WELL Health is positioned to benefit from government tailwinds, Beacon says

Beacon Securities delivered a report to clients on Tuesday, where analyst Gabriel Leung said he likes the positioning of Canadian health tech company WELL Health Technologies (WELL Health Technologies Stock Quote, Charts, News, Analysts, Financials TSX:WELL) in the Ontario healthcare market, especially in relation to the provincial government’s recently announced plans to ramp up the use of privately run, for-profit clinics.

Last month, the Ford government announced its intentions to expand the number and range of OHIP-funded medical procedures performed at privately run clinics in an effort to cut down on the backlog of surgeries which the province has been dealing with in the wake of COVID-19.

The province said non-urgent, low-risk and minimally invasive procedures will be targeted, with a focus on offering more MRI and CT imaging, colonoscopies and endoscopies.

On Tuesday, Vancouver-based WELL Health issued a press release voicing its support of the Ford government’s plan, with Michael Frankel, WELL’s Chief Medical Officer, saying, “Improving accessibility to important health services such as diagnostic imaging is vital to ensuring the long-term sustainability of healthcare in Ontario.”

Along with clinics, telehealth services and other healthcare assets in Canada and the US, WELL has wholly-owned subsidiary MyHealth Partners, which is the largest single license holder and service provider for specialty clinics providing diagnostics in Ontario, with almost 50 locations at present.

“MyHealth is ideally suited to support these initiatives in a timely and cost-effective manner, while working seamlessly with public institutions like Hospitals and the Ministry of Health,” WELL said in the press release.

Commenting on the news was Leung, who said the government’s initiative could represent an opportunity for WELL and its MyHealth division, which last reported revenues and segmented EBITDA before corporate costs of $26.1 million and $5.5 million, respectively.

On how a WELL partnership with the government might play out, Leung said it’s likely that WELL will look to increase its capacity through investments in new imaging equipment, locations and clinicians.

“We also await details of a potential ten-year, $100 billion federal healthcare funding offer to help with provincial/territorial healthcare systems, which could likewise act as a tailwind for WELL,” Leung wrote.

“We expect the next financial catalyst for WELL to be its Q4 CY22 results, which are expected in the March timeframe,” he said.

With the update, Leung reiterated a “Buy” rating on WELL and $5.50 target price, which at the time of publication represented a projected one-year return of 47 per cent.

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