WELL Health should show “substantial growth” in upcoming results, Stifel says

Stifel analyst Justin Keywood maintained his “Buy” rating and C$9.00 target price on WELL Health Technologies (WELL Health Technologies Stock Quote, Chart, News, Analysts, Financials TSX:WELL) in an Oct. 21 earnings preview, saying the company’s upcoming third-quarter results should demonstrate “substantial growth” in both revenue and Adjusted EBITDA, even as it pursues strategic divestitures and prepares for a potential spinout of its WELLSTAR unit.

WELL Health is a multichannel digital health technology company and Canada’s largest owner and operator of outpatient health clinics. It also provides electronic medical records services and digital health apps to doctors and clinics across Canada, while operating facilities in both Canada and the U.S.

Keywood expects WELL to report Q3 revenue of C$368-million, representing 57% year-over-year growth but slightly below his previous C$370-million forecast and consensus at C$374-million, reflecting “a somewhat tepid M&A cadence over the summer months.” Adjusted EBITDA is projected at C$54-million, or a 14.7% margin, in line with Stifel’s prior forecast and up sharply from C$33-million last year.

He said the results are likely to reaffirm the company’s full-year guidance of C$1.4–1.45-billion in sales and C$200-million in Adjusted EBITDA at the midpoint, implying another strong step-up in the fourth quarter.

“Our broader thesis is predicated on streamlining activities, including one U.S. asset divestiture by year-end and the potential spin-out or IPO of WELLSTAR early next year,” Keywood said. “A recalibrated WELL, focused on its Canadian roll-up strategy in primary and specialty care with heavy technology implementation, including AI, could broaden investor appeal and lead to better valuation.”

Stifel expects progress on the company’s planned divestitures of WISP and Circle Medical, which could collectively reduce WELL’s C$391-million debt load by roughly C$100-million and bring net leverage to about 1× next-12-month EBITDA from 2× in Q2/25. The sale of WISP is anticipated before year-end, while the Circle divestiture process may extend into early 2026.

WELL’s subsidiary WELLSTAR recently reported new growth targets tied to three signed letters of intent representing C$15-million in annual recurring revenue and C$5-million in Adjusted EBITDA (+20–25% to run-rate). Keywood noted that WELLSTAR’s last financing valued the business at C$285-million, and that a spinout or IPO could unlock further value amid favourable health-tech market multiples, citing Canadian peer VitalHub at roughly 4.9× EV/sales and 21× EV/EBITDA for 2025.

“WELL remains the leading consolidator in Canadian healthcare,” he said, noting its 210 primary and specialty care clinics and more than 80 healthcare assets across North America.

“Its model alleviates system strain by removing administrative burdens and implementing technology that empowers doctors to see more patients. We see scale benefits and margin improvement as earlier acquisitions mature, supporting long-term strategic value as a healthcare infrastructure play with potential takeout appeal.”

Keywood said WELL Health should generate C$186.6-million in Adjusted EBITDA on revenue of C$1.41-billion in fiscal 2025, consistent with management’s outlook.

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