Microcap stock Carebook Technologies (Carebook Stock Quote, Chart, News, Analysts, Financials TSXV:CRBK) received a coverage launch from Industrial Alliance Securities on Monday, with analyst Chelsea Stellick initiating with a “Buy” rating and price target of $2.75 per share. At press time, the 12-month target represented a projected return of 120.0 per cent.
Incorporated in 2015 and listed on the TSX Venture on October 1, 2020, through a reverse takeover of Pike Mountain Minerals, Carebook Technologies is a Montreal-based digital health solutions provider selling custom applications it for its platform in a business-to-business-to-consumer (B2B2C) model.
Carebook has three industry verticals in pharmacy, virtual care and insurance. In 2018, the company partnered with McKesson to create a digital pharmacy solution, Be Well, for Rexall Pharmacy Group, one of McKesson’s retail pharmacy chains and the second largest in Canada. This was a $15-million contract extended over five years.
In virtual care, Carebook has developed and commercialized an application to assess vital signs for COVID-19, “Carebook My Vitals – COVID-19,” a virtual health assessment tool allowing individuals and clinicians to get real-time vital signs measurements using just a smartphone camera. The myVitals application is to be tested in a pilot project at the Jewish General Hospital in Montreal before rolling it out to a new anchor customer this year.
On the insurance vertical, Carebook is currently in discussions with a number of insurance providers as potential partners in the areas of underwriting, long distance virtual care and personalized health insurance.
According to Stellick, Carebook is well placed in the digital health sector, which is continuing to disrupt healthcare as a whole, and is expected to exceed US$600 billion globally by 2026, with the mHealth segment (which includes mobile applications) expected to have a CAGR of 39 per cent. That’s a tremendous tailwind that’ll bring Carebook into multiple rapidly growing multi-billion-dollar markets, the analyst said.
“With increasingly more people online, current generations may be more inclined to use digital health options for their treatment. In fact, 70 per cent of Canadians say that accessing personal health information online has helped them feel more informed about their healthcare and 59 per cent feel they are better able to manage their health,” Stellick said.
“Patients and providers can benefit from data collection, low-cost alternatives to traditional therapies, the ability to access treatment remotely, the large reach, improved outcomes and medication adherence, accessing underserved populations, promoting self-management, early intervention and prevention and personalization,” Stellick wrote.
Stellick said Carebook has a turnkey pharmacy engagement platform where its three verticals each of which has a unique and diversified, customer-centric and engaging product offering.
On the acquisition front, Stellick sees growth for Carebook in 2021 after the company announced in November 2020 two Letters of Intent for the acquisition of two companies: TargetCo, a B2B SaaS company with a proprietary healthcare platform, and Novus Health, a leading Canadian provider of health navigation programs and integrated health and wellness management solutions for insurers, financial institutions and employers.
The transactions, both of which are expected to close over the first quarter of 2021, will add an aggregate of about $8.5 million in annualized revenue, according to Stellick.
“We believe several factors will contribute to profitability growth in the coming years, including the close and successful integrations of the TargetCo and Novus Health acquisitions, additional M&A, the successful roll-out of its myVitals COVID-19 app, global sales of the pharmacy solution, and the potential successful engagement with an insurance provider,” Stellick said.
The analyst is calling for full fiscal 2020 revenue and adjusted EBITDA of $3.7 million and negative $3.3 million, respectively, fiscal 2021 revenue and adjusted EBITDA of $12.8 million and $4.1 million, respectively, and fiscal 2022 revenue and adjusted EBITDA of $14.1 million and $4.9 million, respectively.
Carebook last reported earnings on November 20, 2020, where its third quarter featured revenue of $880,000 compared to $1.1 million a year earlier. The company posted a net loss of $1.632 million compared to a loss of $1.425 million a year earlier and a loss per basic and diluted share of $0.13 compared to a loss of $0.12 per share a year ago.
“These are our first results reported as a public company and as such they represent a very important milestone in our young company’s history,” said CEO Pascale Audette in a press release, “We are committed to creating value for our shareholders and to that end in the few short weeks since listing, we’ve already announced some very exciting developments that will position our company as a leader in the industry.”
“One of our key strategies for growth is to build out our platform with leading technology and accretive acquisitions. We believe that the two highly accretive and strategic acquisitions that we recently announced, along with organic growth across our existing verticals, will drive significant growth and value creation over the coming years,” Audette said.
Carebook’s share price has fallen since debuting on October at $2.85, with the stock currently trading roughly within the $1.20 to $1.40 per share range.
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