Buy WELL Health for a 131% return, Stifel says

Stifel analyst Justin Keywood has maintained a “Buy” rating on WELL Health Technologies (WELL Health Technologies Stock Quote, Chart, News, Analysts, Financials TSXV:WELL) with a C$9.00 target in a June 24 note, after the company announced plans to add 45,000 new patient openings across its 210-plus Canadian clinics through international physician recruitment.

WELL aims to onboard 20 more internationally trained doctors in 2025, aligning with Ontario’s $1.8-billion plan to connect two million patients to primary care and ease licensing barriers for foreign-trained physicians. Keywood said WELL, which holds the largest clinic market share in Ontario, is well-positioned to benefit. He noted that the stock trades near 52-week lows amid U.S. billing challenges, which may ease later this year, and highlighted the potential for a share re-rating tied to U.S. asset divestments.

“The Ontario Gov’t action plan includes broad initiatives to connect unattached patients to doctors and clinics, comprising mainly of doctor recruitment efforts and technology investment,” Keywood said. “The Ontario Gov’t previously relaxed barriers for international physicians to work in Ontario immediately, including certain re-education programs. The action plan outlines the addition of ~80 primary care teams in 2025 at a $235mm investment and 305 new teams by 2029.”

Through acquisitions, WELL has grown to over 210 primary and specialty care clinics, giving it the top market share in Canada, but still only 1% of a $30 billion market. In contrast, U.S. primary care is already 55% consolidated, aligning with WELL’s goal to scale its Canadian network tenfold. The model helps ease system strain by reducing administrative tasks and introducing new technology, allowing doctors to treat more patients. Billing is typically split 70/30, with doctors retaining the larger share. As acquired clinics mature, margins improve, supporting WELL’s long-term potential as a healthcare infrastructure platform.

However, Keywood noted that Canadian consolidation still trails the U.S. significantly, at just 2% compared to 50%.

“The U.S. primary care market has undergone substantial consolidation from the early 2010s to 2020 and 29% of the market to ~55%, he said. “Insurers, hospital groups and private equity have been the primary consolidators with the pursuit of bargaining leverage and higher prices, as well as achieving synergistic patient volume flows, which also contribute to greater pricing. The largest employer of U.S. physicians remains UnitedHealthGroup.”

Keywood outlined four main pillars of his investment thesis for WELL Health. First, he said the company is expected to “add scale” by acquiring or building more clinics to support future growth. Second, recent acquisitions of tech assets are seen as “adding valuable SaaS revenue,” which could lift WELL’s valuation, particularly given billing code changes that better integrate virtual care.

Third, he noted that with WELL now exceeding one million patient visits annually, the company has “a unique environment to test and develop new technologies using rich patient data.” Finally, he said organic growth could accelerate as WELL rolls out these technologies across Canada and into the U.S., and adds more doctors to existing clinics, including through expanded virtual care capacity.

Disclosure: Cantech’s Nick Waddell owns shares of WELL and the company is an annual sponsor of the publication.

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