Andlauer Healthcare Group Inc

Andlauer Healthcare Group Inc (TSX: AND) is a Health Care Equipment & Services company based out of Canada. The Group is engaged in the business of providing supply chain services to healthcare sector. The Company offers customized 3PL (third-party logistics) services and transportation solutions. AND operates across Canada through 18 branches and 9 distribution Centers.

Financial Highlights – Q1 Financial Year 2020 (31^st March 2020, CAD)

(Source: Quarterly Report, Company Website) 

In the first quarter of the financial year 2020, driven by increase in the revenue from Healthcare logistics & Specialized transportation business for the period, the revenue increased by 14.4% to CAD 81.7 million (Q1 FY2019: CAD 71.4 million). The EBITDA increased by 9.2 per cent to CAD 18.8 million in Q1 FY2020 (Q1 FY2019: CAD 17.2 million), with EBITDA margin of 23%. The Operating income stood at CAD 12.4 million in the first quarter of the financial year 2020 (Q1 FY2019: 10.9 million), reflecting increased revenue and EBITDA. The Group’s net income surged by 8.5% to CAD 8.2 million in Q1 FY2020 (Q1 FY2019: CAD 7.5 million). The basic and diluted earnings per share for Q1 FY2020 stood at $0.22. The cash balance declined to CAD 16.8 million as on 31^st March 2020 from CAD 18.7 million as on 31^st December 2019. The Total assets stood at CAD 217.1 million as on 31^st March 2020 versus CAD 212.9 million as on 31^st December 2019.

Share Price Performance

Daily Chart as of 10^th July 2020, after the market closed (Source: Refinitiv, Thomson Reuters)

Andlauer Healthcare Group Inc shares closed at CAD 37.50 at the time of writing after the market close on 10^th July 2020. Stock's 52 weeks High is CAD 40.71 and Low is CAD 18.00.

Key Risks

The market conditions in which the Company operates is full of challenges and might impact the operational performance and reduce financial performance as well. Any change in regulations and government policies could affect the overall business of the Company. The covid-19 outbreak has resulted in the supply chain disruptions, which will have a negative impact on the Company’s performance. 

Conclusion

The Company has shown an increase in financial performance in the first quarter of the financial year 2020. Both the top-line and the bottom-line performance have increased, with improved profitability for the period. The liquidity position of the Company has declined for the period and it needs to manage the operating expenses unless it results in further deterioration in financial performance in the coming years. The Company operations are impacted by the outbreak of covid-19 pandemic and have been focusing on strengthening the balance sheet and reducing the costs to preserve cash. AND performance is also impacted by the volatility in the financial markets and challenging conditions in the transportation services and healthcare logistics markets. Moreover, the company’s share price is trading near a 52-week high, which raises doubt over the upside potential.

Based on the factors as highlighted above, we recommend investors to keep a “Watch” on the stock at the closing price of CAD 37.50 (as on 10^th July 2020), with support from few catalysts needs to be evaluated at a later stage.

Disclaimer

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