Here’s why WELL Health is down and why you should buy it: Ventum

Delayed financials from WELL Health (WELL Health Stock Quote, Chart, News, Analysts, Financials TSX:WELL) mean an opportunity for investors.

On March 28, WELL announced that its audited financial statements would be delayed by a request from Civil Division of the United States Attorney’s Office for the Northern District of California which is investigating certain billing practices.

“The company does not expect the resolution of the matter to have a material effect on the company’s cash position or available resources. The company and Circle Medical are currently working diligently to finalize the company’s annual consolidated financial statements at the earliest possible date. The company currently expects to be in a position to file the required filings on or before April 15, 2025,” WELL said.

Goff summarized the event, offering that the potential effect is minimal.

“WELL announced that the filing of its Q4/24 and 2024 results have been delayed as the Company addresses a review by the Civil Division of the US Attorney’s Office for the Northern District of California (USAO),” the analyst wrote. “USAO is investigating certain of Circle Medical’s US billing practices. WELL has been responding to a voluntary request for information since September 2024. Where Circle’s proportionate EBITDA contribution represents <3% of WELL's EBITDA, WELL's leverage to Circle is contained within its value to the Company's SOTP valuation, which represents ~C$0.77/shr or 9.7% of our C$8.00 SOTP valuation. The review of Circle's revenues has, in turn, delayed WELL's year-end filings. WELL anticipates filing its Q4/24 and full-year results on or before April 15, 2025. Additionally, we reiterate our Q4 and 2025 forecasts ahead of the release." In a research update to clients March 31, Goff maintained his "Buy" rating and price target of $8.00 on WELL, implying a return of 61% at the time of publication. The analyst thinks the company will post EBITDA of $148.6-million on revenue of $1.17-billion in fiscal 2025. He expects those numbers will improve to EBITDA of $177.1-million on revenue of $1.26-billion in fiscal 2026. The analyst believes the impact of the news is simply headline risk. "We could see near-term pressure about the announced delay," he added. "The review may lead to revisions in Circle's 2024 revenues and potential sale value, where WELL's stake in Circle represents roughly 9.7% of our C$8.00 SOTP valuation. Any reduction in deemed value for Circle should be considered in the context of WELL's potential gains from the recent move to buy Canada. Across HEALWELL and WELLSTAR, WELL is exceptionally positioned to capture a strong share of the literally hundreds of millions of government RFPs expected over the next few years. WELL remains committed to the sale of both WISP and Circle as it looks to redeploy funds toward its aggressive consolidation strategy in the Canadian market." Disclosure: Nick Waddell owns shares of WELL Health and the company is an annual sponsor of Cantech Letter.