HEALWELL AI acquisition gets thumbs up at Beacon

A new acquisition by HEALWELL AI (HEALWELL AI Stock Quote, Chart, News, Analysts, Financials TSX:AIDX) is winning praise from Beacon Securities analyst Gabriel Leung.

On January 26, AIDX announced it would acquire Electronic Health Records firm Intrahealth from WELL Health, which had acquired it in 2021.

“Intrahealth is a highly respected global EHR with a rich history of supporting major health systems in three countries across two continents,” said AIDX CEO Dr. Alexander Dobranowski. “Intrahealth will not only add mature SaaS and digital revenue, strong positive [earnings before interest, taxes, depreciation and amortization], and cash flows, but it will also serve as a platform to showcase the effectiveness of our industry-leading [artificial intelligence] solutions. Our firm belief is that the future of health care will be centered around AI enabled EHRs due to the enormous potential scope to positively impact health care providers and their patients. EHR systems that are not outfitted with AI capabilities either natively or through an AI powered clinical decision support system will not be able to retain their customers in the future. This presents an enormous market opportunity for companies such as Healwell who have the technology to drive this industry forward.”

WELL said it expected that Intrahealth would generate more than $12-million in revenue. HEALWELL will acquire all the shares of the company for approximately $24.2-million.

Leung says there are benefits to AIDX taking control of this asset.

“From HEALWELL’s perspective, we believe there are several benefits to the transaction. First, it adds mature, high margin revenues and cashflow to support the growth of HEALWELL’s business,” the analyst said. “Second, the integration of HEALWELL’s AI capabilities with Intrawest’s EHR platform should result in the creation of a powerful AI-powered EHR platform with next-generation clinical decision support capabilities that will provide patients and providers with powerful tools to drive better healthcare outcomes at lower costs. Third, we believe the integration could also drive more data and therefore interest from healthcare groups for HEALWELL’s healthcare research and technology solution offerings.”

In a research update to clients January 26, Leung maintained his “Speculative Buy” rating and 12-mont price target of $1.10 on AIDX, implying a return of 53 per cent at the time of publication.

The analyst thinks the company will post an Adjusted EBITDA loss of $6.6-million on revenue of $22.7-million in fiscal 2024. He expects those numbers will improve to an EBITDA loss of $2.6-million on a topline of $30.1-million the following year.

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