VitalHub (TSX:) simply crossed a milestone most traders missed. The corporate is knocking on the door of $100 million in annual recurring income (ARR), closing Q3 at $93.7 million, a 75% soar year-over-year whenever you consider acquisitions and natural development.
The TSX-listed inventory has pulled again roughly 45% from its highs, however the underlying enterprise continues to execute. VitalHub operates in a sticky market. Its shoppers embrace hospitals, long-term care amenities, and neighborhood well being suppliers that don’t don’t swap software program on a whim.
As soon as VitalHub’s digital well being information, affected person circulate instruments, or workforce automation methods are embedded, they have an inclination to remain. That creates predictable, recurring income, which now accounts for 74% of complete gross sales.
The Canadian inventory is targeted on acquisitions
VitalHub closed two main offers in 2025: Novari and Zesty. Collectively, they characterize roughly 30% of the corporate’s income. Each got here in beneath VitalHub’s typical profitability profile, however administration is working by means of cost-cutting and integration efforts, and early indicators level to progress.
Administration famous that some financial savings started to circulate within the remaining month of Q3, with extra anticipated all through 2026. VitalHub goals to develop its adjusted EBITDA (earnings earlier than curiosity, tax, depreciation, and amortization) margin to about 27% by mid-2026.
- Q3 adjusted EBITDA stood at $7.2 million, or 22% of gross sales, down from 28% within the year-ago interval.
- The margin compression displays the Novari and Zesty integrations.
- However VitalHub ended the quarter with $123.8 million in money and no debt, giving it ample room to pursue natural development and acquisitions.
- VitalHub reported income of $32 million in Q3, a rise of 94% yr over yr. Its recurring income, which incorporates time period licenses, upkeep, and assist, stood at $23.6 million.
Providers and different non-recurring income spiked to $5.5 million, pushed by challenge timing and the truth that each Novari and Zesty present important implementation companies.
Cross-selling and scale are beginning to click on
VitalHub affords a number of merchandise that may be bundled to ship complete options. For instance, it’s beginning to see prospects use merchandise like SHREWD, Strata, and Novari collectively to handle affected person circulate, referrals, and operational visibility throughout complete well being methods. VitalHub is progressively transitioning from a set of area of interest software program instruments to an built-in platform.
Novari, which makes a speciality of referral administration, is making headway within the U.Okay. market. VitalHub’s U.Okay. crew can also be well-positioned to drive Novari’s development in Canada, the place referral administration is changing into a precedence for provincial governments.
VitalHub’s SHREWD product, a affected person circulate and operational intelligence instrument, has been a workhorse for the corporate, significantly within the U.Okay.’s Nationwide Well being Service (NHS). However the NHS is presently reorganizing its regional our bodies by combining smaller areas into bigger built-in care methods, creating short-term uncertainty.
VitalHub is engaged on roughly half a dozen AI initiatives throughout its product suite. The obvious use case is medical scribing, whereby AI helps docs and clinicians take notes throughout affected person visits. The corporate can also be exploring predictive analytics for its SHREWD dashboards and AI-assisted referral summaries in Novari.
Why VitalHub is a eternally maintain
Valued at a market cap of $512 million, VitalHub inventory has returned near 300% within the final 9 years. Analysts monitoring VitalHub inventory forecast income to extend from $108 million in 2025 to $209.5 million in 2029. On this interval, free money circulate is projected to develop from $18.4 million to $49 million.
If the small-cap Canadian inventory is valued at 22 occasions ahead FCF, which is in keeping with its five-year common, it ought to double over the following three years.
Bay Road stays bullish on VHI inventory and expects it to surge 86%, given consensus value goal estimates.