VitalHub (TSX: VHI) just crossed a milestone most investors missed. The company is knocking on the door of $100 million in annual recurring revenue (ARR), closing Q3 at $93.7 million, a 75% jump year-over-year when you factor in acquisitions and organic growth.
The TSX-listed stock has pulled back roughly 45% from its highs, but the underlying business continues to execute. VitalHub operates in a sticky market. Its clients include hospitals, long-term care facilities, and community health providers that don’t don’t swap software on a whim.
Once VitalHub’s electronic health records, patient flow tools, or workforce automation systems are embedded, they tend to stay. That creates predictable, recurring revenue, which now accounts for 74% of total sales.
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The Canadian stock is focused on acquisitions
VitalHub closed two major deals in 2025: Novari and Zesty. Together, they represent roughly 30% of the company’s revenue. Both came in below VitalHub’s typical profitability profile, but management is working through cost-cutting and integration efforts, and early signs point to progress.
Management noted that some savings began to flow in the final month of Q3, with more expected throughout 2026. VitalHub aims to expand its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) margin to about 27% by mid-2026.
- Q3 adjusted EBITDA stood at $7.2 million, or 22% of sales, down from 28% in the year-ago period.
- The margin compression reflects the Novari and Zesty integrations.
- But VitalHub ended the quarter with $123.8 million in cash and no debt, giving it ample room to pursue organic growth and acquisitions.
- VitalHub reported revenue of $32 million in Q3, an increase of 94% year over year. Its recurring revenue, which includes term licenses, maintenance, and support, stood at $23.6 million.
Services and other non-recurring revenue spiked to $5.5 million, driven by project timing and the fact that both Novari and Zesty provide significant implementation services.
Cross-selling and scale are starting to click
VitalHub offers multiple products that can be bundled to deliver comprehensive solutions. For example, it is starting to see customers use products like SHREWD, Strata, and Novari together to manage patient flow, referrals, and operational visibility across entire health systems. VitalHub is gradually transitioning from a collection of niche software tools to an integrated platform.
Novari, which specializes in referral management, is making headway in the U.K. market. VitalHub’s U.K. team is also well-positioned to drive Novari’s growth in Canada, where referral management is becoming a priority for provincial governments.
VitalHub’s SHREWD product, a patient flow and operational intelligence tool, has been a workhorse for the company, particularly in the U.K.’s National Health Service (NHS). But the NHS is currently reorganizing its regional bodies by combining smaller regions into larger integrated care systems, creating short-term uncertainty.
VitalHub is working on roughly half a dozen AI projects across its product suite. The most obvious use case is clinical scribing, whereby AI helps doctors and clinicians take notes during patient visits. The company is also exploring predictive analytics for its SHREWD dashboards and AI-assisted referral summaries in Novari.
Why VitalHub is a forever hold
Valued at a market cap of $512 million, VitalHub stock has returned close to 300% in the last nine years. Analysts tracking VitalHub stock forecast revenue to increase from $108 million in 2025 to $209.5 million in 2029. In this period, free cash flow is projected to expand from $18.4 million to $49 million.
If the small-cap Canadian stock is valued at 22 times forward FCF, which is in line with its five-year average, it should double over the next three years.
Bay Street remains bullish on VHI stock and expects it to surge 86%, given consensus price target estimates.
