A medical devices and instruments developer and a healthcare provider and services stock were recently profiled in The MoneyLetter.
Profound Medical Corp. (TSX—PRN)
Douglas Loe and Siew Ching Yeo of Leede Jones Gable assert that a stable list of legacy partnerships, access to liquid assets and new contracts for the TULSA-PRO ultrasound platform will help Profound Medical Corp. weather pandemic challenges apparent in the company’s fourth-quarter results.
Despite a lack of capital-equipment sales in the fourth quarter, the analysts perceive budding growth for the ultrasound-tissue-ablation-device developer and maintain their Buy recommendation.
Profound reported top-line revenue at US$1 million for the quarter, compared to US$2.9 million in fourth-quarter 2020. The company also reported fourth-quarter operating expenses of US$10.2 million, and research and development (R&D) expenses of US$4.7 million.
The company exited the quarter with US$67.2 million in cash and equivalents, which the analysts say is ample funding for approximately two years of ongoing marketing and reimbursement activities for Profound’s TULSA-PRO and Sonalleve devices.
TULSA-PRO is a medical resonance (MR) guided prostate-focused ultrasound ablation platform approved by the Federal Drug Administration (FDA) and the European Medicines Agency (EMA). Sonalleve is a MR-guided prostate-focused ultrasound ablation device which is FDA-approved to treat a niche oncology indication, according to the analysts. The analysts expect positive regional-adoption of the Sonalleve device, but say that sales activity in China, where the device was originally approved, have been affected by the pandemic.
Dentalcorp Holdings Ltd. (TSX—DNTL)
Messrs. Stephen MacLeod and Nevan Yochim of BMO Capital Markets are resuming coverage of healthcare stock Dentalcorp Holdings Inc. with the message that the company demonstrates an attractive risk-to-reward ratio in its expansion plan.
Dentalcorp’s $115-million equity offering indicates the company’s ability to fund an aggressive acquisition campaign while maintaining a healthy balance sheet, say the analysts, who resumed coverage with an Outperform recommendation. “We continue to view Dentalcorp as a unique Canadian growth stock with a niche market position and multi-year opportunity to grow its market-leading network of dental clinics,” say Messrs. MacLeod and Yochim.
Dentalcorp first announced the bought-deal offering of subordinate voting shares on January 5 and closed the sale of the 7,055,250 shares issued at $16.30 per share for a total of $115 million on January19, according to the company.
The proceeds will be used to fund an accelerated pace of dental-practice acquisitions as part of Dentalcorp’s retail acquisition program, which the company accelerated in the second half of 2022, according to the analysts.
Messrs. MacLeod and Yochim say that Dentalcorp completed 62 acquisitions in 2021, and added 67 additional dental practice locations to the network.
The 67 additional dental practices are expected to represent more than $43 million in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA). Dentalcorp was founded in 2011 and is a Toronto-based company with an aggressive growth strategy.
This is an edited version of an article that was originally published for subscribers in the April 2022/First Report of The MoneyLetter. You can profit from the award-winning advice subscribers receive regularly in The MoneyLetter.
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