WELL keeps $10.00 price target at Stifel

Following the company’s second quarter results, Stifel analyst Justin Keywood remains bullish on WELL Health Technologies (WELL Health Technologies Stock Quote, Chart, News, Analysts, Financials TSX:WELL).

On August 14, WELL posted its Q2, 2024 results. The company reported Adjusted EBITDA of $30.9-million on revenue of $243.1-million, a topline that was up 42% over the same period a year prior.

“The second quarter of 2024 exceeded expectations, showcasing the strength of our technology-driven care platforms,” CEO Hamed Shahbazi said. “We are very pleased to report 42% year-over-year revenue growth, driven by accelerated organic growth of 21% which includes contribution from our absorption program where we recruit clinics to our network for nominal cost. This marks our 22nd consecutive record-breaking revenue quarter, highlighting our sustained momentum. We are proud to once again improve our annual revenue guidance to $970 million to $990 million and report that we are on track to achieve one billion in revenues by the end of 2024 if we include acquisitions that are currently in our acquisition pipeline. Additionally, we are maintaining our guidance on Adjusted EBITDA in the upper range of $125 million to $130 million despite facing additional costs as a result of our projection of materially reduced share issuances for stock-based compensation. We remain focused on enhancing profitability and capital efficiency and continue to project a 30% year-over-year increase in free cash flow to shareholders in 2024. Our strong organic growth and healthy cash flows increasingly allow us to fund acquisitions, earn-outs, and employee incentives with cash. We are still on track to deliver record revenue, Adjusted EBITDA, and Net Income in 2024, while increasing cash flows, reducing debt, improving leverage, lowering share issuances, and decreasing earn-out payments.”

The analyst provided a snapshot of the quarterly results.

WELL reported good Q2 results, in line with estimates but with points of strength including bumped-up guidance and positive FCF generation to shareholders (removing NCI),” he wrote. “With a $1b 2024 sales goal in sight, optimization efforts are continuing to improve margins with recently ‘absorbed clinics,’ currently generating no margin but with expected expansion ahead. WELL is also in the process of potentially divesting two U.S. assets, WISP and Circle Medical, that could bring net proceeds to WELL of +$200mm, deleverage the balance sheet and serve as near-term catalysts.”

In a research update to clients August 14, Keywood maintained his “Buy” rating and $10.00 price target on WELL.

The analyst thinks WELL will post EBITDA of $127.1-million on revenue of $982.6-million in fiscal 2024.

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