Originally Posted by
silverblizzard888
I'm pretty happy with the gain I've made so I will elect to sell 100% of my position, but thats because I have earnt a return that is above market averages and I'm prepared to find another opportunity that would give me a decent return. I will admit that Orion is probably a better business with this investment, but the uncertainty around it is a bit hard to calculate and for me I've learn in the past to make the most of my capital and not be too greedy, the longer I stay the bigger the risk in some cases of the current gains.
Quick calculation (due to limited info) forecast was for FY 19 revenue to be similar if not slightly higher by the company originally, though with extra investment I'd expected some extra business and bit more profits, though we are left with the higher portion of the loss making units.
Rhapsody: 24.9% owned, of the $60 million revenue, I estimated about $15 million in profit from the business. Of that $3.73 million will be Orions.
Due to lack of clarity in numbers since they merged the numbers in Population Health and Hospital business its unclear, though I will assume Population health is the business doing better that is why it was partly acquired.
Population Health: 75.1% owned, $70 million revenue (estimated), $5 million profits . $3.755 profits earning attibutributed .
Hospital: 100% ownership, $55 million (estimated), loss $5 million, loss attributed $5 million.
Overall a $2.485 million profit for FY19. I expect FY 20 to be a decent year for the company that will see Rhapsody earn $20 million, Population Health Earning $10 million and Hospital unit breaking even. When attributed to Orion will be worth about $4.98 million + 7.51 million = $12.49 million profit FY20
I'm not sure how many shareholders will elect to stay so hard to imagine the likely structure and shareholder count going forward. My valuation would imply $100 million dollar business left over for the present time and FY19 forecast ($100 million + $157 million = $257 million value today), if they can execute well for FY20 then we could well have a $200 -250 million business (357 - $407 million value based on FY 20 and the cash offered today) .
So for me there is still a upside, but I never like being in a situation of uncertainty. If the business does perform accordingly and I lack other opportunities then I would considering buying back in in the future, but until then I made decisions that I have certainty over. It is always harder when trying to make a rational decision when you have made a loss. Questions to ponder are do you have other better opportunities or if you still have belief in the business going forward.
*Please note thats are all estimates based on known information and estimates from my part and may lack good accuracy or error in calculation.
*Assumption is Hg brings expertise and scale-ability to the business that saves cost and improves margins