With its solid track record of growth, a strong shareholder base and an overall positive outlook for the health tech industry, there’s plenty to like about WELL Health Technologies (WELL Health Technologies Stock Quote, Charts, News, Analysts, Financials TSX:WELL), according to Jason Zandberg of PI Financial. Zandberg issued a transfer of coverage report on WELL on Monday where he asserted a “Buy” rating and $7.50 target price (previously $7.00), implying at press time a one-year return of 101.6 per cent.
Zandberg pointed to WELL’s ability to grow its top and bottom lines in recent years, where the company, which has assets in, among others, primary clinics, virtual healthcare and electronic medical records, increased revenue by 47 per cent between Q3 2021 and Q3 2022 as well as adjusted EBITDA by 23 per cent over the same time period, with substantial organic growth figuring into the mix.
WELL’s most recently-reported quarter, its third quarter 2022, delivered this past November, saw it hit record quarterly revenue of $145.8 million and record adjusted EBITDA at $27.5 million, with management at the time increasing its full 2022 revenue guidance to above $565 million from the previous outlook of above $550 million.
Zandberg noted the strong quarterly performance of WELL’s virtual medicine segment, saying, “In Q3/22 WELL achieved organic growth of over 18 per cent with its fastest-growing segment, Virtual Services, reaching 75 per cent, making it the largest line of business by revenue, larger than both CRH or Canadian Clinics businesses.”
The analyst also noted WELL Health’s experienced management team, led by founder Hamed Shahbazi, along with its strong group of shareholders which include billionaire Hong Kong investor Li Ka-Shing.
As for the health tech field, Zandberg said the company is well-positioned to benefit from the Ontario provincial government’s recently announced funding plan to shorten wait times for a number of medical procedures by making use of private clinics as well as input digitization initiatives to support the provincial health care system.
“We see WELL as positively impacted in gaining early exposure to the increased funding,” Zandberg said.
“We see a number of catalysts over the next year for the Company including WELL’s track record of outperforming consensus, continued acquisition potential, recent M&A activity in the healthcare sector, the Canadian Federal government’s healthcare funding proposal plan and lastly a potential US listing in 2024,” he said.
For the upcoming fourth quarter, Zandberg is expecting WELL Health to generate revenue of $153 million and adjusted EBITDA of $26 million and for 2023 he is calling for revenue of $657 million and adjusted EBITDA of $118 million.
Disclosure: Nick Waddell and Jayson MacLean own shares of WELL Health Technologies and WELL is an annual sponsor of Cantech Letter.