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Beacon Securities doubles price target on WELL Health Technologies

WELL Health acquisition
well health stock
Hamed Shahbazi

Following the company’s second quarter results, Beacon Securities analyst Gabriel Leung has doubled his price target on WELL Health Technologies (WELL Health Technologies Stock Quote, Chart, News TSXV:WELL).

On Thursday, WELL reported its Q2, 2019 results. The company lost $1.72-million on revenue of $7.40-million, a topline that was up 258 per cent over the same period a year prior.

The company listed its quarterly highlights, including the acquisition of OSCARprn, which delivers EMR software to 71 clinics in British Columbia, and a bought deal financing that included participation of Sir Li Ka-shing and WELL’s senior management team. The company also noted the July 1 acquisition of SaaS-based EMR services company KAI Innovations, which services more than 560 clinics in Ontario.

“Q2 was an excellent quarter for us which demonstrated continued strong clinical revenue growth and increasing gross margin from our SaaS based EMR service,” CEO Hamed Shahbazi said. “In addition, the recently completed acquisition of KAI Innovations has been a very strong fit with our prior EMR related acquisitions and has spurred new growth and expanded capabilities in our EMR business. Also, to our knowledge, it firmly positions us as the third largest EMR service provider in Canada. Furthermore, our recent financing transactions give us a strong balance sheet to execute on our future acquisition growth strategy. WELL management continues to be very focused on securing new acquisitions to grow both its clinical and digital portfolios in a manner that is highly accretive to shareholder value both in the short and long term.”


Leung notes that WELL’s gross margins came in at 30.4 per cent compared to 30.7 per cent in the previous quarter. The analyst, however, thinks margins will move to the mid-30 per cent range once a full quarter contribution from OSCARprn and Kai Innovations. He says the short history of WELL has been managed expertly by its leader.

“Overall, we think CEO Hamed Shahbazi has done an excellent job (in a short period of time) building out a strong platform for further consolidating Canadian healthcare clinics and leveraging technology to positively impact health outcomes,” the analyst writes.

WELL Health Stock gets new $2.00 price target…

In a research update to clients today, Leung maintained his “Buy” rating on WELL Health Technologies, but raised his one-year price target on the stock from $1.00 to $2.00, implying a return of 16 per cent at the time of publication.

Leung thinks WELL will post EBITDA of negative $1.8-million on revenue of $31.6-million in fiscal 2019. He expects those numbers will improve to EBITDA of positive $100,000 on a topline of $37.4-million the following year.

“We are increasing our target price to $2.00 (was $1.00), which applies a 5x sales multiple to our CY20e digital services revenue forecast and 3x sales to clinical services,” the analyst adds. “We believe a premium multiple is warranted for WELL given its experienced management team, strong financial backers and strong traction to date. While not included in our forecasts, for the purposes of our target price calculation, we also assume WELL invests its $20M pro-forma cash into clinical assets at 0.5x sales (which is in-line with previous acquisitions).”

Disclosure: Jayson MacLean and Nick Waddell own shares of WELL Health and the company is an annual sponsor of Cantech Letter.

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About The Author /

Cantech Letter founder and editor Nick Waddell has lived in five Canadian provinces and is proud of his country's often overlooked contributions to the world of science and technology. Waddell takes a regular shift on the Canadian media circuit, making appearances on CTV, CBC and BNN, and contributing to publications such as Canadian Business and Business Insider.
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