Vancouver-based healthcare technology company WELL health technologies (WELL Health Technologies Stock Quote, Charts, News, Analysts, Financials TSX:WELL) looks like an exceptionally attractive rally at current levels, according to Haywood Capital Markets analyst Colin Healey, who provided a report to clients on WELL on Monday. . Healey reiterated his “Buy” rating on the stock and price target of $12.00, which at press time represented a projected one-year return of 173.3 percent.
WELL Health Technologies is an omnichannel healthcare company with businesses including primary and specialty healthcare clinics, electronic medical records (EMRs), virtual medical platforms in the US and Canada, and digital patient engagement tools. The company on Monday provided a business update and preliminary financial figures for the first quarter of 2022, saying it expects first quarter revenue to exceed $120 million, operating adjusted EBITDA to exceed $20 million and free cash flow to shareholders of about $10 million. Based on those numbers, revenue would increase more than 369 percent year over year and about four percent sequentially.
WELL said it had 772,093 omnichannel patient visits during the first quarter, which represented a 62 percent year-over-year increase and a 10 percent sequential jump, while its Ontario-based MyHealth healthcare network had 149,906 visits. in the quarter and its US-based women’s health-focused platform, Wisp, had 142,988 asynchronous patient inquiries. Combining omnichannel, MyHealth and Wisp, patient interactions reached 1.06 million for an annual execution rate of 4.26 million patient interactions.
“We are pleased to report that WELL is on the verge of delivering its best ever quarter of revenue performance in the first quarter, which is typically a quarter that is negatively affected by seasonality,” said Hamed Shahbazi, President and CEO of WELL, in a press release. .
“Patient visits are a strong leading indicator for WELL’s business. This report confirms that WELL continues to run operationally and is favorably positioned to continue to grow organically and inorganically. We continue to believe that revenue, adjusted EBITDA and free cash flow to shareholders are key metrics for shareholders to watch, as we expect them to continue to increase per share. We look forward to reporting our first quarter results and continuing to be very positive in our business,” said Shahbazi.
Commenting on the update, Healey said preliminary first-quarter results came in slightly above his estimates. He said WELL’s US-based virtual health services business continues to do well, with Circle Medical and Wisp virtual platform now exceeding $100 million in combined annualized revenue run rate, which would represent 150 percent year-over-year growth, with positive adjusted EBITDA. On the M&A front, Healey said he anticipates WELL and its US gastroenterology and anesthesia business, CRH Medical, to be “selectively acquisitive” in 2022, which would support and provide confidence in the ability of WELL to meet its revenue projections, which call for 67 percent growth. in 2022 and eight percent in 2023.
“Given strong organic growth, dry dust on the balance sheet and WELL’s healthy portfolio of targets, we expect the likelihood of an upward adjustment to our 2022/23 guidance to remain high,” Healey wrote.
Looking at the numbers, the analyst forecasts revenue and EBITDA for 2022 of $505.4 million and $95.7 million, respectively, and for revenue and EBITDA for 2023 of $543.7 million and $108.8 million, respectively. Healey expects WELL’s earnings per share to grow from $0.04 per share in 2022 to $0.00 per share in 2023.
“WELL continues to evolve, rapidly growing its revenue, market presence and underlying financial metrics, both organically and through complementary acquisitions. Stocks have been under pressure along with the sector and broader markets. We see WELL as extremely attractive at these levels with the underlying businesses performing very well,” said Healey. “We continue to like WELL, backed by strong management and evolving technical offerings.”
WELL’s stock price has been near $4.50 for much of the year so far, after a 2020 in which the stock gained 416 percent and a 2021 in which it lost 39 percent. .
WELL’s latest M&A move was a strategic investment in Tali.ai, an AI-powered virtual assistant for healthcare providers and information retrieval engine. Tali.ai uses natural language processing algorithms to allow clinicians to ask questions and get answers from resources such as EMR software. WELL said it has made a “significant minority investment” in Tali.ai.
“We are excited to collaborate closely with Tali.ai to create a transformative tool for productivity and efficiency in healthcare. Tali’s technology enables clinicians to have a voice conversation with their EMR and quickly retrieve information at the point of care,” Shahbazi said in an April 13 press release. “This investment is a continuation of WELL’s efforts to support physicians and be at the forefront of innovative technology in healthcare.”
Disclosure: Jayson MacLean and Nick Waddell own shares of WELL Health Technologies and WELL is an annual sponsor of the Cantech Letter.