Get the Latest Investment Ideas Delivered Straight to Your Inbox. Subscribe


Healthcare Tech Firm Grows Revenue 10% YOY in Q1/23
Research Report

View Important Disclosures for this Article
Share on Stocktwits


This positive start to 2023 bodes well for the company turning EBITDA positive later this year, which is expected, noted an Echelon Capital Markets report.

CloudMD Software & Services Inc. (DOC:TSX.V; DOCRF:OTCQB; 6PH:FSE) announced solid Q1/23 results that "highlight emerging double-digit baseline growth," reported Echelon Capital Markets analyst Rob Goff in a May 30 research note.

"We are encouraged to see Q4/22 and now Q1/23 results support baseline organic revenue growth of about 10% with expanding gross margins," Goff wrote. "We remain bullish toward a more focused and efficient CloudMD emerging."

CloudMD offers health technology solutions on a software-as-a-service basis to North American medical practices; operates a network of interconnected medical clinics and two pharmacies; and provides cloud-based software for electronic medical records, medical billing, and practice management.

122% Possible Return

Goff noted this Canadian healthcare services firm offers investors a significant potential gain of about 122%. This is based on the difference between Echelon's CA$0.40 per share target price on CloudMD and its current CA$0.18 share price.

The company is a Speculative Buy.

Quarter Results at a Glance

Echelon calculated that in Q1/23, CloudMD achieved about 10.8% year-over-year (YOY) organic revenue growth, Goff highlighted. This figure accounts for one-time COVID-related revenues of US$4.1 million (US$4.1M) in Q1/22 and YOY reductions related to the lost Ontario iCBT program (US$2.6M) and VisionPros challenges (US$0.6M).

Because in Q1/23, CloudMD continued integrating acquisitions, including networks and back-end systems, its topline results for the quarter were largely in line with those of Q4/22. The exception was gross profit, which came in about US$0.4M higher.

Goff presented CloudMD's key Q1/23 numbers. Revenue was US$26.1M, ahead of Echelon's US$25.9M forecast but below the consensus US$27M estimate.

Gross profit was US$9.4M, above Echelon's US$9M estimate and in line with consensus expectations.

EBITDA was (US$1.6M), better than both Echelon's (US$2.4M) estimate and consensus (US$2M) projection.

Positive EBITDA on Horizon

Goff pointed out that Echelon expects the company will turn EBITDA positive in Q4/23 and cash flow positive in 2024, both potential catalysts for its stock.

"As CloudMD approaches EBITDA-positive results, we believe the company will hold considerable potential for a significant valuation rerating either organically or via takeout," Goff commented.

Echelon also forecasts that by year-end 2023, CloudMD will achieve quarterly run-rate revenues that exceed US$30M and an annually recurring revenue of US$40M. Echelon forecasts annually recurring and reoccurring, or high-quality, revenues will increase to comprise a larger share, about 90%, of the mix, and gross margins to reach 36% or higher.

Echelon also anticipates CloudMD will gain material refinancing flexibility throughout 2023, noted Goff, to end the year with about US$9.5M in cash.

Estimates Raised, Upside Exists

Goff wrote that Echelon revised its full-year 2023 (FY23) gross profit and EBITDA forecasts for CloudMD, increasing the former by US$0.6M and the latter by US$1.4M.

For FY23, Echelon now estimates revenue of US$111.7M, gross profit of US$40.4M, and EBITDA of (US$3.1M).

For FY24, Echelon projects revenue of US$126.6M, gross profit of US$46.6M, and EBITDA of US$2.6M.

In addition to these expectations, wrote Goff, "We see potential upside to our baseline forecasts where CloudMD's sales pipeline stands at over US$55M in annual recurring revenue and where management indicated on its Q4/22 call (approximately one month ago) that its communicated pipeline does not consider a few potential larger deals with more nuanced procurement processes and longer sales cycles."

Want to be the first to know about interesting Healthcare Services investment ideas? Sign up to receive the FREE Streetwise Reports' newsletter. Subscribe

Important Disclosures:

  1. CloudMD Software & Services Inc. is an affiliate of has a consulting relationship with Streetwise Reports and has paid a consulting fee between US$8,000 and US$20,000. 
  2. Doresa Banning wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor.
  3. The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
  4. This article does not constitute medical advice. Officers, employees and contributors to Streetwise Reports are not licensed medical professionals. Readers should always contact their healthcare professionals for medical advice. *** only put this line if an article is a life science article***

For additional disclosures, please click here.

Disclosures for Echelon Capital Markets, CloudMD Software & Services Inc., May 30, 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: CloudMD Software & Services Inc. | DOC: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.

Want to read more about Healthcare Services investment ideas?
Get Our Streetwise Reports Newsletter Free and be the first to know!

A valid email address is required to subscribe