The Lifehealthcare Group Ltd (ASX: LHC) share price had a strong finish to the week and stormed to a 52-week high of $2.58 on Friday.
This brought its 12-month return to just under 40%.
Why have its shares reached a 52-week high?
LifeHealthcare's shares came under pressure recently after reforms were made to the Prostheses List.
This four-year strategic agreement, which went into effect on October 15, initiated a number of reform measures to the Prostheses List including price reductions.
Approximately 40% of LifeHealthcare's revenue is exposed to these reforms, leading many shareholders to head to the exits.
However, investors appear to have been pleased that these reforms will not impact the company as much as first feared.
According to management, based on the last twelve-month weighted average revenue, LifeHealthcare's revenue will be negatively impacted by 1.3% in February 2018, 0.3% in August 2018 and 1.3% in February 2020.
But thanks to a combination of mitigations including supplier terms, variable cost management, and a recent acquisition, management reiterated its FY 2018 EBITDA guidance of high single to low double digit growth.
Should you invest?
If LifeHealthcare delivers on its full-year guidance then I think it could prove to be a great investment.
At just 15x trailing earnings I think its shares are trading on an undemanding valuation with the potential for significant upside if the market rerates them.
Furthermore, its shares provide a trailing partially franked 5.3% dividend at present. This in my opinion makes it a good mix of value and income.
In light of this, I would put it up there with Nanosonics Ltd (ASX: NAN) as a medical technology investment to consider.
