WELL Health (TSX:WELL) went public in April 2016 and has since returned a staggering 3,770% to shareholders in fewer than eight years. Valued at $930 million by market cap, WELL Health is a digital healthcare company focused on positively impacting health outcomes by leveraging technology to empower practitioners and patients.
Despite its outsized gains, WELL stock trades roughly 60% below all-time highs, allowing you to buy the dip and enjoy market-beating returns when investor sentiment improves. Let’s see why.
Strong revenue growth
WELL Health has increased its sales from $50.2 million in 2020 to $569 million in 2023, primarily on the back of highly accretive acquisitions. Its revenue in the last 12 months has risen to $700 million, and the company is forecast to increase sales by 33.8% to $762 million in 2023 and by 19% to $907 million in 2024.
Moreover, its acquisitions have allowed WELL Health to gain significant traction south of the border. In recent years, Well Health acquired three U.S.-based healthcare businesses:
- CRH: It delivers specialized care services focused on providing gastroenterologists in the U.S. with a portfolio of products and solutions.
- Circle Medical: It is a full-cycle primary care provider that offers virtual and in-person care, with a specialization in mental health-related offerings.
- Wisp: An online provider of women’s health and e-prescription services.
While these acquisitions have delivered top-line growth for WELL, the company also grew organic sales by 16% in the third quarter (Q3), as it reported record sales in Canada and the U.S.
Improving profit margins
Similar to several other growth stocks, WELL has sacrificed its profit margins for sales growth. But in recent months, it has focused on improving profit margins and strengthening the balance sheet.
Record patient visits in Q3 allowed WELL Health to increase adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) to $28.2 million, up from $27 million in the year-ago period.
Analysts tracking the TSX stock also expect its adjusted loss per share to narrow from $0.14 in 2023 to $0.07 in 2024.
WELL stock is undervalued
Priced at just 1.1 times forward sales, WELL stock is quite cheap and trades at a discount to consensus price target estimates. Analysts tracking the TSX stock expect it to more than double in the next 12 months, easily outpacing the broader indices.
What’s next for WELL Health shareholders?
Well is the largest owner and operator of healthcare clinics in Canada. It expects to grow its industry-leading patient services business organically and via acquisitions. Further, the company emphasized growth in patient services in the U.S. will be driven by organic growth amplified by the recent acquisition of CarePlus.
Going forward, Well Health should achieve robust growth while managing costs, resulting in sustained cash flows over time.
WELL Health has invested in artificial intelligence technologies and continues to develop compelling new products, driving engagement rates higher. It is also focused on growing and acquiring market share in Canada and the U.S.
A combination of organic growth, acquisitions, and strong cash flows should enable WELL Health to execute its long-term plans and enhance shareholder wealth.
