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AH's revenue cycle management (RCM) service helps hospitals improve their operating margins. The company has had a couple of unlucky, non-recurring events disrupt its business. First, a notebook computer with unencrypted patient data was stolen over a year ago in MN. This led to the some unflattering business tactics being publicly debated, the lose of a contract and a fine from the MN AG. Then, shortly thereafter, the company announced it would have to restate its financials due to issues covering revenue recognition. In short, the stock is unloved and underfollowed--an fallen angel. However, in an update report delivered in Nov. 2013, new management disclosed that the restatements, when completed, would have no impact on cash flows. Moreover, in the time since the last reported balance sheet, AH's cash balance had grown from < $200m to > $220m, indicating solid business trends. Further, the company has not experienced any further client attrition due to the delay in financial reporting and issues in MN. RCM is a very attractive business in health care as billing becomes more complex. AH appears undervalued, especially relative to its peers (although I am not a fan of relative values). Management agrees--announcing a buyback will be implemented as soon as the financial restatement is complete. This was suppose to happen about 10 tens ago, but was delayed as it continues to take time, money and manpower to complete. The stock do not react to the announcement, a further indication it probably has bottomed here.
3yr rev growth 36%3yr EPS growth 131%
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