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ClearStar Inc: THE INVESTMENT CASE
INVESTMENT OVERVIEW

ClearStar thriving in the gig economy

A flexible jobs market, an increase in short-term contracts - all play to the strengths of the specialist in background checks
Jobs market
INVESTMENT OVERVIEW: CLSU The Big Picture
The company is now winning larger contracts

ClearStar Inc (LON:CLSU) is set to be a beneficiary of the ‘gig economy’ and the concomitant increase in demand for personnel background checks.

The flexibility of the labour market continues to expand and that is increasing the demand for ClearStar’s direct services and is providing new opportunities for revenue generation.

READ: Clearstar posts underlying profit as demand for medical screening climbs

In its half-year results statement, Bob Vale, ClearStar's chief executive, said the company was confident of achieving full year 2018 revenue growth in line with market expectations and being EBITDA (underlying earnings) positive.

Better still, the company expects to deliver accelerated revenue growth in 2019.

Revenue in the first six months of 2018 rose by 11% to US$9.9mln with medical turnover 27% higher at US$3.9mln.

House broker finnCap said the top-line was revising at a rate that was consistent with its full-year forecast.

Adjusted underlying earnings (EBITDA) was just about positive, at US$65,000, compared with a loss of US$165,000 in the first half of 2017.

“Good working capital control has left the net cash position unchanged over the half at US$1.2mln and we continue to expect this to see the company through to future profit and cash generation,” the broker added.

Top-line growth is being driven by medical information services

The company is experiencing growing demand for its technologically-differentiated solutions, particularly for medical information services. Additionally, in the direct services market, the company is receiving increased business from large corporates due to greater brand awareness resulting from investment in its sales & marketing efforts.

“Future growth will be assisted by the on-boarding of major new clients such as IntelliCentrics and MultiLatin, as well as the new global employment screening solution built around the Sphere platform and the new biometric services,” finnCap said.

ClearMD, the company’s mobile drug testing solution, is proving a big hit and is being integrated with eScreen’s offering.

Thanks to the company's integrations with LabCorp and Quest Diagnostics, ClearStar is now the only provider offering paperless medical screening with a fully-customisable user platform across all three of the major laboratories in the US – and the company expects to benefit from the economies of scale associated with engaging multiple large suppliers.

Growing the direct client base will propel ClearStar into the black

That quest for economies of scale was echoed by finnCap, which said the underlying drivers for the business are the continued “upscaling” of the direct client base in an improving US labour market; the increasing traction for its Sphere global offering in the worldwide market; the strength and opportunity in its medical testing business; and finally, the continued strong performance of the company’s original Channel Partner division.


 

 

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ClearStar Inc Timeline

Big Picture
October 02 2018

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