Clinical operations continue to trend attractively for Well Health Technologies (Well Health Technologies Stock Quote, Chart TSXV:WELL), according to Haywood Capital Markets analyst Daniel Rosenberg, who in a client update on Thursday says that the stock remains undervalued.
Healthcare clinic and health tech company Well Health reported its first quarter ended March 31, 2019, financials on Wednesday, featuring revenue of $7.4 million, an upgrade from Q1 of 2018’s $1.9 million and better than analysts’ consensus at $6.8 million. That came with an EBITDA loss of $0.3 million as the company remains in the early days of establishing its operations and services.
Well Health grew by 13 clinics over 2018 and acquired EMR provider NerdEMR in January. While the company’s revenue mix is still largely comprised of its insured services, with technology revenue only accounting for two per cent of total revenue, Rosenberg says he expects new initiatives within clinics and the acquisition of OSCARprn, announced on May 23, to add incremental revenue for the year and help improve margins.
“WELL is in the early days of leveraging technology to improve outcomes and drive operational efficiencies in the ripe healthcare sector. Predictable cash flows from the primary health clinics help to de-risk WELL’s strategy of incubating, deploying and scaling new technologies in healthcare. We like this strategy and believe investors will be rewarded as WELL unlocks synergies between primary clinics, patients and technology solutions,” says Rosenberg.
The analyst has made minor adjustments to his forecast and is calling for 2019 revenue and Adjusted EBITDA of $29.0 million and negative $1.2 million, respectively, and 2020 revenue and Adjusted EBITDA of $37.8 million and $0.5 million, respectively.
Rosenberg is maintaining his “Buy” rating and $0.90 target, which represents a projected return of 29 per cent at the time of publication.
Disclosure: Cantech’s Nick Waddell owns shares of WELL and the company is an annual sponsor of Cantech Letter.