Shares of CloudMD Software & Services (DOC) fell nearly 3% in early trading Friday after the company reported a record revenue but a wider loss in its first quarter. CloudMD is a healthcare technology company offering SaaS-based health technology solutions to medical clinics in North America.
Revenue came in at C$8.8 million in Q1 2021, increasing 187% from C$3.1 million in Q1 2020. This increase is mainly due to CloudMD’s strategy of growth through acquisitions. Indeed, the company made five acquisitions during the quarter and 11 acquisitions during the last twelve months.
Meanwhile, gross margin for the quarter ended March 31 was 41%, compared to 37% in Q1 2020. CloudMD ended the quarter with a net loss of C$5.3 million (-C$0.03 per share), compared to a net loss of C$1.6 million (-C$0.02 per share) in the prior-year quarter.
However, the tech company expects acquisitions made during the first quarter and the C$58.2 million proceeds from a recent bought deal financing to contribute to future growth.
CloudMD CEO Dr. Essam Hamz said, “Q1 was a transformative period for CloudMD, as we closed 5 acquisitions, adding C$13 million in annualized revenue and establishing the foundation for our Enterprise Health Solutions division.”
“Within our Enterprise Health Solutions division, we have already seen significant early adoption and through cross-selling opportunities, attained over C$5 million in new multi-year contracts in the first quarter. Equally exciting is that CloudMD already has a revenue run rate of over C$120 million, and through highly profitable acquisitions coupled with organic growth and realization of cost synergies, we expect to be profitable in the second half of 2021,” added Hamz.
CloudMD ended the quarter with C$99.2 million in cash and cash equivalents and currently has a cash balance of C$95 million. (See CloudMD Software & Services stock analysis on TipRanks)
Following the results, Canaccord Genuity analyst Doug Taylor kept a Buy rating on DOC with a price target of C$3.50, for 92% upside potential.
Overall, DOC scores a Moderate Buy consensus rating among analysts based on 2 Buys. The average analyst price target of C$3.75 implies 106% upside potential to current levels.
TipRanks’ Smart Score
DOC scores a 4 out of 10 on TipRanks’ Smart Score rating system, indicating that the stock returns are likely to perform in line with the overall market.