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WELL Health Technologies upgraded to “Buy” at Haywood

Well Health Technologies

WELL Health Haywood Haywood Capital Markets analyst Daniel Rosenberg is upgrading his rating on Well Health Technologies (Well Health Technologies Stock Quote, Chart, News TSXV:WELL), saying he expects the healthcare tech company’s shopping spree to continue as it looks to rack up more wins in the electronic medical records space.

Vancouver-based Well Health announced on Monday the formation of Well EMR Group, consolidating its EMR assets including Kai Innovations, NerdEMR, OSCARprn and the proposed acquisition of OSCARwest, announced last week.

“One of the key missions we had when entering healthcare was to break down the siloed approach that has hindered the ability for care to be delivered efficiently,” said Hamed Shahbazi, CEO of WELL Health, in a press release. “By introducing a single nationwide group for our EMR initiatives, we want to elevate our efforts to drive enhanced innovation and security for doctors on our platform without the constraints of managing multiple regional brands, teams and code bases. Our focus with this approach will be to continue to consolidate and defragment healthcare IT challenges.”

In a research report to clients on Tuesday, Rosenberg noted that while shares have come down from 52-week highs of $1.87, the company’s recent strategic initiatives have it poised for continued growth.

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“WELL is in the early stages of leveraging technology to improve outcomes and drive operational efficiencies in the ripe healthcare sector. We continue to like the long-term outlook at the Company and current share price levels combined with recent initiatives in its technology strategy should translate into increased shareholder value,” writes Rosenberg.

The analyst pointed to a couple of other recent highlights from WELL, namely, the announcement that it will be working with McMaster University’s Department of Family Medicine to launch Oscar McMaster Professional Edition, a partnership that Rosenberg says will likely help accelerate advancements in WELL’s OSCAR platform as well as boost the company’s reach into Ontario.

Secondly, Rosenberg noted that after closing a bought deal for $15 million on August 15, Well Health’s balance sheet should show about $19 million in cash, enough for continued
M&A activity, says the analyst.

Rosenberg says that WELL is positioned to grow in a Canadian healthcare sector that is ripe for a tech upgrade.

“Digitizing the Healthcare industry is a big market,” Rosenberg says. “Canadians spend $6,604 per person annually on healthcare services, accounting for approximately 11.5 per cent of Canada’s GDP, but there is very little technology utilized in this market.”

Rosenberg has revised his estimates to reflect recent M&A activity, now calling for calendar 2019 revenue of $32.3 million (previously $33.1 million) and adjusted EBITDA of negative $1.7 million (previously negative $1.4 million).

For calendar 2020, Rosenberg is calling for revenue of $49.8 million (previously $47.9 million) and adjusted EBITDA of $2.6 million (previously $1.9 million).

The analyst has moved his rating from “Hold” to “Buy” and increased his target price from $1.80 per share to $2.00 per share, implying a projected return of 30 per cent at the time of publication.

Rosenberg’s target stems from a 9.0x EV/Revenue multiple on his calendar 2020 technology revenue estimates and a 3.0x EV/Revenue multiple on his calendar 2020 clinical revenue estimates.

 

Disclosure: Nick Waddell and Jayson MacLean owns 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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