Will Mach7 Technologies Limited position itself to take advantage of growth opportunities?

Team Veye | 24 Feb 2020 ASX - M7T
Will Mach7 Technologies Limited position itself to take advantage of growth opportunities?

Mach7 Technologies Limited (ASX: M7T)

Mach7 Delivers Positive EBITDA and NPAT, Revenue growth +158%

Mach7 Announces Strong FY20 First Half Results

Mach7 Technologies Limited (“Mach7” or the “Company”) (ASX: M7T), a company specialising in innovative medical imaging data management solutions for healthcare providers, on 21 February 2020 released its half-year results for the period ended 31 December 2019 (“H1 FY20”).

           

(Graphic Source – Company Reports)

H1 FY20 Highlights:

  • EBITDA $2.3 million, growth of $5.2 million or 176%; 
  • NPAT $0.7 million, growth of $5.1 million or 115%; 
  • Revenue $9.1 million, growth of $5.6 million or 158%; 
  • Business well capitalised with $23.3 million cash, debt-free and positioned for future growth; 
  • Strong growth is driven by new customer contracts and continued growth in CARR 
  • Growing sales pipeline including higher value RFP opportunities

 

Profitability Milestones Hit – Reflecting Scalability

Mach7 has delivered its first positive EBITDA and NPAT half-year result. EBITDA grew 176% to $2.3 million while NPAT grew 115% to $0.7 million. These profitability milestones highlight an inflection point for the size and scale of the business with revenue growth of 158% and expense growth of only 10% (before share-based payments, depreciation & amortisation, and finance costs).

(Chart source: TradingView)

This follows Mach7’s first positive free cash flow result in H1 FY20, announced in January. (Data Source – Company Reports)

 

Veye’s Take

Mach7 has delivered its first positive EBITDA and NPAT half-year result. EBITDA grew 176% to $2.3 million while NPAT grew 115% to $0.7 million. Mach7’s sales pipeline is continuing its steady growth, with 46 new opportunities, valued at >$40 million, added to the pipeline in H1 FY20. For the 10-months ending 31 December, the Company reported $2.4 million of positive free cash flows and is still free cash flow positive. The financial position of the Company is strong with $23.3 million in cash, debt-free and therefore well-positioned to take advantage of organic and acquisitive growth opportunities. As earlier reviewed, the stock had formed a double bottom on the chart and it had the potential to touch $0.79 very soon and could attempt to cross $0.87 also. The stock simply validated our viewpoint. The stock was possibly under the cup and handle formation with increased volume. If it is able to form it completely then a significant upside potential could be there. The stock has already grown by more than 172% in just nine months since Veye had recommended a “buy” on “Mach7 Technologies” on 23 May 2019 at the price of $0.33. We give a “Hold” recommendation on “Mach7 Technologies Limited” at the current price of $0.90

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