This analyst just raised his price target on WELL Health Technologies
Paradigm Capital analyst Daniel Rosenberg maintained his “Buy” rating and raised his 12-month target to $8.00 from $7.75 for WELL Health Technologies (WELL Health Technologies Stock Quote, Chart, News, Analysts, Financials TSXV:WELL).
He said in an August 14 research note that the company reported Q2 results ahead of expectations, supported by both organic growth and M&A.
The Canadian clinics segment continued to deliver strong performance, with the clinic absorption program proving highly accretive. The company also fully consolidated its HEALWELL subsidiary into its financials. Management remains focused on unlocking sum-of-parts value and is pursuing the divestiture of U.S. assets.
“WELL is establishing itself as a large provider of tech-enabled healthcare delivery,” Rosenberg said. “For investors, it is an M&A consolidator and capital allocator, that is driving value within the massive healthcare market that is ripe for digital transformation. Leadership has executed on disciplined, accretive M&A to acquire valuable technology that can scale with eyes to monetize several investments in the near and medium term. Secular changes, accelerated by the pandemic, support WELL’s strategy to leverage technology and drive efficiencies in healthcare, in turn improving patient outcomes while generating shareholder value.”
Q2 revenue was $356.7-million, up 56.9% year over year and slightly ahead of consensus at $353.5-million, with growth driven by acquisitions, including $40.5-million from HEALWELL. Adjusted EBITDA rose 230.6% to $49.7-million, above consensus of $48.5-million, while adjusted EPS of $0.10 was in line. The company delivered over 1.7 million total patient visits in the quarter, up 21% year over year, including over one million Canadian patient visits, a quarterly milestone, up 38% year over year.
WELL ended the quarter with $98.9-million in cash and $598.8-million in total debt, compared with $103.2-million and $441.5-million, respectively, last quarter. The increase in net debt reflected the HEALWELL consolidation.
Management expects further deleveraging in the coming quarters, potentially aided by a U.S. asset sale or a WELLSTAR spin-out.
Canadian core businesses, Canadian Clinics, WELLSTAR, and CYBERWELL, generated $131.4-million in revenue, up 40% year over year, and $23-million in Adjusted EBITDA, up 76%. Management expects this segment to reach $100-million in annualized run-rate Adjusted EBITDA by mid-2026, two quarters earlier than previously expected.
Longer term, the company aims to capture 8–10% of the Canadian market, representing about $4.5-billion in annual revenue, $650-million in Adjusted EBITDA, and more than 1,400 clinics.
Rosenberg said WELL Health should do $200.6-million in Adjusted EBITDA on revenue of $1,447.8-million in fiscal 2025, up from his prior estimates of $196.3-million on $1,423.9-million. He thinks those numbers will ease slightly to $199.4-million on revenue of $1,599.2-million in fiscal 2026, compared with his previous forecast of $187.7-million on $1,548.8-million.
Disclosure: WELL is an annual sponsor of Cantech and Nick Waddell owns shares of the company
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Rod Weatherbie
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Rod Weatherbie is a journalist based in Prince Edward Island. Since 2004, he has written extensively about the Canadian property and casualty insurance landscape. He was also a founder and contributing editor for a Toronto-based arts website and a PEI-based food magazine. His fiction and poetry have been featured in The Fiddlehead, The Antigonish Review, and Juniper.