Total revenue Q2 2003 was 8% greater than Q2 2002. Service revenue, which is the growth engine, was 15% greater. These are good growth numbers.
The Company has been focused on operational improvement and on driving higher revenue per customer. They have been pretty successful at that -- and now they are turning emphasis back to driving a higher absolute customer growth rate, with a combination of new mktng programs. Included is more direct mktng, which I think is needed.
You are right re: aggregate subscriber growth at 5%. That number needs to get higher; but I was comfortable with 15% service revenue growth.
The next 3-4 quarters are key for the company to prove it can drive higher subscriber growth. If it can, expect a strong move up in the stock. I believe current EV of 7-8X EBITDA does not price in much growth..
Lifeline is a great company that provides a valuable service to the very elderly. Unfortunately Lifeline's service is not scale-able, as they add more customers they have to add more monitors, which in turn increases costs. Also Lifeline has to replace their entire customer base on a regular basis due to customers either passing away or moving to a nursing home. Although Lifeline does dominate its niche I think it is too expensive at this level.
Looks to me as though they're scaling okay...they've grown their EBITDA to 22% in the last FY and have been keeping capex flat at an absolute level over the last few years.
And I wouldn't be too worried about lack of scale in operations. I think there is some, but there is likely more scale in sales and marketing -- these guys have a chance to be the dominant brand/company in this space.
The population is aging and technology should allow more and better products -- like a sensor that can go off if a fridge isn't open for a few days. Things that could be great for livealone elders.
I would like to see these guys nudge up the growth rate. Seems like a pretty conservative mgmt team. That's why my Buy isn't a strong buy.