WELLSTAR Technologies is off to a great start, this analyst says

WELLSTAR Technologies’ (WELLSTAR Technologies Corp. Stock Quote, Chart, News, Analysts, Financials TSXV:WSTR) first quarterly results as a public company exceeded revenue and earnings expectations, strengthening Haywood Securities analyst Gianluca Tucci’s outlook for the Canadian healthcare technology provider.

Tucci maintained his “Buy” rating and $10.25 target on Nov. 11, offering that the company’s recurring revenue, expanding customer base and opportunities in artificial intelligence support further growth.

“WELLSTAR’s first print as a public company was a beat on both lines,” Tucci said.

WELLSTAR reported third-quarter revenue of $24.1-million, up 33% year-over-year and ahead of Tucci’s $23.8-million forecast and consensus of $24-million. Adjusted EBITDA reached $5.1-million, exceeding his $4.5-million estimate and consensus of $4.8-million. The Adjusted EBITDA margin improved to 21% from 20.2% in the previous quarter.

Subscription and support revenue increased 35% to $21-million, representing 87% of total revenue, while annual recurring revenue grew 27% to $83.7-million. Billing and Practice Management revenue rose 54% to $9-million, supported by acquisitions. Clinical Platform Group revenue increased 24% to $8.4-million, helped by electronic medical record (EMR) systems and adoption of Nexus AI, while Digital Health Networks revenue grew 21% to $6.7-million.

WELLSTAR began trading on the TSX Venture Exchange on Oct. 1 after completing its public listing transaction and a $50-million financing. It ended September with $93-million in cash and no debt, providing funding for acquisitions and product development.

Tucci thinks the company’s growth opportunities extend beyond the adoption of electronic medical records, which are already widely used across Canada.

“While EMR adoption has largely matured, significant opportunity remains in connecting fragmented workflows and reducing administrative burden across the healthcare ecosystem,” he said. He believes healthcare providers will increasingly adopt technology that connects patient information across systems and automates administrative work, allowing physicians to spend more time treating patients.

WELLSTAR’s OceanMD referral platform and Nexus AI tools could benefit from that demand by improving connectivity between healthcare providers and automating clinical documentation.

“WELLSTAR is building what we believe is Canada’s leading healthcare technology platform, combining EMRs, interoperability networks, billing solutions, managed IT services, and AI-enabled workflow automation into a single ecosystem,” Tucci said. “The Company reaches more than 40% of Canadian healthcare providers through at least one product or service, generates predominantly recurring revenue, and combines approximately 20% organic growth with ~20% EBITDA margins.”

Tucci said the company’s extensive customer network also creates opportunities to sell additional products to existing users, while acquisitions could expand its presence in Canada’s fragmented healthcare technology market.

The analyst raised his fiscal 2026 revenue forecast to $92.8-million from $92.3-million and his Adjusted EBITDA estimate to $18.3-million from $17.5-million. For fiscal 2027, he increased his revenue forecast to $111.4-million from $110.8-million and his Adjusted EBITDA estimate to $24.2-million from $23.2-million. Tucci expects revenue to reach $131.4-million and Adjusted EBITDA to increase to $29.9-million in fiscal 2028.

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