Clinically proven to deliver faster growth
There are now approx. 57m Americans (source: 2018 Gallop poll) working at least part-time in the gig economy. Here the elderly rely on their domiciliary staff to be both honest and competent carers. Equally Angie’s List users trust that the plumbers, builders and/or electricians they hire, have the necessary insurance and qualifications.Not surprisingly this is a massively complex task, made worse by the largely siloed nature of the records held within each State and county. Enter ClearStar, whose fully automated and mobile-centric background & medical (MIS) screening services are disrupting the sector.
So much so that this morning, the firm posted 16.9% LFL revenue growth in H1’19 to $11.6m vs $9.9m H1’18. Split 21.7% Q2 ($6.5m) vs 11.4% Q1 ($5.1m), with Aug ’19 YTD being 18% ahead of LY.
The stand-out performers were once again Direct (+49% to $4.2m) and MIS (+25% to $5.0m), which together climbed 36% in H1, and contributed 72% (or $8.3m, excluding divisional overlap) of the group. The latter enjoying strong demand for drug testing, particularly after the gradual legalisation of cannabis for recreational use, and the launch of a new combined substance abuse & alcohol product in Q2.
With regards to the numbers, we’ve lifted our FY19 turnover forecast to $23.725m (from $23.0m before), but held the adjusted EBITDA (post SBPs) at $650k (split H1 $187k & $463k H2) mirroring the MIS mix shift (ie lower GP %).
Similarly, net debt is anticipated to close Dec’19 at $1.2m (vs £1.0m June & +$934k cash in Dec’18), following the H1 capex ($1.2m), working capital and one-off payments ($464k). While in September, the CLSU extended its $5.0m credit facility ($2.1m drawn-down as at June) with Silicon Valley Bank until Oct’21. Demonstrating the lender’s considerable confidence in the business, and providing sufficient headroom to fund future organic growth.
Our 135p/share valuation remains unchanged.
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