Vasomedical Inc. (VASO, Financial) CEO and President Ma Jun purchased 30,000 shares of the company for 13 cents per share on Nov. 15, according to a Form 4 filing with the Securities and Exchange Commission. Jun now owns 4,269,341 shares of the company.
Vasomedical was established in July 1987. The company is headquartered in Plainview, Long Island, New York and maintains offices in Manhattan. For most of its history, the company was a single-product company engaged in designing, manufacturing, marketing and supporting Enhanced External Counterpulsation systems, primarily for the treatment of angina. In 2010, the company began to diversify its business operations.
In May 2010, Vasomedical began its professional sales service business through a wholly-owned subsidiary, Vaso Diagnostics Inc. (VasoHealthcare). The company sells General Electric's (GE, Financial) diagnostic imaging equipment to specific market segments.Â
In June 2014, Vasomedical began its information technology business by concluding the Value Added Reseller Agreement to become a national value added reseller of GE Healthcare IT’s Radiology PACS (Picture Archiving and Communication System) software solutions and related services, including implementations, management and support.
In May 2015, the company further expanded its IT business by acquiring all of the assets of NetWolves LLC and its affiliates, including the membership interests in NetWolves Network Services LLC. NetWolves designs and delivers efficient and cost-effective multi-network and multi-technology solutions as a managed network provider and provides a complete single-source solution that includes design, network redundancy, application device management, real-time network monitoring, reporting and support systems as a comprehensive solution.
Vasomedical has a market cap of $22.07 million, a price-earnings (P/E) ratio of 7, an enterprise value of $26.5 million and a price-book (P/B) ratio of 1.87.
According to GuruFocus, Vasomedical has a 5 of 10 financial strength rating with a 0.66 cash to debt ratio, a 0.24 equity to asset ratio and an interest coverage ratio of 6.38. The Piotroski F-Score of 6 indicates the company’s financial situation is typical for a stable company. The company also has a 6 of 10 profitability and growth rating. It has an operating margin of 5.96%, a net margin of 5.36%, a return on equity (ROE) of 38.04%, a return on assets (ROA) of 8.21%, a return on capital (ROC) of 156.98% and three-year revenue growth of 25.20%.
There are a few warning signs associated with Vasomedical that investors should pay attention to.
- The company’s sloan ratio represents poor quality of earnings. When the Sloan Ratio (30.86%) is higher than 25% or lower than -25%, earnings are more likely to be made up of accruals.
- Asset growth is faster than revenue growth. If a company builds assets at 62.4% a year, faster than its revenue growth rate of 42.1% over the past five years, it means that the company may be getting less efficient.
- Vasomedical has a Beneish M-Score of -1.75, which indicates the company is a manipulator of its financial statements.
Jun may have decided to invest in Vasomedical because the company is trading at a five-year low in price and is trading below its intrinsic value, according to the Peter Lynch chart below.
Disclosure:Â Author does not own any shares of this company.
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