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Why Agiliti Stock Soared 42% in May

By Beth McKenna - Jun 8, 2021 at 10:00AM

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Investors are enthused about the growth prospects of this newly public healthcare services company.

What happened

Shares of Agiliti (AGTI 0.84%) soared by 42.1% in May, according to data from S&P Global Market Intelligence. The healthcare services company's encouraging first-quarter results were the catalyst for that surge, and led to a handful of Wall Street firms initiating coverage of the stock with buy ratings. 

For context, the S&P 500 returned 0.7% last month.

Agiliti is probably a new name to many investors, as it just held its initial public offering on April 23. The company provides medical equipment management and service solutions to healthcare providers.

Close-up of a ventilator in healthcare setting.

Image source: Getty Images.

So what

Agiliti released its first-quarter results on May 18. Revenue jumped 31% year over year to $235.2 million. Revenue growth got a boost from the company's March 19 acquisition of Northfield Medical, which repairs surgical equipment, though Agiliti didn't provide an organic revenue growth figure in the release.

Agiliti's bottom line improved as well. Net income was $9.6 million, or $0.09 per share, up from a net loss of $12.6 million, or $0.13 per share, in the year-ago period. 

The company ended the quarter with $13.3 million in cash and cash equivalents. Cash isn't as abundant as investors might expect it would be for a company that just went public. That's because Agiliti used the net proceeds from its IPO "to repay outstanding borrowings and related fees and expenses under the company's credit facilities," it said in the earnings release. 

CEO Tom Leonard commented on the quarter in the release:

Our strong first-quarter results reflect the continued execution of our growth strategy and the extraordinary work of our entire team at Agiliti. The challenges of the past year helped raise awareness of the unique and essential nature of what we do, while also demonstrating the stable and predictable nature of our business model. Agiliti is a critical part of our national healthcare infrastructure, and as the events of 2020 highlight, the services we provide are always necessary and in high demand. This long-term consistency gives us confidence in our 2021 outlook and beyond.

Leonard, of course, is referring to the COVID-19 pandemic with his mention of "challenges" and "events of 2020."

Following the earnings release, at least five Wall Street firms initiated coverage of the stock with buy (or equivalent) ratings: Citigroup, Goldman Sachs, Raymond James, BMO Capital, and Morgan Stanley. UBS initiated coverage with a neutral (or hold) rating.

Now what

Management guided for full-year 2021 revenue of $950 million to $975 million.

Beth McKenna has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Agiliti, Inc. Stock Quote
Agiliti, Inc.
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