Trending >

WELL Health keeps $11.00 price target at Stifel

WELL stock

Following a business update from the company, Stifel analyst Justin Keywood remains bullish on WELL Health Technologies (WELL Health Technologies Stock Quote, Chart, News, Analysts, Financials TSX:WELL).

WELL today provided a business update, noting the acquisition of new clinics on its WELL Network and cost savings initiatives.

“2023 was a landmark year for WELL, marked by significant growth, record revenues and EBITDA but perhaps what encourages us the most is how doctors and clinic owners across the country are proactively approaching WELL for support on managing their clinics,” CEO Hamed Shahvazi said. “This has caused an unprecedented growth in the inbound interest in our owned and operated patient care business leading to an acceleration in our organic growth. Simply put, our growth is no longer just limited to buying clinics or developing greenfield sites, we are now attracting and recruiting entire clinics with a full roster of patients and providers for nominal consideration. We refer to this as our clinic absorption program. This is because care providers are increasingly trusting WELL and looking to be ‘absorbed’ by WELL such that they be supported with professional management that allows them focus on delivering the best care possible. We are coupling this shift of rapid growth due to reduced physician and clinic acquisition costs with an emphasis on streamlining and cost optimizing our operations so that we can scale profitably and demonstrate the operating leverage that exists in our business. We believe it is critical for us to do this so that we can meet the industry demand and be able to continue to support our community of patients and providers.”

Keywood summarized the development.

“WELL provided a business update, highlighting an M&A pipeline for clinic assets that includes 13 ‘absorption’ prospects, along with ~30 ‘non-absorption’ targets and ~43 in total under LOI,” he explained. “The ‘absorption model’ refers to WELL essentially taking over the operations of a clinic for a nominal amount, such as 0.1x sales. In return, doctors are alleviated with the administrative burdens of running a clinic and a ~30/70 split in billings results for WELL/doctor. As an example, WELL essentially absorbed five clinics in Q4, generating +$33mm in sales for $400k or 0.1x sales. WELL’s ‘non absorption’ pipeline is assumed to comprise Specialty Care with better margins and could be acquired for ~1x-1.5x sales (table below). WELL is the largest owner/operator of clinics in Canada at 167. The stock trades at 1.5x Fwrd sales and 11x EBITDA. WELL last reported $42mm in cash and net debt/LTM adj. EBITDA of 2.7x, or 3.3x (leases).”

Keywood, in a research update to clients January 16, maintained his “Buy” rating and one-year price target of $11.00 on WELL, implying a return of 184.2 per cent at the time of publication.

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

We Hate Paywalls Too!

At Cantech Letter we prize independent journalism like you do. And we don't care for paywalls and popups and all that noise That's why we need your support. If you value getting your daily information from the experts, won't you help us? No donation is too small.

Make a one-time or recurring donation

About The Author /

Cantech Letter founder and editor Nick Waddell has lived in five Canadian provinces and is proud of his country's often overlooked contributions to the world of science and technology. Waddell takes a regular shift on the Canadian media circuit, making appearances on CTV, CBC and BNN, and contributing to publications such as Canadian Business and Business Insider.
insta twitter facebook