Analyst says Carebook Technologies Inc. (TSXV:CRBK) is “rewriting the book on digital health applications”
Capital Ideas Media | December 31, 2020 | SmallCapPower: COVID-19 has accelerated the move into digital healthcare, and has created big winners for early investors in companies such as WELL Health Technologies Corp. (TSX:WELL), which has soared more than 1200% since we first wrote about the company back in March 2019.
(Originally published on Capital Ideas Media on November 3, 2020)
Unfortunately, the timing could not have been much worse for Carebook Technologies Inc. (TSXV:CRBK) to make its stock market debut in early October this year, a month that has historically been unkind to investors long on equities.
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Nonetheless, Canaccord Genuity analyst Doug Taylor is believes Carebook is “rewriting the book on digital health applications,” as he sees a large market “ripe for disruptions.”
Carebook Technologies creates digital products for entities such as pharmacies, insurance providers, and governments, in which the Company aims to develop a scalable technology portfolio by leveraging initial contracts with these companies.
“Carebook’s digital health platform integrates disparate systems to provide user friendly yet powerful portals to connect organizations with their customers,” Mr. Taylor said.
“Carebook’s multi-year cornerstone contract with Rexall Pharmacy is foundational as the company develops and proves out its platform in the pharmacy vertical. We understand the company is in advanced discussions with a major potential insurance client that would similarly serve as a beachhead in that market. Lastly, the company hopes that regulatory approval of its My Vitals / COVID-19 smartphone app will precede multiple contracts in that segment within the Canadian market and globally.”
The Canaccord analyst added that success in this pursuit has the potential to drive substantial organic growth and share performance for CRBK. He cautions, though, that this opportunity has yet to be proven and stock-price upside from current levels is dependent on the Company delivering sizable contract wins in the next six to nine months, leading him to rate the stock a “Speculative Buy.”
Mr. Taylor said the Company’s financial performance through the end of this year is powered largely by a contract with McKesson Canada, projecting revenue of $4 million and an EBITDA loss of $2.5 million for 2020.
“Based on in-contract growth of this key customer win, leveraging its platform to secure two additional pharmacy customers in 2021, and closing an initial agreement with its first insurance industry customer in late 2020/2021, we model 211% revenue growth in 2021 (to $12.5 million) and the company crossing the EBITDA breakeven threshold,” he said.
Doug Taylor asserts that the digital health industry is expected to grow annually by 28.5% through 2026, creating what he considers to be a US$639 billion opportunity for Carebook.
Carebook Technologies is 54.7% owned by private equity firms led by the Company’s Executive Chairman, Dr. Sheldon Elman.
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