ISW Holdings Inc (OTCMKTS:ISWH) has been one of the top performers in the stock market over the past several weeks, but you may not have heard of it before because it doesn’t trade on the major exchanges. ISWH is a penny stock, but the growth powering the stock’s rise is for real, and one might want to take note now, while it’s still pricing at just $0.50 per share.
The company is a leader in the home healthcare marketplace, recently racking up a string of sequential q/q growth leaps at double-digit percentage scale on the top-line. While we are still dealing with relatively small numbers, one can easily make a case that the company will be looking at something like $2-3 million in revenues for 2020, and considerably more in 2021 based on organic growth in the Texas home healthcare market and its stated plans to expand to 4 more states over the near term.
The ISW Holdings Inc (OTCMKTS:ISWH) growth trend has obviously been amplified by the need for non-hospital healthcare solutions during the coronavirus pandemic. But there’s a lot more to the story than that.
The Big Picture
Home healthcare is a booming secular theme. This is leveraged by problems with health insurance in the US in concert with the aging of the Baby Boomers generation. Taken together, these factors have been driving massive growth for companies positioned to pick up the pieces and provide support with an established and qualified infrastructure. ISWH is dead center in this theme.
Home health spending is expected increase at a faster rate through 2027 than all other categories of care, according to a recent analysis from the Centers for Medicare & Medicaid Services (CMS) Office of the Actuary. Home health care spending is expected to reach more than $186 billion in 2027, according to the report.
This is miles above any other category of health care service, including hospital inpatient care, physician and professional services, nursing facilities, prescription drugs, retail sales of medical products and literally everything else in the space.
That is part of why we are suddenly seeing as much as 150% in share gains in the stock over the past few weeks.
The Hard Data
Another reason we are seeing that rip is because the company just put out its 2019 financials and included some guidance about what it will likely be reporting for Q1 2020 as well as what it expects for Q2.
The latest Earnings Trends report from Zack’s Research indicates that earnings for the Medical sector are expected to have gained 1.9% in first-quarter 2020, on revenue rise of 8.1%. That is likely to be the strongest sector in the market for Q1.
According to the most recent release from ISWH, “for the year ended December 31, 2019, ISW Holdings posted revenues of $527,151. Management notes that these results were achieved on accelerating sequential quarterly growth, with nearly half of those revenues appearing in Q4. Sequential growth in Q3 (versus Q2) was 26%. Sequential growth in Q4 (versus Q3) was 29%. The Company projects Sequential growth in Q1 2020 to come in at a new record level significantly outpacing Q4 2019 results.”
In other words, ISWH will probably post growth about four times as powerful as the overall healthcare sector in Q1, which is likely to end up as the strongest sector overall during the Q1 reporting season.
Provided the trends powering the company’s growth remain intact over the next four quarters, the stock is now trading at about 0.5x forward sales, which makes it extremely cheap by any standard.
“We are receiving a flood of calls every day as hospitals prepare for overwhelming circumstances,” commented Alonzo Pierce, President of ISWH, in the company’s March 25 release. “We are waiting for final regulatory approval, and then we will aggressively launch services in Nevada, New Mexico, Arizona, and Florida, to accompany our current growing operations in Texas.”