After growth stocks across sectors were pummelled in 2022, they staged a stellar comeback year to date. One such TSX growth stock is Well Health (TSX:WELL), which is currently valued at $1 billion by market cap.
Shares of Well Health fell by 42% in 2022 and have surged almost 55% year to date. If market sentiment improves in the last quarter of 2023, the TSX stock can easily double in 2023, meaning it has to gain another 30% from current levels.
Let’s see why I’m bullish on Well Health stock right now.
Is Well Health stock a buy, sell or hold?
Despite its recent gains, Well Health stock trades 54% below all-time highs. But the health-tech company has also created significant wealth for long-term shareholders, rising over 4,000% since its initial public offering in 2016.
Well Health aims to equip healthcare providers with digital tools and services, which should enhance productivity and result in improved patient care. Armed with an omnichannel business model and a robust practitioner enablement platform, Well Health generates predictable revenue.
The company has focused on highly accretive acquisitions in recent years, allowing it to increase sales from $32.8 million in 2019 to $569 million in 2022. The acquisitions of physical and digital healthcare assets have allowed Well Health to enjoy powerful network effects driving organic growth higher.
Well Health’s omni-channel patient services are delivered at scale via a network of primary, secondary, specialized, diagnostic, and integrated care facilities. It also operates the largest outpatient medical clinic network in Canada.
Its virtual services include telehealth, billing and revenue cycle management, ePharmacy, digital booking, e-referral, workflow automation, and several other products.
How did Well Health perform in Q2 of 2023?
Well Health ended the second quarter (Q2) with 3,207 practitioners, 181 clinics, and 116 physical facilities allowing it to increase patient visits to 1 million from 855,000 in the year-ago period. Its sales rose to $171 million in the June quarter, up from $27.8 million in the year-ago period. It was the 18th consecutive quarter where Well Health posted record sales.
This rapid revenue expansion allowed Well Health to increase adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) by 5.1% to $27.8 million, while net income stood at $14.4 million, or $0.06 per share.
With close to 1.5 million total patient interactions in Q2, Well Health’s patient interactions stand at 5.9 million on an annualized run-rate basis.
Well Health also announced its subsidiary OceanMD recently signed a multi-year contract worth $38.5 million to provide eReferral and eOrder tech services to providers and patients in British Columbia, which will be a key revenue driver in the near term.
Well Health has upgraded its guidance for 2023 and forecast sales between $740 million and $760 million, indicating an increase of 30% year over year.
What is the target price for Well Health stock?
Analysts expect sales to increase by 32.6% to $755 million in 2023 and by 18% to $893 million in 2024. Additionally, adjusted earnings might improve to $0.09 per share in 2024 compared to break-even earnings in 2022.
Priced at 1.1 times 2024 sales, WELL stock is very cheap for a growth stock. Bay Street also expects shares to move higher by 90% in the next 12 months.
