AIDX plus WELL is a “match made in heaven”, Beacon says

The combination of WELL Health Technologies and HEALWELL AI (HEALWELL AI Stock Quote, Chart, News, Analysts, Financials TSXV:AIDX) is a match made in heaven, says Beacon Securities analyst Gabriel Leung.

In a research report to clients November 6, Leung initiated coverage of AIDX with a “Speculative Buy” rating and one-year price target of $1.10.

The analyst says that with WELL becoming HEALWELL’s largest shareholder, a whole world of expansion has opened up to the latter.

“In our opinion, HEALWELL’s exclusive access to WELL’s vast repository of patient records and healthcare provider reach represents a massive competitive advantage as it provides HEALWELL with enormous channel access to extensive healthcare data, along with providers and patients who can benefit from its AI decision support tools,” Leung argued. “HEALWELL’s AI technology supports physicians in earlier diagnosis of rare and complex conditions, along with patient care and treatment optimization, helping to improve clinical outcomes and quality of life for patients. Life sciences / pharmaceutical companies also benefit in the area of commercial model effectiveness and efficiency, accelerating linkage to appropriate care earlier in a patient’s disease progression and accelerating patient recruitment/matching for clinical trials, which can significantly benefit scientific discovery and time to market for new drugs and indications.”

It’s perhaps the only hot money sector in junior tech right now, but Leung says AIDX comes about its AI pedigree honestly.

“AI solutions, such as big data applications, along with machine and deep learning algorithms can be leveraged to harness the vast amounts of data that currently sit idle in physicians’ practices and be put to good clinical and administrative use (such as helping to reduce administrative burden, supporting clinical decision-making for earlier diagnoses, and patient care optimization to improve patient outcomes),” he wrote. “We believe this is the key area of focus of HEALWELL’s AI efforts.”

Leung thinks AIDX will post EBITDA of negative $6.7-million on revenue of $9.2-million in fiscal 2023. He thinks those numbers will improve to EBITDA of negative $4.3-million on revenue of $11.7-million in fiscal 2024.

“We estimate that HEALWELL is on a ~$9–10M revenue run-rate with an EBITDA loss,” Leung added. “However, we expect this financial profile to change
quickly via organic growth, along with a strong pipeline of M&A opportunities to strengthen HEALWELL’s technology / research health services businesses. We are initiating coverage with a Speculative Buy rating and C$1.10 target price, which is based on 10x CY24e EV/Sales. We believe near-term catalysts, include M&A, along new deal announcements with large life sciences / pharmaceutical / medical device companies.

Disclosure: Nick Waddell is a shareholder of AIDX and WELL Health.