Citibank (NYS:E C) analysts maintained its hold rating on Emdeon (NYSE: C) and raised their price target on the company to $20.00, up from $19.00 after the company announced their fourth quarter earnings per share and offered a positive outlook for 2010.
Analyst Charles Boorady said, “EM released 4Q09 earnings am on Tuesday, reporting 4Q09 Cash EPS of $0.20 v. our/consensus $0.18/$0.19 on total revenues of $238.6mn v. our/consensus $240.1mn/$239.7mn for the quarter, 9.5% y/y growth of which ~6% was organic, and $918.5mn for FY09. We update quarterly adjusted EPS in the table below, and FY10E-FY13E to $0.93 (+5c), $1.04 (+6c), $1.15 (+8c), and $1.27 (+14c), respectively on positive initial 2010 guidance implying approximately 9-15% revenue growth in FY10, of which 4.5-4.7% would be organic, and 3.8-8.4% Cash EPS growth. Adjusted EBITDA of $62.6mn was above our $58.8mn estimate and 17% greater than previous year with Adj EBITDA margin of 26.2%. Payer services segment was up 8.9% y/y and improved its gross margin to 36.6% from 34.0%, a positive trend for the segment after a sequential decrease in Q3. Pharmacy services continues to be a growth engine with 109% y/y, but note the segment received a large boost with the eRX acquisition in mid-2009 which largely aided the growth. Pharmacy is currently only 8.7% of total revenues, but it will continue to be a key segment of growth and ePrescribing is its most significant tool.”
For 2010, the bank raised its earnings per share estimate from $0.88 to $0.93, versus consensus estimates of $0.92.
