Broadening of medical testing service
ClearStar (CLSU) is a leading technology provider to the multi $billion job screening (63% of $17.8m 2017 revenues, up 11% LFL) and drug/medical testing (37%) markets.Momentum seems to be building. At the 22nd May trading update, CLSU announced that it had secured new work with the likes of Gulfstream Aerospace, Hilmar Cheese and BNSF Railway Company (a Berkshire Hathaway company).
Then today came news that the firm had enhanced its medical services platform by integrating the ClearMD mobile drug testing solution with Abbott Laboratories, a leading global provider of healthcare diagnostics.This immediately increases the number of CLSU locations [to >9,500] where an employee/candidate can utilise ClearMD, particularly in rural areas. What’s more the agreement should also generate significant economies of scale (eg procurement), along with speeding up the whole service proposition.
CEO Robert Vale stating: 'We are very proud to have achieved this integration with Abbott Laboratories, which makes ClearStar the only provider of paperless medical testing with a fully customisable user platform that is integrated with all three major US labs'.
Although this agreement does not change our numbers or 95p/share valuation, we nevertheless believe the stock is significantly undervalued. Underpinned by CLSU’s technological expertise, ongoing buoyant demand, high repeat revenues and 90%+ retention rates.
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