Revenue cycle management (RCM) is not what it used to be. There was a time when a visit to a small medical practice meant paying the doctor or his receptionist in cash. RCM for the physician was, essentially, receiving cash from a patient and depositing that cash. Alas! Those halcyon days are gone. As the scope and cost of healthcare services in the most advanced nation on earth have grown, so too have the complexities of the supporting reimbursement systems, giving rise to entirely new industries in healthcare information technology (HIT) and revenue cycle management (RCM).
But these complexities also pose challenges to both patients and providers. Now nimble, innovative HIT company Medical Transcription Billing, Corp. (NASDAQ: MTBC) (NASDAQ: MTBCP) is soothing those headaches with its suite of electronic health record (EHR), revenue cycle and practice management, transcription and data management solutions.
The HIT industry is filled with promise because of its rapidly evolving nature and sophistication. The Health Information Technology for Economic and Clinical Health (HITECH) Act enacted in 2009 was meant, among other objectives, to encourage providers of medical services to adopt electronic health records (EHR). The incentives and penalties prescribed by the law have driven widespread adoption of EHR systems. Meanwhile, the Patient Protection and Affordable Care Act (PPACA) of 2010 expanded the market of insured patients by millions.
At the same time, under the PPACA guidelines, the reimbursement process has become more cumbersome. This problem has been exacerbated by the adoption of ICD-10, which classifies and codes a large number of medical variables. ICD-10 has increased the complexity of selecting billing codes considerably.
These factors have enticed a plethora of firms to get on the U.S. ambulatory EHR/RCM playing field, which is estimated to represent a market opportunity of more than $13 billion. Currently, there are at least 1,500 companies offering RCM services in this highly competitive arena. None commands more than 10 percent of market share. The largest, athenahealth (NASDAQ: ATHN), has about seven percent of the market. With annual revenues that are likely to exceed $1.0 billion this year, the market value of its equity is close to 4x revenues. Its stock currently trades at around $93.00.
This makes MTBC look seriously undervalued. According to its recently filed 10-Q, revenues for the nine months to September 30, 2016, were $15.7 million. It is quite likely, then, that full year revenues will cross the $20 million mark. With market cap at around $10 million, the price to sales ratio is a paltry 0.5x. Even taking into account Athena’s larger size, it seems the market has not fully taken notice of MTBC, whose common shares are currently trading at under $1.00.
Named among Deloitte’s Technology Fast 500™ based on its 130 percent revenue growth from 2012 to 2015, MTBC is certainly on a fast track of growth driven organically and through acquisition. The company has completed and integrated 15 acquisitions over the last five years. The largest, to date, was MediGain, LLC for $7 million in October.
For more information, visit www.mtbc.com
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