SmallCapPower | February 16, 2016: Traders and investors have badly beaten down stocks in the healthcare sector during the past year, yet some appear to be in good financial health. Key financial ratios investors and market analysts use to evaluate companies in this space include the cash flow coverage ratio, the debt-to-capitalization ratio and operating profit margin. Based on this, the companies on our list today are believe to be undervalued.
Medical Facilities Corp. (TSX: DR) – $13.85
Healthcare Facilities & Services
Medical Facilities Corporation is a Canada-based specialty surgical hospital. The Company through its subsidiaries, Medical Facilities America, Inc. and Medical Facilities (USA) Holdings, Inc. owns controlling interests in six limited liability entities (the Centers), each of which owns a specialty surgical hospital (SSH) or an ambulatory surgery center (ASC) located in the United States. ASCs are specialized surgical centers that provide outpatient procedures, whereas SSHs are licensed for inpatient and outpatient surgeries.
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Market Cap: $428,116,282
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Cash Flow Coverage: 0.92
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Debt to Capitalization: 0.18
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Operating Profit Margin: 23%
Find out why Jason Donville likes the healthcare space for 2016 >>
Cipher Pharmaceuticals Inc. (TSX: CPH) – $5.07
Pharmaceuticals
Cipher Pharmaceuticals Inc. is a specialty pharmaceutical company focused on dermatology. The Company acquires products that fulfill medical needs, manages the required clinical development and regulatory approval process, and markets those products either directly or through partners. Cipher’s dermatology products include Sitavig, Absorica, Epuris, Beteflam, Dermadexin, Pruridexin, Ozenoxacin, CF101, ASF-1096 and Nanolipolee-007.
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Market Cap: $132,470,967
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Cash Flow Coverage: 0.25
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Debt to Capitalization: 0.26
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Operating Profit Margin: 16%
CRH Medical Corp. (TSX: CRH) – $3.36
Medical Equipment, Supplies & Distribution
CRH Medical Corporation is a Canada-based company that specializes in the treatment of hemorrhoids utilizing its treatment protocol and technology. It is focused on providing physicians with products and services for the treatment of gastrointestinal diseases. The Company operates in two industry segments: the sale of medical products and the provision of anesthesia services.
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Market Cap: $240,850,993
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Cash Flow Coverage: 0.21
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Debt to Capitalization: 0.18
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Operating Profit Margin: 26%
Merus Labs International Inc. (TSX: MSL) – $1.90
Pharmaceuticals
Merus Labs International Inc. (Merus) is a specialty pharmaceutical company that is engaged in the acquisition and licensing of branded prescription pharmaceutical products in Canada and internationally. It carries out business principally in Canada and Europe. The Company has products in the area of urology/women’s health and anti-infectives, including Factive, Emselex/Enable and Vancocin.
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Market Cap: $187,757,828
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Cash Flow Coverage: 0.10
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Debt to Capitalization: 0.28
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Operating Profit Margin: 13%
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