AIDX stock is a double, Eight Capital says

Its second quarter results are in the books and Eight Capital analyst Christian Sgro thinks there is still money to be made on HEALWELL AI (HEALWELL AI Stock Quote, Chart, News, Analysts, Financials TSX:AIDX).

On August 12, AIDX reported its Q2, 2024 results. The company posted and Adjusted EBITDA loss of $3.7-million on revenue of $5.44-million, a topline that was up 205%, year-over-year.

“During the quarter, we not only delivered record revenue and profitability, but we also significantly improved our balance sheet,” CEO Dr. Alexander Dobranowski said. “We successfully completed a $20 million equity financing sourced mainly from long term institutional investors as well as settled and removed a number of liabilities incurred in past years which led to a significant net profit in Q2. The combination of these two events has notably strengthened our financial position, providing us with the necessary resources to advance our strategic objectives. The enhanced financial stability enabled us to complete the acquisitions of BioPharma and VeroSource on July 1, 2024, two pivotal moves that align seamlessly with our growth strategy. These acquisitions not only broaden our market presence but also enhance our capabilities, positioning us for robust expansion and long-term success.”

Sgro says this was a good result.

“June-quarter performance met Street expectations and highlighted the company’s strengthened balance sheet position,” he wrote. “With the transformative acquisitions of VeroSource and BioPharma all closing at quarter-end, this makes Q3/24 the first full quarter representative of the company’s communicated, scaled $65M run-rate revenue. With ~$20M of cash to close the quarter, the company reiterated its goal of achieving near $100M of run-rate revenue by yearend. The pipeline appears diverse in terms of size and capability, with the company focused on expanding the foundational AI core across its network of assets.”

In a research update to clients August 13, Sgro maintained his “Buy” rating and price target of $4.00 on AIDX.

The analyst thinks AIDX will post an Adjusted EBITDA loss of $10.5-million on revenue of $45.9-million in fiscal 2024. He expects those numbers will improve to an Adjusted EBITDA loss of $1.2-million on a topline of $90.7-million in fiscal 2025.

“We are maintaining our BUY rating and target price of C$4.00 based on 10.0x 2025E EV/revenue (from 12.0x) and increased estimates. HEALWELL currently trades at 5.0x and AI-focused healthcare peers trade at 8.8x. Key US peer Tempus AI (TEM-US, Not rated) trades at 6.7x,” he added.

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