Could This Canada-Listed Small Cap Become the Next WELL Health?

Skylight Health Group Inc. (TSXV:SHG) shares have surged 31% in the seven weeks since Capital Ideas wrote about the company

Capital Ideas Media | January 29, 2021 | SmallCapPower: WELL Health Technologies Corp. (TSX:WELL) was such a big success for us that we were intrigued when we discovered what could be another up-and-coming healthcare small cap in Skylight Health Group Inc. (TSXV:SHG).

(Originally published on Capital Ideas Media on December 8, 2020)

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Much like WELL, Skylight Health offers both onsite and telemedicine services with a proprietary electronic health record (EMR) system. Skylight, though, operates in the United States, with a network of more than 30 bricks-and-mortar clinics in 14 states.

[Editor’s Note: Shares of Skylight Health have surged 31% in the seven weeks since Capital Ideas wrote about the company.]

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Skylight Health, with a patient base of over 120,000, offers a subscription-based healthcare model for uninsured Americans along with a traditional fee-for-services model for patients under Medicare, Medicaid and commercial insurance plans.

Mackie Capital analyst Yue Ma, in a recent note to clients, called SHG “a highly undervalued name in the telemedicine/primary care space.” He currently has a “Speculative Buy” rating on the stock, saying the company’s third-quarter financial results came in better than expected.

During Q3 2020, Skylight Health reported adjusted EBITDA of $331,122, better than the analyst’s estimate at negative $0.4 million, which Company attributed to improvements in its operating model.

Skylight said it is seeing growth in patient visits and registrations following a temporary slowdown due to COVID-19, while its telemedicine platform “has created opportunities to further reduce the cost of healthcare delivery with lower overheads, higher margins and improved availability for patients.”

Mr. Ma noted that the Company’s clinic business has been growing as of late and it has closed on two acquisitions since the start of the fourth quarter and is in the middle of completing another one in APEX Family Medical (since the Mackie Capital analyst’s note, Skylight Health announced a fourth acquisition, Tennessee-based Perimeter Pain and Primary Care Clinic, which will add 12,000 new patients and expand its services into a 15th state).

Yue Ma said the first three acquisitions should generate combined annual revenue of $4.8 million along with $900,000 in yearly profits.

Management, meanwhile, reported that it is on track for a $20-million annual revenue run rate by the end of 2020.

Skylight Health Group said its growth strategy includes expansion of insurable services to its current patient roster, subscription for the uninsured and underinsured, and accretive acquisitions.

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