Buy WELL Health Technologies for a double, this analyst says

WELL Health Technologies’ (WELL Health Technologies Stock Quote, Chart, News, Analysts, Financials TSX:WELL) Canadian clinic operations delivered strong third-quarter growth, while the potential sale of its U.S. businesses could provide the next opportunity to increase shareholder value, according to Haywood Securities analyst Gianluca Tucci.

On Nov. 10, Tucci maintained his “Buy” rating and $8.00 target on the Vancouver-based healthcare technology company, saying its Canadian operations are becoming an increasingly important source of earnings.

“WELL delivered an Adj. EBITDA beat on in-line revenue, reinforcing our view that Canadian Patient Services is the earnings engine,” Tucci said.

WELL reported third-quarter revenue of $407.4-million, up 12% year-over-year and broadly in line with consensus of $408.5-million. Adjusted EBITDA reached $50.9-million, exceeding Tucci’s $47.2-million estimate and consensus of $46.8-million. Canadian Patient Services revenue increased 49% to $164.9-million, while Adjusted EBITDA rose 82% to $25.7-million. Patient visits increased 20% to 1.3 million across 302 clinics, with same-clinic sales up 12%.

Tucci said the Canadian division reached its target of $100-million in annualized Adjusted EBITDA one quarter ahead of schedule, supported by higher patient volumes and productivity improvements from AI-enabled administrative tools.

The company’s U.S. Patient and Provider Services business generated $182.9-million in revenue, down 8%, while Adjusted EBITDA declined to $29.1-million from $46.3-million a year earlier. The comparison was affected by revenue recognized at Circle Medical in the prior-year quarter.

The analyst thinks the potential sale of WELL’s U.S. operations could be an important catalyst for the stock, allowing the company to concentrate its resources on expanding its Canadian healthcare network.

“WELL has reiterated its intention to divest its US assets, including CRH, Wisp, and Circle, as part of a broader strategy to sharpen focus on its Canadian core,” Tucci said.

Tucci believes the outcome of the U.S. midterm elections could strengthen demand for healthcare assets, potentially improving the company’s prospects for completing the sales. “Net-net, we view the print as positive for the thesis and view the next major catalyst(s) to unlock value being the US strategic alternatives process which is advancing,” he said.

WELL is actively pursuing acquisitions in Canada. Its potential acquisition pipeline represents more than $390-million in annual revenue, with discussions involving over 20 targets operating more than 100 clinics. Tucci said these acquisitions could support further earnings growth as WELL expands its network and introduces technology to improve clinic productivity.

Management maintained its fiscal 2026 Adjusted EBITDA guidance of $185-million to $195-million and updated its revenue outlook to approximately $1.58-billion. WELL is targeting annual Adjusted EBITDA growth above 10%, excluding Circle Medical, and a combined annualized revenue run rate exceeding $1-billion for its Canadian clinics and WELLSTAR operations by the end of 2028.

Tucci reduced his fiscal 2026 revenue forecast to $1.58-billion from $1.61-billion and his Adjusted EBITDA estimate to $189.1-million from $190.4-million. For fiscal 2027, he lowered his revenue forecast to $1.68-billion from $1.74-billion and his Adjusted EBITDA estimate to $205.4-million from $209-million.

Nick Waddell owns shares of WELL Health and the company is a sponsor of Cantech Letter

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