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"Ideagen makes smart US move with Medforce deal First acquisition Stateside provides platform for faster growth RED TAPE AND compliance software supplier Ideagen (IDEA:AIM) has made its first acquisition in the US. We believe this is a significant stepping stone that could realise substantial value for the company and shareholders. New York-based Medforce provides productivity and legal compliance solutions that help streamline processes for healthcare organisations and prepare them for auditing. Healthcare is one of the most highly regulated industries in the world. Ideagen is paying $8.7m for Medforce, or about �6.1m at current exchange rates. There are several things to like about the purchase. First, it gives Ideagen a firm base across the pond. About half of new business currently being won by the company is in the US. Medforce is also profitable, chalking-up about �0.7m of earnings before interest, tax, depreciation and amortisation (EBITDA) on rough �3.4m revenue in 2017. A high proportion of those revenues are recurring in nature, 82% according to Ideagen. Paid out of cash and debt facilities, that means no new shares are being issued so there is zero dilution to existing Ideagen shareholders. While analysts raised forecasts for the full year to 30 April 2019 to �11.4m of pre-tax profit on �42.8m revenue, we believe there is scope to outstrip those estimates. SHARES SAYS:  Ideagen remains a high quality business that deserves its premium 2019 price to earnings multiple of 24.1"
Lots of chunky sells as vol hits over 2m traded. Not sure why this is so but last few days buyers have been negligible. It could of course be repositioning into share ISAS. Whatever the t350 added 5 with Mfocus up 10 and Sage -3. Overnight the Nsdq fell 25 and London called lower at open.
Maybe pis have taken a dim view Of the rns as all trades have been on the sell side. However in such a thinly traded stock its impossible to gauge investor sentiment which imo is mainly very positive despite its 28x pe/r according to the IC. As ever the pe/r is in the eye of the beholder and you should compare Idea to companies with similar attributes. Sector av is c.31x so Idea is hardly overvalued as long as you are comparing like for like ie not a growth stock pe v a low growth stock pe. I'm happy with 30x earnings for a high growth co like Idea and am prepared to pay more for each pound of the Co earnings.
Director dealings in the ordinary shares of Idea resulting from share options. See RBS for a fuller explanation. However the upshot is that Messrs Spenceley, Kent , Dorks increased their holdings while J.Wearing reduced his.
Despite positive comments in the IC on the Medforce acquisition... " we don't expect the acceleration to tail off...some chunky institutional sells went through at 109. I don't read much into it. Could just be profit taking after a good run and sit on cash while Trump decides his next move in Syria. No move in the sp just widened the spread. The 350T added 6 but off days high, Mfocus and Sage up 9&7 respectively. In the US the volatile Nsdq had a good day up 144 but off highs as both the Dow and S&P fell away at close.
Https://www.investorschronicle.co.uk/tips-ideas/2018/04/10/ideagen-makes-its-first-us-acquisition/ "Ideagen (IDEA) has bought Medforce Technologies � a healthcare software business � for $8.7m (�6.2m). This marks the information management software supplier�s first US acquisition, and will be funded with cash and existing debt facilities. Medforce has all the hallmarks of an astute acquisition. It is growing, profitable and cash generative. Sales for the year to December 2017 of $4.7m comprised more than 80 per cent recurring revenues, while cash profits and post-tax profits were $1m before $400,000 of non-recurring costs. Its �Center� platform is used by more than 300 US-based healthcare customers. All being well, the business should enhance Ideagen�s earnings for the year to April 2019. Ideagen is an acquisitive company: it made four purchases last financial year. We learnt within the recent half-year results that these have integrated to plan, boding well for Medforce�s performance under new ownership. IC View Medforce should bring further growth in the US, while boosting Ideagen�s recurring sales. At 116p, the shares now trade at a demanding 28 times finnCap�s forecast adjusted EPS of 4.2p for the 2018 financial year. But they are also up 43 per cent on our buy tip, and we don�t expect this acceleration to tail off. Buy."
Sunderland City council adds Ideas Pentana audit software to monitor strategic & operational performance throughout the Council.
Little change to the sp..whose surprised? That's fine...I tell myself....I'm in for the long haul --well for today and tomorrow! I jest of course. I have passed on several multi baggers in days past through being impatient. I dont intend to make that mistake here! Initially I pencilled in 3 years to hopefully double my money so two to go and on track.
Dows fall overdone Asian stocks in the blue and London called 35 better at kick off.
Better wk for techs now c.28% down ytd nos (Nsdq u/c). Idea rose 5 on the Medforce acquisition but u/c on the Easter wk close. Mfocus and Sage closed higher. With US markets tanking on Friday expect volatility to continue on trade worries with London on the back foot - could easily be 50 off at open as the Nikkei is called 150 lower. Much will depend on how traders view the Dows chances of coming back from Fridays 572 fall.
