Echelon Wealth Partners analyst Rob Goff has added WELL Health Technologies (WELL Health Technologies Stock Quote, Chart, News TSX:WELL) to his list of Top Picks for the third quarter, saying in a client update on Tuesday that mainstream adoption of telemedicine will be a driver for the company.
Vancouver-based WELL owns and operates 20 medical clinics, provides digital EMR (electronic medical records) software and services to over 1,900 medical clinics across Canada and is a majority owner of SleepWorks Medical.
The stock, which debuted on the Venture Exchange in January of 2019, finished last year up 280 per cent and has so far returned 88 per cent in 2020. Back in March, WELL launched its VirtualClinic+ telehealth platform which the company said offered access to physicians to Canadians without a family physician while at the same time giving patients the opportunity to see physicians virtually, a plus during the COVID-19 pandemic.
WELL showed the early results of its telehealth platform in the company’s fiscal first quarter 2020 results (for the period ended March 31), delivered in mid-May.
On WELL’s first quarter, Goff wrote, “The highlight of Q120 was clearly the early success of physician and patient adoption of telehealth. WELL indicated that it is currently exceeding 1,000 patient sessions on a daily basis with ~800 physicians onboard.”
In his update, Goff maintained his “Speculative Buy” rating for WELL and one-year target price of $3.50 per share, which at press time represented a projected return of 20.3 per cent.
“The stock is up 90 per cent year-to-date 2020 and in the last three months, rallying on the demand for telemedicine services during the pandemic,” Goff wrote. “The Company has a strong network of 21 clinics with 180+ physicians that provides for a solid base for serving the demand during social distancing, to offer its services on it VirtualClinic+ platform.”
“WELL’s OSCAR EMR’s seamless integration with the platform is a straightforward cross-sell opportunity with 1.5K clinics and 8K physicians in the EMR network. We were encouraged by the announcement with the Q120 results that the Company had already onboarded 500 physicians from the EMR network, within 5 weeks of the launch. We see further upside as the Company ramps up its telemedicine program, unifies OSCAR EMR
vendors (only two OSCAR providers remaining with an annual revenue of $0.5M), and continues to follow its disciplined acquisition approach,” Goff wrote.
Goff thinks WELL will generate an adjusted EBITDA loss of $0.8 million in 2020 on revenue of $42.6 million and positive EBITDA of $2.9 million in 2021 on a top line of $58.6 million.
For its first quarter 2020, WELL reported revenue of $10.2 million, representing a year-over-year growth rate of 38 per cent and an adjusted EBITDA loss of $245.9 million.
On June 26, WELL announced that it would be delaying holding its annual general shareholders meeting to a later date but prior to the year’s end, citing the COVID-19 public health emergency and social distancing restrictions.
Disclaimer: Nick Waddell and Jayson MacLean own shares in WELL and the company is an annual sponsor of Cantech Letter.