Here are two healthcare stocks to buy. One is an owner and operator of healthcare clinics; the other a biotechnology supplier of custom antibodies.
WELL Health Technologies Corp. (TSX—WELL)
Healthcare stock WELL Health Technologies has agreed to acquire a majority stake in Circle Medical, a rapidly growing California-based omni-channel healthcare provider offering both in-clinic and tele-health services.
WELL’s investment in Circle provides WELL with a springboard to make further investments in the enormous US market where the patient economics are significantly better than in Canada. For example, WELL indicated that Circle earns approximately five to six times the patient fee for a tele-health appointment than WELL earns in BC. Vancouver-based PI Financial analyst David Kwan maintains his Buy recommendation for the stock.
“WELL intends to use Circle’s technology in its Canadian business and will have exclusive rights to offer and/or commercialize Circle’s technology solutions in Canada, including its AI platform, which has enabled Circle to deliver superior patient care.
“In addition to its in-clinic services, Circle has been providing tele-health services in 35 states over the last 100 days and plans to expand its tele-health services to most of the remaining states over the next few months. It has ‘payer’ agreements with most of the major health insurance carriers in the US including Anthem, Aetna, Cigna, and United Healthcare, allowing its services to be in-network and accessible by approximately 200 million Americans who can use its patient-centric app anytime for no cost or a small co-pay. Out-of-network patients can use the app at any time with a per-use fee.
“I have increased revenue forecasts to $45 million in fiscal 2020 (was $44.2 million) and $98.4 million in fiscal 2021 (was $78.5 million). Our adjusted EBITDA forecasts have decreased to -$1 million in fiscal 2020 (was -$600,000) and $2.4 million in fiscal 2021 (was $6.2 million), due to the aforementioned increase in investments to drive stronger growth at Circle.”
Immunoprecise Antibodies Ltd. (TSXV—IPA)
Healthcare stock Immunoprecise Antibodies Ltd. reported its fourth quarter 2020 earnings featuring revenue up 57 per cent year-over-year for the quarter to $4.4 million and a record revenue of $14.1 million for the 2020 year, up 29 per cent compared to 2019. The company’s net loss for the year was $4.9 million compared to a loss of $7.6 million a year earlier. Calgary-based iA Securities healthcare and biotech analyst Chelsea Stellick initiates coverage with a Buy rating.
Ms. Stellick highlights: “IPA is a full-service, end-to-end contract-research-organization (CRO) in the business of therapeutic antibody discovery. A CRO is a company that supports the biotechnology, pharmaceutical and medical devices industries in the form of pre-clinical research on an outsourced, contracted basis.
“We see ample upside in IPA given the growth in demand for outsourced services provided in antibody discovery and development. Immunoprecise Antibodies is a full-service, end-to-end CRO. IPA’s CRO services include, but are not limited to, target design and antigen modeling, immunization, antibody discovery, characterization and optimization and manufacturing and account for 95 per cent of the company’s revenue.”
This is an edited version of an article that was originally published for subscribers in the October 2020/First Report of The MoneyLetter. You can profit from the award-winning advice subscribers receive regularly in The MoneyLetter.
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