultsSM for mobile and Internet access to images, reports and an instant communication link to radiologists. vRad Results will push out alerts of critical findings and completed reports to ordering physicians via Apple® iPhone® or iPad™ mobile digital devices.

Last month, VRAD received notice of allowance of a patent by the U.S. Patent and Trademark Office for several applications within its technology portfolio. The pending patent, titled “Multiple Resource Planning System,” recognizes the rules-based technology VRAD uses to receive orders over the Internet and automatically assign them to radiologists based on a set of business and clinical rules, including subspecialty training, licensing, credentialing, workload, hospital preferences and other customized parameters. The patent also covers VRAD’s order forecasting and radiologist scheduling applications.

Source: http://www.virtualrad.com/

Technical Analysis

Source: http://stockcharts.com

VRAD is trading above its 50-day moving average. This is considered to be the sign of a bullish trend. There is added weight to this indication because the moving average is rising and suggests that there has been buying interest in this stock.

VRAD’s recent volatility has been greater than normal. This is evidenced by the increased distance between the upper and lower Bollinger Bands. These bands measure volatility using standard deviation and a large width is due to high volatility. Additionally, VRAD is trading above its upper Bollinger Band. Relative to recent price action, the stock is currently overextended and due for either a pause or retracement.

The MACD for VRAD currently indicates a strong bullish signal for two reasons. First, the MACD is above the signal line, a 9-day moving average. Second, the MACD is above zero, which implies that the underlying moving averages are trending higher.

Comparative Analysis

Company Name Ticker Price per Mrkt. Cap. P/E P/S
May18-2010 symbol Share, $ $ Mn 2009 2010 2009 2010
American Services Group Inc. ASGR 18.92 169.97M 28.48 n/a 0.28 n/a
Transcend Services Inc. TRCR 14.13 148.21M 18.88 n/a 2.14 n/a
CorVel Corp. CRVL 37.90 458.16M 20.50 n/a 1.45 n/a
Healthcare Facilities Median 258.78M 22.62 n/a 1.29 n/a
Virtual Radiologic Corp. VRAD 16.90 274.38M 32.48 n/a 1.86 n/a

Source: Thomson Financial

Insider Trading Activity

NET SHARES PURCHASE ACTIVITY

Inside Purchases – Last 6 Months

Shares Transaction
Purchases n/a 0
Sales 371,100 12
Net Shares Purchased (Sold) (371,000) 12
Total Insider Shares Held 8.82M n/a
% Net Shares Purchased (Sold) (4.0%) n/a

Net Institutional Purchases — Prior Qtr to Latest Qtr
Shares
Net Shares Purchased (Sold) (149,417)
% Change in Institutional Shares Held (2.7%)

Source: Yahoo Finance

DO NOT BASE ANY INVESTMENT DECISION UPON ANY MATERIALS FOUND ON THIS REPORT. We are not registered as a securities broker-dealer or an investment adviser either with the U.S. Securities and Exchange Commission (the “SEC”) or with any state securities regulatory authority.  We are neither licensed nor qualified to provide investment advice.

The information contained in our report should be viewed as commercial advertisement and is not intended to be investment advice.  The report is not provided to any particular individual with a view toward their individual circumstances. The information contained in our report is not an offer to buy or sell securities.  We distribute opinions, comments and information free of charge exclusively to individuals who wish to receive them.

Our newsletter and website have been prepared for informational purposes only and are not intended to be used as a complete source of information on any particular company.  An individual should never invest in the securities of any of the companies profiled based solely on information contained in our report.  Individuals should assume that all information contained in the report about profiled companies is not trustworthy unless verified by their own independent research.

Any individual who chooses to invest in any securities should do so with caution.  Investing in securities is speculative and carries a high degree of risk; you may lose some or all of the money that is invested.  Always research your own investments and consult with a registered investment advisor or licensed stock broker before investing.

Information contained in our report will contain “forward looking statements” as defined under Section 27A of the Securities Act of 1933 and Section 21B of the Securities Exchange Act of 1934.  Subscribers are cautioned not to place undue reliance upon these forward looking statements.  These forward looking statements are subject to a number of known and unknown risks and uncertainties outside of our control that could cause actual operations or results to differ materially from those anticipated.  Factors that could affect performance include, but are not limited to, those factors that are discussed in each profiled company’s most recent reports or registration statements filed with the SEC.  You should consider these factors in evaluating the forward looking statements included in the report and not place undue reliance upon such statements.

We are committed to providing factual information on the companies that are profiled.  However, we do not provide any assurance as to the accuracy or completeness of the information provided, including information regarding a profiled company’s plans or ability to effect any planned or proposed actions.  We have no first-hand knowledge of any profiled company’s operations and therefore cannot comment on their capabilities, intent, resources, nor experience and we make no attempt to do so.  Statistical information, dollar amounts, and market size data was provided by the subject company and related sources which we believe to be reliable.

To the fullest extent of the law, we will not be liable to any person or entity for the quality, accuracy, completeness, reliability, or timeliness of the information provided in the report, or for any direct, indirect, consequential, incidental, special or punitive damages that may arise out of the use of information we provide to any person or entity (including, but not limited to, lost profits, loss of opportunities, trading losses, and damages that may result from any inaccuracy or incompleteness of this information).

We encourage you to invest carefully and read investment information available at the websites of the SEC at http://www.sec.gov and FINRA at http://www.finra.org.

Leave a Reply

Your email address will not be published. Required fields are marked *