What is LEAA Health Technologies?
LEAA Health Technologies Corp. (LEAA:CA), based in Vancouver, Canada, was founded to develop a network of healthcare service providers to provide patients with high-end medical tests and services at home or in the office.
The management is headed by co-founder, general manager Isaak Yakubov, who has been with the company since its inception and was previously a medical assistant.
The company’s other co-founder is Chairman Eli Ofel.
LEAA currently has 2 employees and 5 independent contractors and is also seeking to acquire the remaining interest in LEAA’s US operations which it does not currently own.
As of December 31, 2021, LEAA Health has recorded an investment at fair market value of $10.5 million as of December 31, 2021 from investors.
According to a 2022 market research report by Grand View Research, the US market for medical concierge services was estimated at $5.5 billion in 2021 and is expected to reach $13.3 billion by 2030.
This represents a projected CAGR of 10.3% from 2022 to 2030.
The main drivers of this expected growth are patients’ desire for easier access to medical care and the preference of some physicians for these less price-sensitive types of patients.
Additionally, the chart below shows the historical and projected trajectory of the US Medical Concierge Market:
Major competitors or other industry participants include:
Concierge & Cardiology
Castle Connolly Private Health Partners
Campbell Family Medicine
United States San Diego Health
LEAA Health IPO Date and Details
The IPO date, or IPO, of LEAA Health has yet to be announced by the company or its agent.
(Disclaimer: Compared to stocks with more history, IPOs generally have less information for investors to review and analyze. For this reason, investors should exercise caution when considering investing. in an IPO or immediately after the IPO.Remember that many IPOs are heavily marketed, past company performance is not a guarantee of future results and potential risks may be under -estimated.)
LEAA Health intends to raise $5 million in gross proceeds from a Canadian IPO of 8.33 million subordinate voting shares offered at a proposed price of $0.60 per share.
The offering is not being marketed to US investors and no US SEC filings have been made. It is only offered in accordance with Canadian securities regulations.
No existing shareholders have expressed interest in purchasing shares at the IPO price.
Assuming a successful IPO, the company’s enterprise value at the time of the IPO would be approximately $25.8 million, excluding the effects of underwriter over-allotment options.
The free float-to-shares outstanding ratio (excluding subscriber over-allotments) will be approximately 16.31%. A figure below 10% is generally considered a “low float” stock that can be subject to significant price volatility.
Management says it will use the net proceeds from the IPO along with its existing working capital as follows:
Product development costs including app and interface enhancements $451,000
Systems implementation and business process improvements $77,000
General and administrative expenses $2,155,000
Investor Relations $180,000
Product advertising and marketing cost $2,118,000
Unrestricted working capital $577,329
*Based on the Bank of Canada daily exchange rate as of June 30, 2022 of US$1.00 to CA$1.2886.
(Source – SEDAR)
The presentation by management of the company’s roadshow is not available.
With respect to ongoing legal proceedings, management asserts that the company is not a party to any legal proceedings or regulatory actions.
The IPO agent is Canaccord Genuity.
How to Invest in Company Stock: 7 Steps
Investors can buy shares in the same way they can buy shares of other publicly traded companies, or as part of the pre-IPO allocation.
Note: This report is not a recommendation to buy stocks or any other security. For investors who wish to pursue a potential investment after the IPO is complete, the following steps for buying stocks will be helpful.
Step 1: Understand the company’s financial history
Although there isn’t much public financial information available about the company, investors can view the company’s financial history in their SEDAR filings (Source).
Step 2: Assess the company’s financial reports
The main financial statements available for publicly traded companies include the income statement, balance sheet, and cash flow statement. These financial statements can help investors learn about a company’s cash capitalization structure, cash flow trends, and financial condition.
Here is my summary of the company’s recent financial results:
The company’s financial statements showed a small amount of revenue, operating profit and operating margin of 16.1% and positive operating cash flow for the nine months ended December 31. 2021.
Free cash flow for the nine months ended December 31, 2021 was $499,292.
Advertising and promotion expenses as a percentage of total revenue were 43.7% in the last three quarters of 2021; its advertising and promotional effectiveness multiple was 2.3x over the same period.
The company currently plans to pay no dividends and retain all future earnings to reinvest in the company’s growth initiatives.
LEAA’s capital expenditures from Q2 to Q4 2021 indicate that it spent significantly on capital expenditures as a percentage of its operating cash flow.
Step 3: Assess the potential of the business against your investment horizon
When investors are evaluating potential stocks to buy, it is important to consider their time horizon and risk tolerance before buying stocks. For example, a swing trader may be interested in near-term growth potential, while a long-term investor may prioritize strong financial stocks over short-term price movements.
Step 4: Select a brokerage
Investors who do not yet have a trading account will start by selecting a brokerage firm. Common account types used to trade stocks include a standard brokerage account or a retirement account.
Investors who prefer fee-based advice can open a trading account with a full-service broker or independent investment adviser, and those who want to manage their portfolio at a lower cost can choose a discount brokerage firm.
Step 5: Choose an investment size and strategy
Investors who have decided to buy shares of the company should consider how many shares to buy and what investment strategy to adopt for their new position. The investment strategy will guide an investor’s holding period and exit strategy.
Many investors choose to buy and hold stocks for long periods of time. Examples of basic investment strategies include swing trading, short-term trading, or investing over a long-term holding period.
For investors wishing to obtain an allocation of shares prior to the IPO at the IPO price, they would “indicate their interest” with their broker prior to the IPO. Indication of interest does not guarantee that the investor will receive a pre-IPO share award.
Step 6: Choose an order type
Investors have many choices for placing stock orders, including market orders, limit orders, and stop orders.
Market Order: This is the most common type of order placed by retail traders. A market order executes a trade immediately at the best available trade price.
Limit Order: When an investor places a buy limit order, they specify a maximum price to pay for the shares.
Stop order: A buy-stop order is an order to buy at a specified price, called the stop price, which will be higher than the current market price. In the case of a buy-stop, the stop price will be lower than the current market price.
Step 7: Submit the transaction
Once investors fund their account with cash, they can decide on an investment size and order type and then submit the trade to place an order. If the transaction is a market order, it will be executed immediately at the best available market price.
However, if investors submit a limit order or stop-loss order, the investor may have to wait for the stock to reach its target price or stop-loss price for the trade to be completed.
LEAA is seeking Canadian public investment to fund the expansion of its growth initiatives in the United States.
The market opportunity for the provision of medical concierge services in the United States is significant and is expected to grow at low double-digit rates through 2030, so the business benefits from strong industry growth momentum in his favour.
However, there seem to be many competitors, so the company faces a growing competitive landscape.
Canaccord Genuity is the agent and there is no data on IPOs conducted by the company in the last 12 months in the United States. Canaccord may have been more active in the Canadian IPO market, but I have no performance information on that.
The main risks to the company’s outlook are its small size and weak capitalization compared to the vast US market where competition is intensifying.
On valuation, management asks investors to pay an EV/Income multiple of 13.9x rolling earnings.
Given the company’s small size, low capitalization and fragmented competition, my view of LEAA’s IPO in Canada is uncertain.