AIDX is on the right track, Beacon says

Its fourth quarter results are in the books and Beacon Securities analyst Gabriel Leung is still bullish on Healwell AI (Healwell AI Stock Quote, Chart, News, Analysts, Financials TSX:AIDX).

On March 28, AIDX reported its Q4 and fiscal 2024 results. In the fourth quarter, the company lost $6.76-million on revenue of $1.92-million.

“Fourth quarter was a transformative period for the Company marked by our relaunch as HEALWELL AI and our new mission to improve healthcare and save lives through early disease detection with the use of leading AI and data science technologies,” said CEO Dr. Alexander Dobranowski. “In the quarter, we achieved significant milestones including the establishment of a groundbreaking partnership with WELL Health Technologies, securing approximately $29.5 million through convertible debt and equity financings, and completing the acquisition of a majority interest in Pentavere, one of the leading healthcare AI platforms in Canada. I am grateful for what our team has been able to accomplish in such a short amount of time and excited with our continued trajectory as we show no signs of slowing down.”

Leung summarized where AIDX is at right now.

“Looking into 2024, the company is now on a pro-forma revenue runrate of ~$20M. Furthermore, based on its M&A funnel, management believes that it has the potential to double its revenue run-rate to $40M with existing cash on hand (of ~$11M against $10M of in-themoney convertible debenture). However, as previously noted, given the company’s negative EBITDA position, we believe there is a risk of dilution from future financings to fund operations and M&A,” he wrote. “Based on the company’s update call, we believe its funnel of organic opportunities with life science companies for its AI and data science business is full and it does expect some RFPs to be decided shortly. Likewise, as previously noted, the company’s M&A funnel (consisting of AI-based companies, along with more mature software companies) remains robust. The company’s strategic alliance with WELL is moving in the right direction with the ongoing integration of its AI platform into WELL’s EMR software. The integrated platform can be used by providers for rare disease detection, while also providing a patient data repository for HEALWELL to conduct its patient screening services for life sciences customers.”

In a research update to clients April 2, Leung maintained his “Speculative Buy” rating and price target of $1.10 on AIDX, implying a return of 18 per cent at the time of publication.

The analyst thinks the company will post EBITDA of negative $8.4-million on revenue of $22.0-million in fiscal 2024. He expects those numbers will improve to EBITDA of negative $2.6-million on a topline of $30.1-million the following year.

“Over the coming year, we believe new customer announcements, the continued execution of its M&A strategy, and an improving EBITDA profile represent key catalysts for the stock,” Leung concluded.

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