January 8, 2016

Q4 2015 Share Price Performance (Part 1)


Ninety-nine Canadian healthcare companies started 2015 with share prices of $0.10 or higher. Four of these companies are no longer part of this sector, including Catamaran which was acquired by UnitedHealth Group and IMRIS which was taken private by Deerfield. For the remaining 95 companies, the sector performance in 2015 can be described by the following statistics.

Based on these numbers, the sector performance could be described as volatile and negative. The small cap healthcare sector has always been volatile and 43 companies or 45% of the sector had share price changes greater than 40% in 2015. The negative sector performance has to be looked at in the proper context. The sector performed substantially better than the TSX and TSX Venture Composite Indices, which were hit very hard by the declining price of oil and other commodities. Conversely, the sector underperformed both the NASDAQ and NASDAQ Biotechnology Composite Indices.

Broad sector numbers do not tell the complete story in a sector where there are major differences in market cap (Tier 1 vs. Tier 2) and in the variety of products and services being developed and delivered. In the Tier 1 group, all 6 companies in the Diagnostics and Miscellaneous subsectors had share price declines in 2015. Excluding these two subsectors, advancers would outnumber decliners by 22 to 18 and the average share price change would rise from -5% to 0%.

Tier 1 Companies

The Tier 1 and Tier 2 companies have similar average share price change, -5% and -3%. Despite the Tier 2 decliners to advancers ratio of 33 to 16. The Tier 2 average is skewed by the extraordinary share price bounce of +428% for Theratechnologies. Removing this one company from the Tier 2 data lowers the average share price change to -12%.

Tier 2 Companies

I have always had a personal bias to looking at Therapeutics – Development companies, the highest risk – highest reward subsector. There were 32 companies in this subsector in 2015, about one-third of the total sector, with a good balance of advancers and decliners, and more volatility than the overall sector.

  • Advancers: 15 companies (47%)
  • Decliners: 17 companies (53%)
  • Share price decrease -40% or more: 12 companies (38%)
  • Share price increase +40% or more: 7 companies (22%)

In the next two blogs, I will give a more detailed review of the Q4 and 2015 share price performance of the Tier 1 and Tier 2 Canadian healthcare companies.

 [The author and his immediate family members may have long or short positions in the shares of some companies mentioned in or assessed during the preparation of this blog. Past share price performance may not be an indicator of future share price performance. This blog does not consider the investment objectives, financial situation or particular needs of any particular person. Investors should obtain professional advice based on their own individual circumstances before making an investment decision.]

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