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Best Healthcare Stock: CRH Medical (CRHM) or Viemed Healthcare (VMD)?

Alphyn Capital recently released its Q1 2020 Investor Letter, a copy of which you can download below. The fund posted a return of -21.7% for the quarter, underperforming its benchmark, the S&P 500 Index which returned -19.6% in the same quarter. You should check out Alphyn Capital’s top 5 stock picks for investors to buy right now, which could be the biggest winners of the stock market crash.

In the said letter, Alphyn Capital spoke about CRH Medical Corp (NYSEAMERICAN:CRHM) and Viemed Healthcare Inc. (NASDAQ:VMD) stocks. CRH Medical and Viemed are small cap healthcare companies. Year-to-date, CRHM stock lost 51.3% and on May 12th it had a closing price of $1.88. Meanwhile, year-to-date, VMD stock gained 13.1% and on May 12th it had a closing price of $7.02. Here is what Alphyn Capital said:

“CRH Medical and Viemed Healthcare are two small cap healthcare companies, the former is a roll-up of gastrointestinal anesthesiology providers, and the latter provides registered nurses and ventilators to help very sick patients suffering advanced Chronic Obstructive Pulmonary Disease. Both share a number of attractive attributes, including high returns on invested capital, a record of strong historical growth, long runways ahead of them for further growth, ambitious management teams, and attractive valuations when I first bought them. However, both are subject to occasional pricing pressure as the Center for Medicare & Medicaid Servicestries to reign in healthcare costs by changing rates every few years. These hits to revenue have historically provided good entry points to acquire shares, as the market has tended to temporarily over-react to the news, ignoring the fact that the businesses have, over time, continued to grow at robust rates. Overall, I would characterize these as good businesses with good long term prospects, but clearly not “great” given their lack of control over their own pricing. Market volatility presented the opportunity to redeploy capital into larger/stronger/better businesses.”

Do you think it was appropriate to exit CRH Medical and Viemed Healthcare stocks?

Disclosure: None. This article is originally published at Insider Monkey.

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