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Let me get straight to it. VitalHub (TSX:VHI) is likely one of the most compelling small-cap Canadian tech shares you should buy proper now.

The corporate simply crossed $100 million in annual income, carries no debt, sits on practically $120 million in money, and is rolling out synthetic intelligence merchandise that its personal prospects are already paying to construct.

Right here is the total image.

Is the Canadian inventory a great purchase?

Valued at $500 million by market cap, VitalHub builds software program for hospitals, psychological well being suppliers, social providers businesses, and different healthcare organizations. Its instruments assist handle affected person circulation, digital well being information, referral administration, and workforce scheduling.

• The corporate serves greater than 1,000 shoppers throughout Canada, the UK, Australia, and different markets.
• Crossing the $100 million income milestone in 2025 was an enormous deal for the corporate. However what issues much more than the highest line is the standard of that income.
• In keeping with VitalHub’s fourth-quarter (This autumn) earnings name, it ended 2025 with annual recurring income of $96.1 million. That represents 10% web natural development over the prior 12 months.
• Recurring income accounted for 75% of complete income in This autumn. A widening recurring income base ought to assist the corporate generate steady money circulation throughout enterprise cycles.
• Adjusted earnings earlier than curiosity, taxes, depreciation and amortization (EBITDA) margins got here in at 24% for the quarter, up from 22% within the prior quarter. Administration is focusing on a return to 27%-28% margins as price synergies from latest acquisitions proceed to circulation by way of the enterprise.
• VitalHub closed 2025 with $119.2 million in money and 0 debt. For a corporation of its dimension, that stability sheet is phenomenal. It offers administration the pliability to focus on acquisitions with out taking over high-cost debt, and in line with CEO Dan Matlow, the merger and acquisition pipeline is energetic.

Matlow famous on the earnings name that personal fairness patrons are pulling again from some offers, leaving targets out there at extra affordable valuations.

VitalHub has a disciplined acquisition method and is primarily alternatives in the UK and Europe, the place it already has a robust foothold.

The Novari and Induction acquisitions accomplished in latest quarters are already integrating effectively. Cross-selling between Novari and MedCurrent is selecting up, notably in the UK market.

A widening AI moat

VitalHub has established devoted AI improvement groups and is constructing AI options straight into its current merchandise. Extra importantly, a few of these options are already producing early income. Matlow confirmed that prospects have already paid the corporate to assist construct AI-powered transcription instruments.

Novari shipped its first AI module for imaging protocoling, a function prospects purchased earlier than it was even constructed. A voice-enabled analytics function for the SHREWD product line can also be in improvement with associate prospects.

Matlow expects AI-driven income contributions to start showing within the monetary statements from mid-2026 onward.

The corporate can also be utilizing AI internally to enhance gross sales processes, buyer help, and software program improvement productiveness.

The Silly takeaway

VitalHub doesn’t generate the identical headlines as among the greater Canadian tech gamers. However the fundamentals listed here are quietly distinctive: a clear stability sheet, sticky recurring income, enhancing margins, a rising pipeline of acquisitions, and AI merchandise that prospects are already paying for.

Analysts monitoring the small-cap TSX inventory forecast free money circulation (FCF) to develop to $56.66 million in 2030. If VHI inventory is priced at 20 instances ahead FCF, it might greater than double over the following 4 years.

The corporate can also be focusing on a return to Rule of 40 standing, that means mixed income development and EBITDA margin above 40%. For buyers looking for a smaller Canadian tech inventory with actual upside and restricted draw back threat, VitalHub deserves a more in-depth look.