WELL Health keeps $8.50 target at PI

Following the company’s fourth quarter results, PI Financial analyst Jason Zandberg has maintained his bullish price target on WELL Health (WELL Health Stock Quote, Chart, News, Analysts, Financials TSX:WELL).

On March 21, WELL reported its Q4 and fiscal 2023 results. In the fourth quarter, the company posted Adjusted EBITDA of $30.8-million on revenue of $231.2-million, a topline that was up 48 per cent over the same period a year prior.

“We had an outstanding year in 2023 with record revenue, adjusted EBITDA [earnings before interest, taxes, depreciation and amortization], net income and patient visits,” CEO Hamed Shahbazi said. “I am proud to announce that with the inclusion of growth associated with our clinic absorption program where Well is attracting clinics to its network for nominal consideration, we achieved organic growth of 15 per cent and overall revenue growth of 36 per cent in 2023 driven by strong operating results across all our business units. Our record achievements can be attributed to the company’s discipline and focus on tech-enabling health care providers and supporting them by simplifying, modernizing and digitizing their workflows and empowering them to deliver the best health care possible. In 2024 thus far, we have begun the year with an intense focus on enhanced profitability and capital efficiency and are very pleased to provide shareholders with new and enhanced guidance which features continued top-line growth approaching $1-billion in revenues and accelerating adjusted EBITDA growth into our guidance range of $125-[million to] $130-million. What is exciting about our 2024 game plan is that it features less capital allocation and M&A activity and more emphasis on organic growth given the company’s growing attractiveness to care providers across Canada and the U.S.”

In a research update to clients March 22, Zandberg maintained his “Buy” rating and $8.50 target on WELL, implying a return of 123.1% at the time of publication.

The analyst described the results as “mostly positive”, nothing the minor dip in EBITDA was offset by revenue increases.

“We have raised our revenue estimates for FY24 and FY25 due to strong Q4 results and a positive outlook on WELL’s Canadian Patient Services business, Circle Medical, and WISP. However, our EBITDA estimates have slightly decreased due to potential weakness in Q1 and lower margin assumptions for WELL’s CRH and recruitment businesses. We maintain our C$8.50 target and remain bullish on WELL,” he said.

Zandberg thinks WELL Will post Adjusted EBITDA of $124.9-million on revenue of $955.0-million in fiscal 2024. He expects those numbers will improve to Adjusted EBITDA of $150.0-million on a topline of $1.06-billion the following year.

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