Earnings are set to be at an ebitda level $26m for 2013,...

Earnings are set to be at an ebitda level $26m for 2013, representing a reduction on 2012 and prior years on a normalised basis. Looking to 2014, the group could probably continue surgery, consulting and theatre fee growth of around 5%, assuming lack of new doctor recruitment continues over next few months. At best, this contributes $1/$1.5m to ebitda in 2014 over 2013.

Cash at end of Feb 13 post raising and debt reduction is around $12.5m, where roughly another $5m net will be generated over period to end of June 2013. This provides a kitty allowance of $17.5m to be used on further debt reduction, cash on hand for ongoing daily liquidity and acquisitions. Assuming the first two consume around $10m of it, at most you get $7.5m for acquisitions.

Using the $7.5m to acquire more theatres (absolutely avoiding value destruction doctor acquisitions) on a ebitda multiple of say 3 to 4 times in private off market deals could generate another $2.5m in ebitda in 2014.

You can therefore get VEI up to around $30m ebitda on an annualised basis by the later half of the 2014 financial year, which supports a stock price in the region of $1.

Lack of details on ebitda mid term growth targets and specific strategy execution makes it difficult to ascertain whether anything more than tepid ebitda growth will be achieved in near term.