All posts

WELL Health could unlock value with U.S. divestiture, Stifel says

Stifel analyst Justin Keywood says WELL Health Technologies (WELL Health Technologies Stock Quote, Chart, News, Analysts, Financials TSX:WELL) could unlock big value with the divestiture of some U.S. assets.

On June 18 in Toronto, WELL Health hosted its annual investor day, summarizing the progress that has brought it to nearly a billion dollars in revenue and highlighting the opportunities it sees going forward.

Keywood says WELL is trading at a discount and with a myriad of opportunities in the Canadian market and could free up a lot of cash to act on them.

“WELL has executed on 80 transactions, where the sum-of-parts could be worth more than the whole,” he wrote. “WELL detailed potential divestitures of U.S. assets, WISP and Circle Medical, not nearly reflected in current valuation, we believe. Circle Medical has grown from US$5m sales since its 2020 acquisition to a ~US$95mm run-rate. WISP has similarly seen rapid growth and focused in women’s health, with comp (HIMS) trading at favorable valuation.

In a research update to clients Keywood maintained his “Buy” rating and $10.00 price target on WELL.”

Keywood says the M&A pipeline remains robust for WELL.

“WELL still has a wide pipeline for M&A, particularly in healthcare services assets in Canada,” he wrote. “WELL highlighted an average of 300bps in EBITDA margin expansion achieved on M&A, including heavy technology implementation. WELL’s 24-asset pipeline currently, includes about half, related to absorption prospects, with only a nominal fee paid and as low as 0.02x sales. The other half are better margin-generating assets and could be acquired for 4x-8x EBITDA, by our math. WELL’s current leverage is ~2.7x or 3.5x with the convertible debenture but $55mm in FCF expected to be generated in 2024 could be used for M&A. Further, +$250mm of contributions from WISP/Circle Medical may finance future M&A.”

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

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

Tagged with: well
Nick Waddell

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.

Recent Posts

Is IMAX stock a buy? (July, 2024)

With an improving international footprint, Roth MKM analyst Eric Handler thinks there is money to be made on IMAX (IMAX… [Read More]

2 days ago

Quipt Home Medical a “Top Pick” at Ventum

With its stock on an extended slide, Ventum Capital Markets analyst Stefan Quenneville thinks there is money to be made… [Read More]

3 days ago

Sylogist wins “Top Pick” status at Ventum

Despite a strong start to the year for the stock, Ventum Capital Markets analyst Amr Ezzat remains bullish on Sylogist… [Read More]

4 days ago

WELL Health named “Top Pick” at Ventum Capital

The stock has been on fire of late, but Ventum Capital Markets analyst Rob Goff says there is more to… [Read More]

4 days ago

Ascend Wellness a Top Pick at Ventum

Want to make the second half of your year better? Pick up some shares of Ascend Wellness Holdings (Ascend Wellness… [Read More]

4 days ago

Alpha Cognition upgraded at Raymond James

With catalysts on the horizon, Raymond James analyst Rahul Sarugaser has upped his rating and price target on Alpha Cognition… [Read More]

5 days ago