WELL Health is building a Canadian healthcare powerhouse, Beacon says

Well Health Technologies (Well Health Technologies Stock Quote, Chart, News, Analysts, Financials TSXV:WELL) delivered a strong Q1 rebound that reaffirmed its Canadian growth strategy, prompting Beacon Securities analyst Gabriel Leung to maintain his “Buy” rating and $9.00 target price as the company looks to scale its core business and exit U.S. operations.

In his May 15 note on WELL Health’s Q1 results, Leung said the company beat expectations despite a one-time accounting delay. Reported revenue was $294-million, and EBITDA was $27.6-million. After adjusting for a $6.5-million revenue deferral at Circle Medical, the numbers improve to $301-million in revenue and $34-million in EBITDA, showing solid performance underneath.

“Overall, we believe the Q1 results represented a good rebound from the messier Q4 results and highlight the continued strength of the core WELL Canada businesses, which are expected to be the key value drivers going forward,” he said. “We maintain our ‘Buy’ rating and $9.00 target, which is based on our sum-of-parts valuation.”

Leung said Well Health’s Canadian operations are leading its growth. Patient Services in Canada rose 32% from last year, with patient visits up 29%, and WellStar — Well Health Technologies’ digital health division — saw 20% organic growth. He expects these areas to remain the company’s primary focus and biggest value drivers.

“Canadian Patient Services was $99.7M, which was up 32% y/y,” Leung said. “Gross margins of 42.1% were down from 45.9% last year, largely reflecting revenue mix, timing of clinic absorptions, and some catch-up payments in the Diagnostic division last year.

“There were 1.6M patient visits in Q1, which was an (increase) of 23% y/y. Canadian Patient Services visits increased 29% (including ~2% same store and 10% clinic absorptions) while U.S. Patient Services visits increased 16%.”

Leung expects Well Health to generate $194.6-million in Adjusted EBITDA on $1.43 billion in revenue for fiscal 2025. Looking ahead to 2026, he forecasts revenue rising to $1.56 billion, with Adjusted EBITDA holding steady at $194.1-million.

He said the company plans to sell off its remaining U.S. businesses, including WISP and Circle Medical, over the next year or two. The money from those sales will be used to grow its Canadian operations, with a goal of reaching $ 800 million in revenue and $100-million in EBITDA in Canada within two years.

“WELL reiterated its 2-year target of hitting (run-rate) ~$800M in revenues with ~$100M in EBITDA for WELL Canada,” Leung said.

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