WELL Health Technologies keeps Buy rating with Stifel GMP

Stifel GMP analyst Justin Keywood delivered a report on Monday on WELL Health Technologies (WELL Health Technologies Stock Quote, Charts, News, Analysts, Financials TSX:WELL), saying WELL is carving out a unique space for itself as a consolidator within the health tech space. Keywood reiterated a “Buy” rating on the stock and $13.50 target price, which at the time of publication represented a projected one-year return of 362 per cent.

Vancouver-based WELL Health put out an update on Monday on its US-based businesses, which include virtual medicine platforms Circle Medical and Wisp and gastroenterology and anesthesia company CRH Medical. WELL, which also has among its Canadian assets a group of medical clinics with primary and specialized services as well as an Electronic Medical records business and virtual healthcare, said Circle Medical and Wisp combined for over US$100 million in annualized revenue run rate for the month of September with 116,989 patient visits from Circle Medical and 186,952 asynchronous consultations from Wisp, good for year-over-year growth rates of 230 per cent and 50 per cent, respectively.

WELL CEO and Founder Hamed Shahbazi said the company is achieving strong organic and inorganic growth despite a challenging macro environment and, due to the currently strong US dollar, commentary on WELL’s US operations was in order.

“Our business has never been stronger and more resilient as we remain committed to demonstrating sustained healthy operating Adjusted EBITDA and organic growth metrics for the entire enterprise,” Shahbazi wrote in a press release. “We continue to demonstrate that our efforts to tech-enable and support healthcare providers is working and generating real results.”

WELL also commented on CRH Medical, saying the company completed in September the acquisition of Phoenix, Arizona-based Grand Canyon Anesthesia (GCA) for an undisclosed amount. WELL said GCA has over 100 anesthesia providers and over 50,000 surgical cases annually, with an expected US$16 million in annual revenue and US$2 million in shareholder EBITDA. WELL said the purchase marked CRH’s entry into its 18th state in the US.

“This is one of CRH’s largest single acquisitions ever, spanning over seven sites and was in-line with our stringent capital allocation strategy,” said CRH CEO Jay Kreger in a press release. “GCA also offers anesthesia services outside of the gastrointestinal procedures including orthopaedic, spine, pain, dental, ENT and ophthalmology procedures.”

Commenting on the GCA purchase and on WELL in general, Keywood wrote, “GCA expands CRH’s geographic presence further into western U.S. territories, and services outside of gastrointestinal procedures. WELL’s stock continues to be under pressure, following broader sector headwinds and trades at 1.6x FY22E sales versus peers at 2.8x.”

“We see WELL as an early stage consolidator, similar to Enghouse, Descartes and Constellation Software but focused in health-tech,” Keywood wrote.

WELL last reported its earnings in August where its second quarter 2022 featured record revenue of $140.3 million, up 127 per cent year-over-year, and record Adjusted EBITDA of $26.4 million compared to $11.9 million a year earlier.

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