WELL Health is still a Buy, says Haywood

Haywood Capital Markets analyst Gianluca Tucci is staying bullish on Vancouver-based digital healthcare company WELL Health Technologies (WELL Health Technologies Stock Quote, Charts, News, Analysts, Financials TSX:WELL), saying in a Thursday update that he recommends investors accumulate shares at current levels.

WELL Health, which owns medical clinics and virtual medicine platforms in both Canada and the United States as well as an electronic medical records (EMR) business, announced on Thursday that its wholly owned subsidiary CRH Medical has made a strategic investment in Graphium Health LP, a leading provider of EMR solutions for anaesthesia patients in the US.

“This transition to advanced technology solutions aligns perfectly with our commitment to improving performance and enhancing the provider and partner experience,” said Jay Kreger, CEO of CRH, in a press release. 

“By harnessing the power of artificial intelligence, process automation, and data analytics, we are empowering our team to deliver more accurate billing information, expedite charge capture reconciliation, and drive improved collections,” he said.

CRH said it participated in a recent pilot project with Graphium, where the results showed improved time to capture billable charges by 58 per cent or 5.6 days and reduced overall accounts receivable (AR) balance at the pilot project sites by 24 per cent.

WELL said it plans to expand the use of Graphium’s solution to at least 54 additional ambulatory surgical centres over the next three years.

Tucci said he views the announcement as positive for WELL as it highlights the opportunity in its existing business, where currently nearly one-third of CRH’s anaesthesia sites currently operate without an EMR and rely solely on paper-based systems.

“Continued process digitization should lead to increased revenue and margin growth in the coming years,” Tucci wrote. “Today’s news is also notable in that it is CRH’s first strategic investment in a technology business and reinforces the strategy of diversifying CRH into other services. While the investment size in Graphium Health is not disclosed, we estimate it in the $250K-$1 million range.”

Tucci pointed to the large addressable market for WELL’s products and services, where the Canadian healthcare space is plagued by operational challenges resulting from fragmentation, underinvestment and a lack of technology, issues which WELL’s stack is well-suited to address.

With the update, Tucci maintained a “Buy” rating on WELL and $8.00 target price, which at press time represented a projected one-year return of 66 per cent.

“We recommend accumulating shares at current levels,” said Tucci. “WELL continues to deliver growth driven by its accretive consolidation strategy. Backed by strong management and key shareholder support, we continue to like WELL and view it as the name to own in Canada for exposure to healthcare digitization.”

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