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Digital Health Co. Grows Revenue and Reduces Expenses
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This Canadian healthcare tech company is showing projected returns of over 241% for investors, noted an Echelon Capital Markets research note.

Think Research Corp. (THNK:CVE) is a Canadian company that designs and provides clinical software and services to international healthcare industries, and it ended Q422 with a 13% YoY profit while displaying a 20% reduction in operating expenses. The company ended last year with US$21.6 million in revenue, including US$10.1 million in gross profit and US$1.6 million in EBITDA.

In a May 2, 2023 research report, Rob Goff of H.C. Echelon Capital Markets gives Think a Speculative Buy rating due to promising growth over the past year but still cautions investors that the company will have upcoming debt obligations to settle in 2023 with BioPharma and MDBriefcase.

Since the company mainly works with government contracts and large health conglomerates, it is expected that these debts will be easily covered.

Review of Results

Goff presented the key points of Think's latest reports.

BioPharma, a subsidiary, is credited with the company's robust growth in Q422, bringing in record revenues of around US$11.5 million. Though it had previously faced issues with supply chain delays due to Covid-19, the company was able to pull resources from its extensive sales backlog. Think's Software and Data Services Solutions segment also managed to grow its revenue by roughly 18% as MDBriefcase, Think's largest education client continually grew its contract with the company via renewals and new acquisitions of big pharma clients throughout 2022.

Think did experience declines in its Clinical Services segment "quarter due to the departure of two prominent members of the Clinic 360 team (one plastic surgeon and one lead sales rep). Consequently, Clinic revenues were down ~24% y/y from the nearly $16M run rate established in Q421," reports Goff.

Finally, Think is pulling in significantly large SaaS contracts, like its five-year contract with Digital Front Door, for US$40 million. The company is optimistic that it can continue this growth pattern, as it is currently garnering around 80% of sales from these recurring contracts.

According to Goff, "Think currently licenses its offerings to ~14,200 facilities (up 9% y/y) with over 3 million patients and residents annually receiving care due to the data that the Company produces, manages and delivers." The company's physician outreach has grown 7% y/y, with its services currently reaching over 320,000 physicians.

Structure and Predictions

Think's stock price has declined 46% this year, which Goff notes Echelon "would characterize this sell-off as both irrational and an exceptional buying opportunity for a company executing toward scale and profitability. We believe the shares are significantly discounted and currently trading at 0.7x/1.5x/9.6x EV to 2023 revenues/gross profit/EBITDA on our forecasted 2023 EBITDA margin of ~8%, compared to its Canadian Digital Health (Exhibit 2) peers at medians of 1.7x/2.4x/7.4x on a forecasted EBITDA margin of 13%."

Goff's research report also shares recent rating and target price information as well as current market data on the company:

  •       Rating: Speculative Buy
  •       Price: US$0.35, with a 52-week high of US$1.07 and a 52-week low of US$0.28
  •       Price Target: US$1.10
  •       Market Cap: US$26.1 million 

Think holds a net debt of US$40.1 million with an enterprise value of US$68.8 million. The company has 74.7M basic shares outstanding, with 81.8M fully diluted shares outstanding.

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Important Disclosures:

1) Cori Rupe wrote this article for Streetwise Reports LLC as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.

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Disclosures for Echelon Capital Markets, Think Research Corp., May 2, 2023

Echelon Wealth Partners Inc. is a member of IIROC and CIPF. The documents on this website have been prepared for the viewer only as an example of strategy consistent with our recommendations; it is not an offer to buy or sell or a solicitation of an offer to buy or sell any security or instrument or to participate in any particular investing strategy.

Any opinions or recommendations expressed herein do not necessarily reflect those of Echelon Wealth Partners Inc. Echelon Wealth Partners Inc. cannot accept any trading instructions via e-mail as the timely receipt of e-mail messages, or their integrity over the Internet, cannot be guaranteed. Dividend yields change as stock prices change, and companies may change or cancel dividend payments in the future. All securities involve varying amounts of risk, and their values will fluctuate, and the fluctuation of foreign currency exchange rates will also impact your investment returns if measured in Canadian Dollars. Past performance does not guarantee future returns, investments may increase or decrease in value and you may lose money. Data from various sources were used in the preparation of these documents; the information is believed but in no way warranted to be reliable, accurate and appropriate. Echelon Wealth Partners Inc. employees may buy and sell shares of the companies that are recommended for their own accounts and for the accounts of other clients.

Echelon Wealth Partners compensates its Research Analysts from a variety of sources. The Research Department is a cost centre and is funded by the business activities of Echelon Wealth Partners including, Institutional Equity Sales and Trading, Retail Sales and Corporate and Investment Banking. Research Dissemination Policy: All final research reports are disseminated to existing and potential clients of Echelon Wealth Partners Inc. simultaneously in electronic form. Hard copies will be disseminated to any client that has requested to be on the distribution list of Echelon Wealth Partners Inc. Clients may also receive Echelon Wealth Partners Inc. research via third party vendors. To receive Echelon Wealth Partners Inc. research reports, please contact your Registered Representative. Reproduction of any research report in whole or in part without permission is prohibited.

Canadian Disclosures: To make further inquiry related to this report, Canadian residents should contact their Echelon Wealth Partners professional representative. To effect any transaction, Canadian residents should contact their Echelon Wealth Partners Investment advisor.

U.S. Disclosures: This research report was prepared by Echelon Wealth Partners Inc., a member of the Investment Industry Regulatory Organization of Canada and the Canadian Investor Protection Fund. This report does not constitute an offer to sell or the solicitation of an offer to buy any of the securities discussed herein. Echelon Wealth Partners Inc. is not registered as a broker-dealer in the United States and is not be subject to U.S. rules regarding the preparation of research reports and the independence of research analysts. Any resulting transactions should be effected through a U.S. broker-dealer

Company: Think Research Corp. | THNK:TSXV

I, Rob Goff, hereby certify that the views expressed in this report accurately reflect my personal views about the subject securities or issuers. I also certify that I have not, am not, and  will not receive, directly or indirectly, compensation in exchange for expressing the specific recommendations or views in this report.

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