Canadian investors should consider holding their stocks in recession-bearing sectors such as utilities and healthcare to protect themselves from underlying market volatility. In this article, we have identified three top TSX healthcare stocks that you can invest in right now. Let's see why.
With a market capitalization of $600 million, Knight Therapeutics (TSX:GUD) is a specialized pharmaceutical company that develops, acquires, acquires, acquires, markets and distributes pharmaceutical and consumer health products and medical devices in Canada, Latin America and internationally.
Revenue increased from $1 million in 2015 to $328.2 million in 2023. Over the past 12 months, revenues have been reported in $348.6 million. Earlier this year, Night Therapeutics disclosed its plans to acquire Paladin Labs from Endo for $100 million and $20 million in stock. The deal represents an iconic reunion as Knight was first spun from the Paladin in 2014.
The acquisition adds $70 million in annual revenues from a diverse portfolio of over 40 pharmaceuticals. Knight's management expects the transaction to soon become EBITDA (revenue before interest, tax, depreciation and amortization) and additional synergies are expected in 2026.
Knight will fund acquisitions from existing cash reserves that were $151 million in the third quarter of 2024 (third quarter). Canada accounts for 25% of Knight's total business after the acquisition.
With a market capitalization of $571 million, KNEAT.com (TSX: KSI) designs, develops and supplies software for data and document management within a US, Ireland, Canada and internationally regulated environment. We provide the Kneat GX platform. It offers applications focused on validating lifecycle management and tests in biotechnology, pharmaceutical and medical device manufacturing industries.
In the fourth quarter of 2024, KNEIT reported a revenue growth rate of $13.7 million, a 40% year-on-year increase. Annual recurring revenue (ARR) increased 60% to $59.7 million, adding a new ARR of $10 million in quarter alone.
“We are pleased to report that we closed the year with fourth quarter figures along the entire 2024. We are showing strong growth in revenue, growth and operating margins for both the three months and the full year,” said CEO Eddie Ryan.
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Since its last revenue call, KNEAT.com has announced four strategic customer wins in a variety of life science segments, including pharmaceutical manufacturing, consumer products, medical devices and engineering services. In particular, engineering company Altan uses Kneat's platform internally and with both its customers.
Total profit for the fourth quarter increased 48% year-on-year to $10.4 million, but the total margin increased to 75%. In comparison, operating expenses increased by just 10% year-on-year, focusing on operational efficiency.
Kneat continues to strengthen its platform, expand its partner program and adds the Global Systems Integrator Capgemini. It also incorporates artificial intelligence capabilities to promote efficiency for both internal operations and customer workflows.
The final TSX Healthcare stock on the list is Andlauer Healthcare (TSX:and), a profitable company with a market capitalization of $1.5 billion. It is a supply chain management company that provides a platform for third-party logistics and specialized transportation solutions for the healthcare sector in the US and Canada.
Andlauer Healthcare reports record annual revenue of $655 million for fiscal year 2024, maintaining a strong EBITDA margin of 25.3%. Canada's specialized transport network rose 6.3% in the fourth quarter, driven by an increase in drug and biology client volume.
Although its Canadian business showed solid growth, its US truckload business faced headwinds from what its management called a “major cargo recession,” with ground transport revenue falling 17% year-on-year.
Andlauer has increased its quarterly dividend to $0.12 per share, actively working in stock repurchases, repurchaseing 266,000 shares for $10.4 million under its current buyback program.
TSX stocks are priced at earnings prior to 21x and are trading at a near 30% discount on consensus price targets.
Post-3 top healthcare sector stocks for Canadian investors in 2025 first appeared in Motley Fool Canada.
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Aditya Raghunath, a Fool contributor, has no position in any of the stocks mentioned. Motley Fool is Andlauer Healthcare Group and Kneat.com, Inc. I am currently working for and recommending. MotleyFool has a disclosure policy.
