NovaMed, Inc. (NOVA)

JJRzut (84.95) Submitted: 6/27/07 2:40 PM : Start Price: $6.04 NOVA Score: 5.67

Started watching this one about two months ago and it is down 15% so I decided to revisit and it passed the mustard.





For background the company's main operating strategy is to acquire, develop, and operate ambulatory surgery centers (ASCs) The stock has been flat over the last two years and sports a PEG ratio of less than one (.82)





Keep those numbers in mind and then consider this: "For each of the past three years, NovaMed has grown operating income more than 40% on average while posting consistent same-facility sales growth in the double-digit range. Most recently, the company reported a 33% increase in third-quarter income, fueled primarily by the growth in total surgical procedures performed"





They did issue $75mil worth of notes a few days ago which is about ½ their market cap but this was just to reload the war chest. Management has been aggressively expanding via acquisition ahead of the curve at very reasonable prices.





Given that ambulatory surgical centers are gaining in popularity, especially with outpatient procedures it seems the only thing that could stop them is insurers.


I wonder where they come in on pricing versus traditional hospitals... So I checked their website and came away convinced that they are undercutting traditional healthcare services. As cost pressures continue in medicine, the low cost/high quality provider will prevail. Here’s betting on that...Where's the double down button? Wish they had one of those!

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