Not the highest quality company listed on the ASX, but a short-term (18 months) thesis could play out here, I have 60% confidence in this playing out:

- Recent quarters demonstrate an inflection point where cash flow breakeven can now be sustained (although certainly not consistent), indicating improved operational efficiency and financial stability.

- KKR's acquisition of shares in MedAdvisor on the market suggests some validation of Andrew Smith's thesis (Perenial); emphasising that the company's transformation into a profitable business will make it takeover attractive. 

- Andrew Smith highlights MedAdvisor's attractive valuation metrics, trading at 1.5x revenue compared to peers in the US at five times sales. My opinion is that a takeover offer could potentially be executed at 3x revenue, indicating good upside potential from the current stock price.

I think it's fair to say that MedAdvisor impressed us all when they reported fantastic results. 

Overall revenue was up 89.9% to $44.1 million and their US was up 97.7% to $39.4 million. This resulted in positive operating cashflow of $21M. It’s quite rare to see so much positive cashflow for companies still reporting on a 4C cycle. 

As we can see, the vast majority (89%) of the revenue came from the US business. MedAdvisor acquired the Adheris LLC business from Syneos Health in 2020 for US$34.5 million. The intent of this move was to help the company become the leader of tailored opt-out, direct-to-patient medication adherence programs in the US as well as Australia. Since then, the big revenue has come from marketing campaigns though. And the big boost here was from a Covid awareness program. This is clearly an incredible result and I tip my hat to the team, but doesn’t give us the same visibility of growth to come in the future as a pure Saas player would. 

If you’d like to understand more about the business, Claude Walker wrote up a good piece on a Rich Life after the results. I will be looking at them a little more closely in the future to see what they can achieve.