Following the company’s second quarter results, Desjardins analyst David Newman has hiked his price target on WELL Health Technologies (WELL Health Technologies Stock Quote, Chart, News TSX:WELL).
In a research update to clients Wednesday, Newman maintained his “Buy” rating on WELL but raised his price target from $3.90 to $5.00, implying a return of 16 per cent at the time of publication.
The analyst summarized the quarter.
“WELL reported 2Q revenue of C$10.6m, higher than our estimate of C$9.7m (consensus of C$9.8m),” he explained. “Digital services accounted for ~22% of revenue vs ~2% in 2Q19, driven by WELL’s recent EMR and digital acquisitions, as well as telehealth with the launch of VirtualClinic+ (VC+) on March 2. At >80% gross margin, the higher mix of digital services drove WELL’s gross margin to 40% vs ~30% in 2Q19. WELL posted adjusted EBITDA of -C$0.5m, which beat our estimate of -C$0.8m (consensus of -C$0.7m).”
Newman now thinks WELL will post Adjusted EBITDA of $900,000 on revenue of $43.1-million in fiscal 2020. He expects those numbers will improve to EBITDA of $3.2-million on a topline of $59.3-million the following year.
The analyst said it is clear that telehealth is leading the way for WELL.
” VC+ (VirtualClinics+) continues to gather steam, recording ~124,800 telehealth visits in 2Q (50% through VC+),” he said. “It has now onboarded ~1,000 physicians and has frequently achieved peak volumes of >1,000 virtual appointments per day. VC+ was also recently selected by the McMaster Family Health Team (MFHT) as its preferred virtual care platform to train the next generation of physicians. We expect this to drive clinical services revenue in 3Q, in addition to the recovery in physical visits (marching back to pre-COVID-19 levels) as BC is in Phase 3 of reopening. Digital services revenue should achieve double-digit growth in 2H20 as WELL continues to layer on new technology offerings within its EMR, WDHA and cybersecurity portfolios.”
Disclosure: Nick Waddell and Jayson MacLean owns shares of WELL Health and the company is an annual sponsor of Cantech Letter.