Lifehealthcare looks reasonable value

Lifehealthcare (LHC) is a distributor of medical supplies and equipment in the orthopaedics, cardiology, neurology and spinal surgery specialties. Since listing in December 2013 the company has beaten its IPO forecasts and has upgraded 2015 forecasts. Every business has key metrics, and in this case it's the number of surgeons using their equipment. Adding another 3 surgeons in the latest half, they have nearly 100 surgeons using their product and this has grown at around 10% per annum recently. In addition the amount of spend per surgeon has increased 56% over the same time frame. This is important as it indicates a wider and deeper reach into their target market. Our forecast is for the company to earn 20c per share and pay a 15c per dividend providing a 4.5% yield. Importantly, we believe the company can continue to grow earnings providing an attractive return on our investment. There are risks to the downside around supplier agreements, and the stronger currency could impact on margins, but if these can be managed there are attractive returns on offer for patient investors