Why Viemed Healthcare Surged 21% on Tuesday

Viemed (TSX:VMD)(NASDAQ:VMD) stock climbed 21%, as the company reported record-setting earnings and a share-repurchase program.

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Viemed Healthcare (TSX:VMD)(NASDAQ:VMD) shares surged 21% on Tuesday after reporting strong earnings along with a share-repurchase program.

What happened?

Viemed stock climbed 21% on Tuesday after reporting earnings that nearly doubled estimates. After analysts estimated earnings per share around $0.08, the company reported $0.13 per share on Tuesday. Net revenue increased to $29 million for the quarter, creating a new company record and a year-over-year 11% increase.

Adjusted EBITDA reached $9.5 million for the quarter, and $29.3 million for the year. Its cash balance reached $28.4 million, with long-term debt at $4.3 million. Viemed stock also announced guidance for the next year of between $29.2 and $30.2 million for the first quarter of 2022. And along with its core business, Viemed stock expects to find more COVID-19-related revenue streams.

So what?

Viemed stock fell from superb heights due to the pandemic. COVID-19 provided the in-home respiratory operator a path to serious revenue. However, many feared it was short term. With vaccination rates increasing, investors feared the company couldn’t keep up the record-setting revenue it achieved.

However, clearly, this earnings report stated the opposite — so much so that Viemed stock announced a share-repurchase program on the Nasdaq. The company will purchase up to 5% of total common shares, or about 1,984,014 shares. Chief Executive Officer Casey Hoyt stated the current share price offers an opportunity “based on the strength of our balance sheet and excess free cash flow.”

Now what?

Viemed stock continues to trade far below where it was at the beginning of COVID-19. After reaching $14.54, it now trades at $5.53, even after the share price surge. Yet analysts give it a consensus target price of $13.38. That would represent a potential upside of 141% as of writing!

With a record-setting, estimate-beating quarter behind it, and trading at 18.01 times earnings, it may be a good time to get in on Viemed stock.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Amy Legate-Wolfe owns Viemed Healthcare Inc. The Motley Fool owns and recommends Viemed Healthcare Inc.

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