Some might say..."whaddya mean the sp is up 6 today so why the carping, it's all good innit"? . I'd say "so what we were 127 without the last few positive good news reports....particularly a pre tax boost of $1m to the bottom line". So get a life. Sp's rarely, if ever indicate the value of a companies assets that's a lesson I have learnt the hard way. Wish it were different but that's life in the stock market casino of the 2018's.
If todays performance does not prompt you to sell i dont know what will? Can't say im that surprised as the mrkt rarely focusses on the plusses of good news from Co announcements...I mean they wouldn't would they? -- much preferring to trim sp's and think management have got it wrong...so ask questions later when they will inevitably be proved right as loose holders dump stock. Short term i'd agree after all a clock is right twice a day and shorting Idea is the play if your a Bear. At 114/5 it's on a knife edge for me, next few moves will decide whether I stay or go.
Gut feeling this is lower..too many loose holders as opposed to committed longs. Wouldn't sell at 107-9 but might just be tempted at 115.....on second thoughts I'd need a stronger reason than the sp at 114-5. I usually ignore daily moves as inconsequential...I need to get my long-term mojo back before I join the 'penny up' sellers.
See what happens when US opens...
Some decent buys going in 145k at 115 but doesn't budge the sp the barrow boys being very accommodating to buyers...
Can't please everyone sells outweigh buys by nearly 4:1 with little interest shown by mrkt. Now that wouldn't have anything to being an Aim stock now would it?
Good start...so far so good. A profit after tax of a mill is excellent for such a small company of 29 employees. It's the huge opportunity of further cross selling of Idea software into the US healthcare sector that pleases me most. A notoriously hard sector for a foreign co to acess Idea may have pulled off a paradigm shift in the cow's fortunes. I underestimated that.
Like the look of this US acquistion getting a foothold in the US for an earnings enhancing co this year -paid out of cash and debt facility. For a reason I'm not sure on I decided to hold as taking 107 did not appeal. Dont expect any improvement in the sp.
Terrific stuff - and highly and immediately earnings-enhancing, adding $1m of PAT with no share dilution. With 300 clients "including a number of Fortune 500 companies", there must be huge cross-selling opportunities plus other cost synergies. And 82% recurring revenues too. Lovely :o)) https://www.investegate.co.uk/ideagen-plc--idea-/rns/acquisition-of-medforce-technologies-inc/201804060700030387K/
Well I missed the break yesterday but remain unconvinced of the future travel...
Been very close to selling up here as the sp is displaying signs of going nowhere but south. I dont want to jump out of the fat...so to speak but will sell if 110 is breached. If the mrkt don't like it I'm not about to argue -- that has cost me plenty in the past I can tell you! We shall see.
T350 climbed most of the day on back of a better Nsdq (+71) - closing up.2%. Idea fell back 2 (113) on 81k traded. Industry heavyweights Mfocus added 24 & Sage (+6).
Techs led the US markets lower yesterday the Nsdq down 193 (6870) clinging on to a 0.50% ytd but 16% up on a 52wk look back v -31% and -14% respectively on the t350. In volatile markets tech 'story stocks' are clobbered first so best keep an eye on the nos and Ideas balance sheet is strong with growth potential though some of its other nos lag the GB average. Instance current sp is above its 5 year future cash flow value (85p). However future rev & earnings growth is expected to exceed the GB av. Idea 60% - Software 27% & Mrkt 11%.
With techs so out of favour at the present check out the FAANGs is it just a cyclical moment in the long 9 year bull market or is the sector about to be engulfed in a mass of regulatory probes and tax penalties? Facebook mirrors what Microsoft went through years ago when Gates faced charges of using Windows monopoly to further Microsoft's dominance of the software mrkt. Any threat from regulators will damage the sp's of tech companies.... for instance ordering them to break up as they did with Standard Oil and more recently AT &T. Bad luck doesn't help....the recent electric car crash and Nvidia suspending self drive car tests after a fatality, tanked investor confidence. The sector had got ahead of itself as investors 'bought the story' not the numbers leading techs to become the most expensive since the .com boom. For sure many are making healthy profits on high margins unlike the tmt bubble so my guess it's a healthy correction. They led the mrkt up....now leading it down.
Dawn Foods Products a US provider of quality bakery goods choses Pentana audit software for its worlwide operations. Dawn partners with some 40.000 artisanal, retail bakers & manufacturers in more than 100 countries with 5000 team members globally. This is the 6th substantial contract win for Idea in Q1.