Think Research has a 125 per cent upside, says Echelon

A new customer agreement for Canadian health tech company Think Research Corp (Think Research Corp Stock Quote, Charts, News, Analysts, Financials TSXV:THNK) adds to the momentum behind its software solutions and data and subscription services. That’s the takeaway from Echelon Capital Markets analyst Rob Goff, who reiterated a “Speculative Buy” rating in a Friday client report. 

Think Research, whose solutions are aimed at supporting the clinical decision-making process and the standardization of care, announced on Thursday a new customer agreement to provide a broad range of solutions and services at a value of $2.0 million.

“We are honoured and excited to leverage our solutions to help solve important healthcare access and delivery challenges. We believe that this deployment will help set the standard for digital health solutions to improve patient outcomes and save lives,” said Sachin Aggarwal, CEO, in a press release.

Goff called the announcement “a nice, bite-sized contract win” to start off the 2023 year and one that builds on THNK’s operational momentum from 2022. Goff said he’s optimistic the initial $2.0 million contract could be expanded over time.

As to his broader take on Think Research, Goff said recent announcements by Canadian federal and provincial governments show the urgent need and political will for healthcare reform, providing structural support for a name like THNK.

“We continue to view digitally enabled healthcare companies such as Think Research as direct beneficiaries of the long secular tailwinds firmly entrenched within the space – ultimately, investment in technology will be critical toward relieving these burdens,” Goff wrote.

By the numbers, Goff is expecting THNK to deliver fourth quarter 2022 revenue of $21.0 million and adjusted EBITDA of $1.2 million. For the 2022 year, that would make for $78.1 million in revenue compared to $47.8 million for 2021 and negative $1.3 million in adjusted EBITDA compared to negative $6.5 million in 2021. For 2023, the call is for $86.4 million in revenue and $5.4 million in adjusted EBITDA.

“Following a tough 2022, we believe Think is in the midst of a critical inflection that will see the Company move into EBITDA-positive territory (consistently), alongside a growing demand for its software and data solutions,” Goff said.

“We continue to highlight the quality of Think’s revenues, with ~85 per cent+ recurring or highly reoccurring, while its plastic surgery clinic (Clinic 360) represents over ten per cent of revenues and owns a backlog greater than two years,” he wrote.

With his “Speculative Buy” rating, Goff also maintained a 12-month target of $0.90 per share, which implied at press time a projected return of 125.0 per cent.