Jack Nathan, WELL Health & Fennec Pharmaceuticals: 3 Growing Healthcare Stocks

Summary

• The pandemic has boosted telehealth penetration and accelerated technology adoption in Canada’s healthcare sector.
• Healthcare stocks such as Jack Nathan Medical Corp (TSXV:JNH), Fennec Pharmaceuticals Inc (TSX:FRX) and WELL Health Technologies (TSX:WELL) have gained this week.
• TSX Health Care Index is down by 32 per cent year-to-date.

Canadian investors have been trading cautiously amid the uncertainties surrounding the US fiscal stimulus and recent country-wide resurgence of coronavirus cases. However, healthcare stocks such as Jack Nathan Medical Corp (TSXV:JNH), Fennec Pharmaceuticals Inc (TSX:FRX) and WELL Health Technologies (TSX:WELL) have gained this week as updates revolving the Covid-19 vaccination dominated the news.

The Health Care Index in the Toronto Stock Exchange (TSX) is down by 32 per cent this year and while the TSX Venture health care dropped by 34.47 per cent in the same time frame. The benchmark TSX Composite Index is down by 4.63 per cent YTD, while the TSX Venture Index shows gains of 24.29 per cent.

The pandemic has boosted telehealth penetration and accelerated technology adoption in Canada’s healthcare sector. Telehealth, an emerging trend in the healthcare sector that helps patients connect with medical practitioners through video chats and teleconference, has gained in times of social distancing. This space has attracted huge corporate investments in Canada that has a high elderly population.

In this backdrop, let us look at the three trending healthcare stocks Jack Nathan, Fennec Pharmaceuticals and WELL Health Technologies.

Jack Nathan Medical Corp. (TSXV:JNH)

Current Stock Price: C$2.09

Healthcare service company Jack Nathan Medical Corp has a suite of medical and dental clinics offering primary care and ancillary services in six provinces across Canada. The company operates turnkey clinics inside the 76 Walmart stores under the Jack Nathan Health® brand. On October 16, the company launched telemedicine service portal in Mexico.

JNH STOCK PERFORMANCE

Jack Nathan Health (TSXV:JNH) debuted on the TSX-Venture Exchange on October 6, 2020. The stock has attracted investor’s attention following phenomenal 308 per cent growth since it went public. The company has a current market capitalization of C$156.71 million. As per data on the TMX group, the profit-to-equity (P/E) ratio is 14.70 and earnings per share (EPS) is C$0.17.

JNH FINANCIAL HIGHLIGHTS

The company’s financial results for the period ended July 31, 2020, indicate revenue was C$1.14 billion as compared to C$823 million during the same period last year. Operating expenses declined year-over-year to C$664.20 million in the latest quarter, as compared to C$916.7 million a year ago. The company reported net operating profit of C$723.11 million, a huge recovery from the loss experienced during the same quarter, last year. The net cash flow from operations is C$447.89 million.

Fennec Pharmaceuticals Inc. (TSX:FRX)

Current Stock Price: C$9.27

This clinical-stage biotechnology company is primarily engaged in research and development. The company is focused on the development of PEDMARK™, which is a novel formulation of Sodium Thiosulfate that prevents ototoxicity from cisplatin in paediatric patients.

FRX STOCK PERFORMANCE

Year-to-date (YTD) performance of this healthcare stock shows an increase of nearly 10 per cent. The scrip has posted 8.55 per cent gains month-to-date (MTD). However, the quarter-to-date performance of the stock shows 21.57 per cent decrease. As per data on the TMX, the company’s current market capitalization is C$239.25 million and the profit-to-book (P/B) ratio is 11.58.

FRX FINANCIAL HIGHLIGHTS

The company ended its second quarter 2020 (ending June 30, 2020) with cash and cash equivalents of US$38.7 million and zero-debt. It raised approximately US$32 million in net proceeds through a public offering in May 2020, which contributed to the increase in cash balance. The research and development expenses were US$1.1 million for Q2 2020, as compared to US$2.0 million in the same period last year.

The General and Administration (G&A) expenses increased by US$0.9 million year-over-year to US$3.7 million as of June 30, 2020. The net loss stood at US$4.8 million in Q2 2020, as compared to US$4.7 million same period in 2019.

WELL Health Technologies Corp. (TSX:WELL)

Current Stock Price: C$8.06

The company delivers healthcare-related services to 2,000 clinics in Canada and supports digitization by providing electronic medical records. Well Health was recognized as a TSX Venture 50 company for three consecutive years in a row - 2018, 2019 and 2020. It graduated to TSX in January this year. In March 2020, the company launched “VirtualClinic+” a telehealth service that helps connects physicians and patients through digital communication channels such as video, teleconferencing and audio calls.

WELL STOCK PERFORMANCE

The company has a current market capitalization of C$1.16 billion. The stocks reflect gains of 417 per cent this year. The MTD performance of the stocks show an increase of 16.64 per cent. According to TSX data, the profit-to-book (P/B) ratio is 21.78 and profit-to-cash flow (P/CF) ratio is 28.10. The stock is trading at a 10-day average volume of 1.42 million shares.

WELL FINANCIAL HIGHLIGHTS

For the second quarter ended June 30, 2020, the company achieved 43 per cent revenue increase to C$10.57 million as compared to C$7.40 million in Q2 2019. Gross profit increased by 88 per cent to C$4.22 million in Q2 2020, as compared to C$2.25 million in Q2 2019. Adjusted EBITDA loss of minus -C$5.43 million was reported for Q2 2020, as compared to loss of minus -C$5.56 million in Q2 2019. Digital services revenue grew by 1212 per cent to C$2.34 million in Q2 2020.