Insider Buying

Insider Buying Report: Inovalon Holdings Inc (INOV:US)

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Inovalon Holdings Inc
12 months:
Purchases from CEO & multiple insiders
Underwhelming Q3 results

Corporate executives and directors have the most up-to-date information on their firms' prospects. If these insiders are buying company stock, it’s generally a bullish sign.

In this article, we are going to highlight some interesting insider buying at Inovalon Holdings Inc (INOV:US). Inovalon is a provider of cloud-based platforms to the healthcare industry. It’s listed on the NASDAQ Global Select Market and currently has a market capitalization of $2.95 billion.

Inovalon Holdings: insider buying

Form 4 filings show that on 30 October, three insiders at Inovalon purchased company stock. Those who purchased shares included:

  • CEO and Chairman Keith Dunleavy (60,000 shares)
  • Chief Administrative Officer Peter De Bock (15,000 shares)
  • Board member William Teuber (10,000 shares)

Combined, these insiders spent $1.7 million on Inovalon stock.

INOV-US(chart)     Source: 2iQ Research

Cluster buying

This insider buying is worth highlighting for several reasons. Firstly, we have a cluster of purchases. This tells us that there’s a consensus of opinion that the stock is undervalued at present.

Secondly, these insider purchases are substantial. Dunleavy’s purchase, in particular, is very large. This purchase, which cost the insider approximately $1.2 million, increased his holding by 10%.

Share price fall

Inovalon shares fell from $27 to $20 recently after the company posted disappointing third-quarter results. For the quarter, revenue was $161.4 million, compared with $166.5 million for the same period last year. Meanwhile, net income came in at $0.8 million versus $6.8 million for Q3 2019.

Looking ahead, however, revenue is expected to pick up on the back of multiple large-scale platform implementations.

We continued to have very strong metrics in key areas of sales, renewals, innovation, and profitability and are strongly on track to go live in the coming months with several substantive multi-year platform implementations that will drive accelerating revenue growth and further profitability expansion in 2021 and beyond,” said Dunleavy.

In light of this expected sales growth, we see the insider buying here as a bullish signal. Insiders clearly believe Inovalon stock is undervalued at present.