CloudMD Software & Services Inc: $1.51 Stock Is a Booming Telehealth Play

A Telehealth Stock for Growth Investors?

Telehealth, the provision of health care remotely through telecommunications, has enjoyed increasing demand due to the COVID-19 pandemic.

And while telehealth may seem like a new field, it has actually been around for a while, and there are already publicly traded companies that allow investors to get a piece of the action.

Check out CloudMD Software & Services Inc (CVE:DOC, OTCMKTS:DOCRF), for instance. The company’s solutions digitize the delivery of health care by providing patients access to all points of their care from their phone, tablet, or desktop computer.

CloudMD Software & Services Inc is both a health-care operator and technology developer.

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The company offers software-as-a-service (SaaS) solutions to medical clinics across North America. In particular, the company has developed proprietary technology that delivers health care through the combination of connected hybrid clinics, telemedicine, health-care technology solutions, and artificial intelligence.

CloudMD Software & Services Inc generates revenue from its digital services, enterprise health solutions, hybrid primary care clinics, and pharmacy networks.

The company is based in Vancouver, BC, Canada. Its shares are listed on the TSX Venture Exchange in Canada under the ticker symbol “DOC.” American investors can find CloudMD stock trading over the counter under the ticker “DOCRF.”

Right now, DOCRF stock trades around $1.50 per share.

Low-priced over-the-counter stocks are known to be at the higher end of the risk spectrum, but don’t ignore this company. While CloudMD isn’t a familiar name to most people, it has actually established quite a sizable presence in its business sector.

The company currently serves:

  • More than 7,000 psychiatrists
  • About 4,500 therapists and counselors
  • About 4,000 psychologists
  • More than 22,000 family physicians
  • More than 34,000 medical specialists
  • More than 1,500 allied health professionals
  • More than 500 clinics
  • More than five million individuals

(Source: “CloudMD Reports Record Fourth Quarter 2020 Revenue; On Track for Significant Growth in 2021,” CloudMD Software & Services Inc, April 28, 2021.)

Moreover, CloudMD runs a fast-growing business. In 2020, the company generated CA$15.0 million of revenue, representing a 122% increase from 2019. Notably, it achieved annual organic revenue growth at all of its businesses, including medical clinics during COVID-19 shutdowns.

Of course, the telehealth industry got a boost during the height of the pandemic, as more people chose the option to consult a doctor online instead of going in person. So, as lockdowns have been lifted and people have started going out again, one might expect CloudMD Software & Services Inc’s business to have slowed down in 2021.

But that hasn’t really been the case.

First-Quarter Results

In the first quarter of 2021, the company generated CA$8.8 million of revenue, which marked a 187% increase year-over-year and a 51% increase sequentially. (Source: “CloudMD Reports Record Revenue of $8.8 Million in First Quarter 2021,” CloudMD Software & Services Inc, May 27, 2021.)

In other words, the growth momentum continued at the telehealth company, despite the reopening.

And there’s more.

In the first quarter of this year, CloudMD Software & Services Inc achieved a gross margin of 41%, an expansion from both the 40% gross margin in the previous quarter and the 37% gross margin in the year-ago period.

The most exciting part, though, is what the company could do in the future. Management has reiterated that CloudMD’s annualized revenue run rate is above $120.0 million.

As the company’s chief financial officer, Daniel Lee, put it, “CloudMD’s annualized revenue run rate is intended to serve as a baseline for the business.” (Source: “CloudMD Software & Services Inc. (DOCRF) CEO Essam Hamza on Q1 2021 Results – Earnings Call Transcript,” Seeking Alpha, May 28, 2021.)

He continued, “This baseline does not include the organic growth that we are currently witnessing within the enterprise health solutions division or post-acquisition cross sell synergies we are seeing in our other businesses, discerned as an upside to our numbers.”

CloudMD Software & Services Inc (OCTMKTS:DOCRF) Stock Chart

Chart courtesy of StockCharts.com

Analyst Take

As you’d expect, 2020 was the year that telehealth gained investor attention, and DOCRF stock had an enormous rally. But after shooting through the roof—particularly from August to October 2020—CloudMD stock wasn’t able to continue its upward momentum.

While shares of CloudMD Software & Services Inc had another surge in early February 2021, they weren’t able to regain their all-time high set in October 2020.

Low-priced over-the-counter stocks may not seem like the safest bets, but given the growth momentum in CloudMD’s business, I wouldn’t be surprised if DOCRF stock makes another big move to the upside.