In a research report to clients today, Sangha initiated coverage of Well Health Technologies with a “Buy” rating and a one-year price target of $0.90, implying a return of 80 per cent at the time of publication.
Sangha says that although approximately 11.5 per cent of Canada’s GDP comes from healthcare spending, the primary healthcare market is very fragmented in which GPs typically own small clinics that are not using modern technology solutions.
The analyst notes that WELL, which operates a network of 220 medical clinics (19 of which it wholly owns) and services more than five million patient visits annually, is uniquely positioned to come out on top in this sector.
“WELL is introducing an entire suite of technology solutions into its clinics,” the analyst says. “Some of the technology solutions that WELL plans to deploy into its clinics includes standardized EMR, virtual care, patient portals, mobile app, online appointment booking, appointment notification, self-serve waiting room automation, automated appointment reminders and follow-ups, and online cancellation and wait lists. This technology rollout will expand beyond WELL’s own clinics as the company will also sell or license the same digitization technologies to other clinics. The recent acquisition of NERDEMR provides WELL with several hundred clinic prospects to sell to. WELL is in effect building a network of company-owned and non-company owned technology centric healthcare clinics.”
Sangha thinks WELL will post Adjusted EBITDA of negative $900,000 on revenue of $28.3-million in 2019. He expects those numbers will improve to EBITDA of positive $1.2-million on a topline of $37.5-million the following year.
“We like WELL because of the company’s experienced management team, rapid growth profile, solid investor backing and large market opportunity,” the analyst adds. “We recommend accumulating shares at current levels.”
Disclaimer: Cantech Letter’s Nick Waddell owns shares of WELL Health Technologies.
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