In a June 4 research note, analyst Gabriel Leung reported that Beacon Securities initiated coverage on CloudMD Software & Services Inc. (DOC:TSX.V; DOCRF:OTCQB; 6PH:FSE) with a Speculative Buy rating and a CA$1.50 per share target price. The stock is trading now at about CA$0.71 per share.
Leung reviewed the company's objective and revenue sources. CloudMD, based in Vancouver, British Columbia, aims to digitize healthcare delivery by providing patients access to all points of their care remotely, from a cellphone, tablet and/or laptop or desktop computer. "CloudMD has generated good early traction on this front," Leung noted.
CloudMD generates revenues in two ways, Leung stated. One is from software as a service-based subscriptions to its technology services. They include CloudMD, a telemedicine platform that connects patients in British Columbia and Ontario to a licensed physician for real-time virtual appointments. MyHealthAccess is an online portal for patient appointments and a telemedicine platform. JunoEMR is a cloud-based electronic medical records software, and ClinicAid is a medical billing software. Livecare Connect is a standalone telemedicine platform used by health professionals across Canada. KindredPHR is a software for storing, managing and sharing personalized health records. As for future revenue, Beacon estimated CloudMD will generate $15 million in 2020 and $27 million in 2021.
This array of telehealth solutions serves 375-plus clinics and more than 3,000 licensed practitioners, including emergency medicine physicians, which cumulatively have about 3 million registered patients. CloudMD has about 100,000 patients registered on its CloudMD platform alone.
Also, the company has partnerships with Save-On-Foods and Pure Integrative Pharmacies, which are pilot testing the presence of telehealth kiosks inside their facilities for on-demand, on-site virtual care.
Revenue also comes from the healthcare facilities that CloudMD runs, which are five medical clinics in the Lower Mainland and two pharmacies in Metro Vancouver.
"While it does have a brick and mortar presence, we believe the main growth and value driver for CloudMD will come via market share gains in the large and relatively untapped virtual care, telehealth market in Canada," commented Leung.
Leung highlighted that three existing factors are setting the company up for further success. One is its healthcare background, another is its suite of telehealth offerings. The third is the impact of COVID-19 and new related governmental regulations around remote healthcare. "CloudMD is well positioned to capitalize on the telehealth opportunity in Canada," he added.
Several potential catalysts are on the near-term horizon for CloudMD, Leung pointed out. They include possible acquisitions of further technology or clinics, for which the company has about $15 million in funds. Other possible stock moving events are an extension beyond the pilot phase of either of its two existing kiosk partnerships and an expansion of its pharmacy kiosk business into Ontario.[NLINSERT]
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Disclosures from Beacon Securities, CloudMD Software & Services Inc., Initiating Coverage, June 4, 2020
Does Beacon, or its affiliates or analysts collectively, beneficially own 1% or more of any class of the issuer's equity securities? No
Does the analyst who prepared this research report have a position, either long or short, in any of the issuerís securities? No
Has any director, partner, or officer of Beacon Securities, or the analyst involved in the preparation of the research report, received remuneration for any services provided to the securities issuer during the preceding 12 months? No
Has Beacon Securities performed investment banking services in the past 12 months and received compensation for investment banking services for this issuer in the past 12 months? Yes
Was the analyst who prepared this research report compensated from revenues generated solely by the Beacon Securities Investment Banking Department? No
Does any director, officer, or employee of Beacon Securities serve as a director, officer, or in any advisory capacity to the issuer? No
Are there any material conflicts of interest with Beacon Securities or the analyst who prepared the report and the issuer? No
Is Beacon Securities a market maker in the equity of the issuer? No
This report makes reference to a recent analyst visit to the head office of the issuer or a site visit to an issuer's operation(s)? No
Did the issuer pay for or reimburse the analyst for the travel expenses? No
Beacon analysts are not permitted to own the securities they cover, but are permitted to have a position, either long or short, in securities covered by other members of the research team, subject to blackout conditions.
Analyst Certification: The Beacon Securities Analyst named on the report hereby certifies that the recommendations and/or opinions expressed herein accurately reflect such research analyst's personal views about the company and securities that are the subject of the report; or any other companies mentioned in the report that are also covered by the named analyst. In addition, no part of the research analystís compensation is, or will be, directly or indirectly, related to the specific recommendations or views expressed by such research analyst in this report.