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WELL Health is a Buy, says Haywood

Haywood Capital Markets analyst Gianluca Tucci likes the look of the new acquisition made by WELL Health Technologies (WELL Health Technologies Stock Quote, Charts, News, Analysts, Financials TSX:WELL). Tucci reviewed WELL’s purchase of US-based CarePlus in a Thursday update and reiterated a “Buy” rating on the stock, saying investors can gain exposure to the healthcare digitization industry through owning WELL.

WELL announced on Thursday that wholly owned subsidiary CRH Medical, a gastroenterology and anaesthesia business in the United States, has completed the acquisition of Atlanta-based CarePlus Management. CarePlus has business in anaesthesia staffing and services and provides billing, revenue cycle management (RCM) and collection services for healthcare entities through its Premier Choice Billing platform.

“As a healthcare provider focused company, we’re thrilled to acquire a successful and profitable recruitment platform, built and operated by a best-in-class recruitment team,” said WELL Founder and CEO Hamed Shahbazi in a press release. “CarePlus will help CRH further optimize anesthesia services, streamline staffing and enhance revenue cycle management, empowering ASC operators and healthcare providers to focus on providing outstanding patient care.”

The purchase price has not been disclosed, but Tucci, who called the event an overall positive for WELL, said the deal was funded from cash on hand and credit facilities. Tucci said CarePlus will add about $100 million in annual revenue to WELL and he noted that CarePlus’ recruitment company RADAR has business in 29 states, a database of over 70,000 providers and has served over 150 clients to date.

“We adjust our 2023 revenue estimate upwards while maintaining our Adj EBITDA forecast while we wait for additional colour on its Q2/23 call. We do move our 2024 Adj EBITDA and revenue estimates upwards on margin enhancement activities and preliminary cross-sell,” Tucci wrote. 

“We continue to believe WELL is well positioned in its efforts to monetize further growth via its organic and inorganic roll up strategy,” he said.

With the announcement, WELL also issued revised upwards guidance for 2023, now calling for revenue at a midpoint of $750 million from the previous $700 million. The company maintained adjusted EBITDA guidance growth of at least ten per cent.

“CarePlus carries lower margins than CRH but we believe WELL is capable of transforming the margin profile over a one- to two-year period as has been the case for many of its past acquisitions,” Tucci wrote.

With his “Buy” rating, Tucci maintained a 12-month target of $8.00 per share, which implied a projected return at the time of publication of 86 per cent.

“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,” he said.

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

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About The Author /

Jayson is a writer, researcher and educator with a PhD in political philosophy from the University of Ottawa. His interests range from bioethics and innovations in the health sciences to governance, social justice and the history of ideas.
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