Valued at a market cap of $1.5 billion, Andlauer Healthcare (TSX:AND) is a supply chain management company. It provides a platform of customized third-party logistics (3PL) and specialized transportation solutions for the healthcare sector in Canada and the U.S.
Currently, the TSX stock is down 30% from all-time highs. Despite the ongoing pullback, the Canadian tech stock has returned around 100% to shareholders since its initial public offering in December 2019. Let’s see why you could buy the dip in AND stock and benefit from outsized gains in 2025 and beyond.
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Is the TSX stock a good buy right now?
Andlauer Healthcare is Canada’s exclusive nationwide temperature-controlled healthcare supply chain services provider. It serves the top 25 global pharmaceutical manufacturers and manages approximately $7 billion in pharmaceutical product distribution across Canada.
Andlauer has established itself as a preferred partner for healthcare distributors. For instance, its client retention rate is impressive, with average relationships exceeding 15 years for its top 20 clients.
Its extensive infrastructure spans 39 facilities, totalling over 2.2 million square feet across Canada. This includes 32 temperature-controlled facilities and seven third-party cross-dock locations. Andlauer’s specialized fleet features validated temperature monitoring systems, complemented by proprietary Crēdo thermal packaging for flexible temperature management ranging from ultra-cold (-70°C) to ambient (25°C).
Since 2021, Andlauer has expanded into the U.S. market through strategic acquisitions of Skelton USA and Boyle Transportation, providing specialized healthcare logistics across all 48 contiguous states. Boyle Transportation notably diversifies revenue, with 25-30% coming from government and defence sectors.
Is the TSX dividend stock undervalued?
Andlauer reported record annual revenue of $650.5 million in the fourth quarter (Q4) while maintaining a robust EBITDA (earnings before interest, tax, depreciation, and amortization) margin of 25.9%, near the upper end of its 24-26% target range. Canadian ground transportation revenue, excluding fuel, increased 6.3% year over year, driven by higher volumes from pharmaceutical and biologics clients, which offset weakness in consumer health products.
Healthcare Logistics saw 10.4% growth, driven by a 25.2% surge in packaging solutions revenue. Meanwhile, U.S. operations faced headwinds in what management described as “the Great Freight Recession,” with ground transportation revenue declining 17% year over year in Q4.
Despite these challenges, Andlauer maintained its shareholder-friendly capital-allocation strategy, raising its quarterly dividend to $0.12 per share while actively repurchasing shares. In 2024, the company bought back over 266,000 shares for $10.4 million under its buyback program.
Andlauer Healthcare is forecast to report a free cash flow of $102.7 million in 2025. Given its outstanding share count, the company’s annual dividend expense is around $17 million, indicating a payout ratio of 17%. The healthcare enabler has more than doubled its dividend payout in the last three years and currently offers a yield of 1.1%.
With $40.5 million in cash, a conservative net leverage ratio of 0.86, and a working capital of $62.7 million, Andlauer remains well-positioned for strategic acquisitions. It is also investing in additional cooler space capacity, including a new facility in Boucherville, to capitalize on growing biologics and vaccine distribution opportunities.
Priced at 21.6 times forward earnings, the TSX dividend stock is reasonably valued and trades at a discount of 28% to consensus price targets.
