HEALWELL AI wins “Buy” rating at Eight Capital

With new life breathed into it by Canadian healthcare giant WELL Health, HEALWELL AI (HEALWELL AI Stock Quote, Chart, News, Analysts, Financials TSX:AIDX) is a digital health stock investors should be buying, says Eight Capital analyst Christian Sgro.

In an report to clients October 17, the analyst initiated coverage of AIDX with a “Buy” rating and a one-year price target of $1.50, implying a return of 142 per cent at the time of publication.

“HEALWELL is a unique growth opportunity at the intersection of healthcare and AI, offering scarcity value in the public markets,” the analyst argued. “The company’s mission is preventative care, leveraging technology to identify at-risk patients and drive better healthcare outcomes. With material financial and strategic alignment with WELL Health (WELL-T, BUY, C$10.00 TP), we believe HEALWELL is in the early innings of a data-driven land-grab strategy in healthtech.”

Sgro thinks AIDX will post Adjusted EBITDA of negative $3.1-million on revenue of $12.8-million in fiscal 2024. He expects those numbers to improve to EBITDA of negative $300,000 on a topline of $18.1-million the following year.

The analyst says that while HEALWELL has a compelling platform of it own, the relationship with WELL Health is a distinguishing feature that provides a myriad of opportunities.

“WELL has restored HEALWELL’s financial standing and has a path to 40%+ economic and 80%+ voting control,” he noted. “We see WELL as a motivated partner in the interest of their own shareholders. This partnership has become a key competitive differentiator for HEALWELL in the company’s effort to drive value with scale. As noted above, a large problem for pharma, clinical trials, and ongoing development is the ability to onboard and engage physicians. As part of a strategic alliance agreement, HEALWELL has access to WELL’s network and data-lake of millions of unique patients’ anonymized healthcare data.

Sgro says this simple scale of what AIDX can do has expanded drastically.

“As we think of the opportunity in Canada, HEALWELL previously shared that the company had access to 3M+ patient records prior to the recent transactions with WELL. As physicians are onboarded onto the platform, we estimate this penetration can grow closer to a base of 7-10M unique patients, or a quarter of the country’s population. This is based on WELL’s tech-enabled provider network, where the company has stated that it supports more than one out of every four doctors in Canada.”

Disclosure: Nick Waddell owns shares of WELL Health and the company is an annual sponsor of Cantech Letter.