Viemed Healthcare Inc.

Significant Increase in Revenue and Net Income: Viemed Healthcare Inc. (TSX: VMD) is a provider of equipment and home therapy to patients with respiratory disease, oxygen problems, sleep apnea and PAP treatment. As on 21 August 2020, the market capitalization of the company stood at ~CAD 575.06 million.

Quarterly Performance (For the Period Ended 30 June 2020): During the quarter ended 30 June 2020, net revenues of the company witnessed a significant increase of 111% to USD 42.9 million and a growth of 296% in adjusted EBITDA to USD 16.3 million. In the same time span, the company reported a net income of USD 19.4 million, up from USD 1.3 million for the quarter ended June 30, 2019. During the quarter, the Company reported a cash balance of USD 29.7 million and an overall working capital balance of USD 17.4 million. These results demonstrate the company’s ability to create value. In addition to its rental business, VMD is pursuing additional purchase orders to support in the COVID-19 pandemic and sourcing equipment and PPE to fulfill these opportunities.

Quarterly Financial Highlights (Source: Company Reports)

Key Risks: The company is susceptible to a variety of risks including the uncertainty from the general business, market and economic conditions, impact of the COVID-19 pandemic, financial conditions, the ability of the Company to implement business strategies and pursue opportunities; volatility in the market price of shares; the Company’s novel business model etc.

Stock Recommendation: The Company has provided guidance for the third quarter and expects to generate net revenues of ~USD 31 million to USD 35 million. This is inclusive of ~USD 6.8 million to USD 9.8 million of revenues related to the ongoing COVID-19 pandemic. The company is adapting to ongoing changes in the healthcare system and is developing new ways to collaborate with referral sources to ensure quality care and service to patients. As per TSX, the stock of VMD is trading close to its 52-weeks’ high level of CAD 16.19 and thus retains limited potential for further growth. The stock of VMD gave a return of 37.16% in the past three months and a return of 5.71% in the past one month. On a TTM basis, the stock of VMD is trading at an EV/EBITDA multiple of 14.6x, higher than the industry median (Healthcare Providers and Services) of 8.4x. Considering the current trading levels, volatility in the past three months, key risks of the company and the softer market conditions, we suggest investors to wait for better entry levels and hence, have a watch stance on the stock at the closing market price of CAD 14.80, up by 4.3% on 21 August 2020.

VMD Daily Technical Price Chart (Source: Refinitiv, Thomson Reuters)

Andlauer Healthcare Group Inc.

Decline in Revenues: Andlauer Healthcare Group Inc. (TSX: AND) is a provider of supply chain management solutions with a platform of third-party logistics and specialized transportation solutions for the healthcare sector. As on 21 August 2020, the market capitalization of the company stood at ~CAD 542.5 million.

Quarterly Performance (For the Period Ended 30 June 2020): During the quarter ended 30 June 2020, the company reported a decline of 1.3% in revenues to CAD 70.3 million and a decrease of 2.8% in operating income to CAD 11.1 million. This was mainly due to the purchasing behavior of the customers and lower fuel related revenue. In the same time span, EBITDA of the company increased by 1.2% to CAD  18 million despite the absorption of incremental costs related to share-based compensation arrangements and the transition to a public company and net income and comprehensive income was CAD 7.1 million. The Company has also implemented its new state-of-the-art 220,000 square foot logistics and distribution facility in Ontario. The decent financial and operational performance enabled the Board to declare a dividend of CAD 0.05 per share.

Quarterly Financial Highlights (Source: Company Reports)

Key Risks: The company is susceptible to a variety of risks including the current subdued economic conditions, general geopolitical risks, the impacts of COVID-19 pandemic, financial conditions, the ability of the Company to implement business strategies and pursue opportunities; volatility in the market price of shares; the Company’s novel business model etc.

Stock Recommendation: The company continued to maintain its service levels without disruption and implemented measures to prioritize the health and safety of its clients and suppliers during the COVID-19 pandemic. As per TSX, the stock of AND is trading very close to its 52-weeks’ high level of CAD 43.79 and thus seems overvalued. The stock of AND gave a return of 34.32% in the past three months and a return of 15.24% in the past one month. On a TTM basis, the stock of AND is trading at an EV/Sales multiple of 2.1x, higher than the industry median (Healthcare Providers and Services) of 1.9x. Considering the current trading levels, decent returns in the past one month, key risks and the volatile market, we suggest investors to keep an eye on the business activities and have a watch stance on the stock at the closing market price of CAD 43.4, up by 3.31% on 21 August 2020.

AND Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

Disclaimer

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