Well Health Technologies (Well Health Technologies Stock Quote, Chart, News TSX:WELL) has gained 112% by the end of May 2020. Some people may see this as a penny stock to trade because of its low price tag per share. But behind the low price tag, there is a wonderful business blooming.
Well Health Technologies has two core businesses: healthcare clinics and a digital health platform. Their healthcare clinic side of the business has grown from 0 clinics to 21 clinics in a few years. They did not build these clinics from the ground up. Rather, these clinics were bought through acquisition which allowed the company to scale so quickly. Currently they are the fourth largest medical clinic operator within Canada and number one in BC!
On the digital health side of things, Well Health Technologies specializes in OSCAR EMR (electronic medical record) software. OSCAR stands for Open Source Clinical Application and Resource. Like the clinic side of the business, the digital health portfolio was predominantly built up through acquisitions. More specifically, Well Health Technologies acquired 6 OSCAR EMR companies over the span of a year and a half and became the 3rd largest EMR software company in Canada.
Recently, they launched their Virtualclinic+ platform just in time as COVID-19 hit North America. This platform allows healthcare workers to interact with their patients through video, call, or secured message in order to limit person to person contact. Speak about timing!
DANIEL CHOI (THE FIRE GRIND) BREAKS DOWN WELL HEALTH. WATCH THE FULL VIDEO…
The main reason why I am bullish on Well Health Technologies is due to market opportunity vs size and the ability of the team to execute. Currently, the market for medical clinics is highly fragmented and this is apparent when a small company like Well Health Technologies is able to come into the industry and climb to the top 5 for both EMR software and medical clinics. For industries that are highly fragmented, this is where the largest opportunities lie. Many processes and expenses can be streamlined as consolidation happens which is what is currently happening in industries like the funeral home (Park Lawn Corp) and self storage (Storage Vault Canada).
The executive team led by Hamed Shahbazi have proven they are able to execute through their series of acquisitions which lead to revenue growth of 210% from 2018 to 2019. Zooming in, the revenue growth for their digital health side of the business increased by 920% and will likely continue to grow in the triple digits in 2020.
In the face of this current pandemic and the possibility of a global recession, we have seen time and time again that the weak companies are weeded out while the innovative and fiscally responsible ones come out stronger. Well Health Technologies belongs in the latter group. In the video, I show how the management team has been managing their finances responsibly which puts them in a great position with a possible recession looming. The main highlight is that they have roughly $17.5M in cash while their cash flow for operating expenses in their latest quarter totalled $450,000. If they were in a pinch for cash, they could cut all investing activities and run for 38 quarters. Not many small cap companies can say the same thing!
To sum things up, Well Health Technologies has some exciting opportunities ahead of it as it aims to consolidate a fragmented market and revolutionize the healthcare industry within Canada through digital platforms. This stock does present some risks with a few larger competitors (Loblaws and Telus) but I believe small companies under the right leadership can outmaneuver larger competitors.
Disclosure: I current own a position in Well Health Technologies
Additional disclosure: Cantech’s Nick Waddell and Jayson MacLean own WELL Health and the company is an annual sponsor of the site.
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