CHNG

Change Healthcare Inc

Healthcare


Presented:09/26/2019
Price:$12.37
Cap:$1.54B
Current Price:$27.49
Cap:$9.03B

Presented

Date09/26/2019
Price$12.37
Market Cap$1.54B
Ent Value$1.10B
P/E RatioN/A
Book Value$14.99
Div Yield0%
Shares O/S124.85M
Ave Daily Vol1,897,989
Short Int11.54%

Current

Price$27.49
Market Cap$9.03B
Change Healthcare, Inc. operates as a healthcare technology company. It offers software, analytics, network solutions, and technology-enabled services. The firm's products include ANSOS staff scheduling, HealthQx, hospital revenue cycle services, coding advisor, revenue performance advisor, and InterQual. The company was founded in 2007 and is headquartered in Alpharetta, GA.

Publicly traded companies mentioned herein: Allscripts Healthcare Solutions Inc (MDRX), The Blackstone Group Inc (BX), Cerner Corporation (CERN), Change Healthcare Inc (CHNG), CSX Corporation (CSX), Experian plc (EXPGF), HMS Holdings Corp (HMSY), Inovalon Holdings Inc (INOV), Iqvia Holdings Inc (IQV), McKesson Corporation (MCK), Moody’s Corporation (MCO), TransUnion (TRU), UnitedHealth Group Incorporated (UNH), Verisk Analytics Inc (VRSK)

Highlights

The presenter is long shares of Change Healthcare (CHNG) and sees a favorable risk/reward setup near- and longer-term. Considering its wide business portfolio, recurring revenue model and the possibility of the MCK overhang dissipating, he is optimistic about CHNG’s potential. With a high degree of revenue / earnings visibility, he believes the company is set up for modest beats and raises over the next few quarters. Through his sum-of-the-parts (SOTP) model, the presenter estimates ~70% upside to ~$21.50 per share based on a forward EV/EBITDA multiple of ~11x (14x for the MCO segment, 8.5x for the provider segment). 

CHNG was created in 2017 through a joint venture between Nashville-based Change Healthcare (formerly HCIT Holdings) and McKesson’s Technology Solutions segment (excluding the EMR and RelayHealth Pharmacy assets). The presenter believes that since CHNG went public in June 2019, its story is not fully appreciated and is trading at a massive valuation discount to reasonable peers. He cites four main reasons as to why the stock is not getting much investor attention:

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Idea Discussion

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