Echelon Capital Markets analyst Rob Goff says a new acquisition by WELL Health Technologies (WELL Health Technologies Stock Quote, Charts, News, Analysts, Financials TSX:WELL) supports both a potential US listing and positive revaluation. In an update to clients on September 3, Goff reiterated his \u201cBuy\u201d rating and $13.00 target price for WELL, saying the new deal should be accretive for WELL. Vancouver-based WELL Health, an omni-channel health tech company including businesses in telehealth, electronic medical records, primary healthcare clinics, digital health applications and cybersecurity, announced on September 2 a definitive stock purchase agreement to acquire approximately 53 per cent of WISP, a female-focused online reproduction and sexual healthcare business. WISP\u2019s offerings include telehealth medical consultations, 24\/7 medical support and prescription and natural medications. The transaction consists of US$41.0 million divided up into US$27.7 million to be paid in cash on the date of closing (expected in the early fourth quarter 2021) and US$6.2 million in shares priced at $9.80 per share, which would represent a 26.9 per cent premium to WELL\u2019s 15-day volume-weighted average price prior to the announcement. The deal also involves a multi-year performance-based earnout of up to US$7.4 million based on WISP maintaining its revenue performance post-closing. (All figures in Canadian dollars except where noted otherwise.) Commenting on the WISP buy, Goff said it portends a US listing for WELL. \u201cWe believe this is a strong strategic acquisition that delivers on WELL\u2019s broader motives of gaining more US exposure, while targeting the specialty\/allied care vertical and prioritizing digital health. Adding WISP to WELL\u2019s US telehealth portfolio quickly moves its gross run-rate revenues in the category to ~US$45 million ($56.7 million) when including Circle Medical \u2013 where we estimate more than 80 per cent of Circle\u2019s revenues are from virtual-based healthcare versus physical clinics,\u201d Goff wrote. \u201cAdditionally, when considering CRH\u2019s business, WELL should generate more than half of its 2022 revenues (over $250 million in gross revenue) from the US. As the Company achieves critical scale and strong growth prospects within the US, we see this as a tailwind for a prospective US listing in 2021 and further supports our positive revaluation thesis,\u201d he said. Goff said the deal would be accretive to WELL\u2019s valuation on a net revenue basis at about 2.1x EV\/Revenues prior to the earnouts and towards gross margin at 65 per cent plus WISP\u2019s gross margins. At the same time, the analyst expects some EBITDA magin dilution as WELL continues to focus on growth and scaling in the telehealth space versus near-term cash flow generation. Goff said the CRH Medical acquisition, completed earlier this year, will continue to transform the company\u2019s earnings profile and help to relieve pressure on other areas of the business, allowing them to focus on growth and scale. Assuming a transaction close date of November 1, Goff has updated his estimates on WELL and is now calling for 2021 revenue, gross profit and EBITDA of $286.2 million, $138.6 million and $56.5 million, respectively. For 2022, he is forecasting $492.4 million, $249.1 million and $111.5 million, respectively. \u201cWe remind investors of WELL\u2019s impressive Q221 revenue\/gross profit\/EBITDA results of $61.8 million\/$30.2 million\/$11.9 million, which exceeded the consensus at $56.1 million\/$25.3 million\/$9.4 million and our aggressive margin forecast at $52.6 million\/$27.8 million\/$11.1 million. With the quarter\u2019s outperformance, we moved our Q321 revenue\/gross profit\/EBITDA ahead $4.0 million\/$0.2 million\/($2.6 million) to $90.5 million\/$44.2 million\/$19.4 million, along with our TP by $1 to $13.00,\u201d Goff wrote. Goff said there\u2019s a valuation disconnect between WELL and its US peers, with WELL currently trading at an EV\/revenue multiple of 4.8x and an EV\/gross profit multiple of 9.2x, which compares to its US peers at 8.0x and 18.0x, respectively. \u201cWe remain resolutely bullish toward the telehealth industry and those companies leveraging differentiated technology, distribution, and service capabilities to provide integrated, healthcare services. We support primary, ongoing care ahead of episodic care models. WELL Health has moved aggressively in building its product and technology suite. The Company\u2019s OSCAR network and owned clinics represent an efficient distribution network to layer on products\/services and accretive acquisitions,\u201d Goff wrote. At press time, Goff\u2019s $13.00 target represented a projected 12-month return of 68.0 per cent. On Tuesday, WELL announced it would be added to the S&P\/TSX Composite Index starting on September 30, 2021, with WELL founder and CEO Hamed Shahbazi saying in a press release, \u201cWe are extremely proud and pleased to be added to the S&P\/TSX Composite Index as it is a truly momentous milestone to join such a prestigious group featuring Canada\u2019s leading companies and brands. We would like to take this opportunity to thank our shareholders for their steadfast trust and support.\u201d Disclaimer: Jayson MacLean and Nick Waddell owns shares in WELL Health Technologies and WELL is an annual sponsor of Cantech Letter.