Well Health Technologies Corp. (TSX:WELL) is an omni-channel digital health service provider. It’s a company that has grown very rapidly in the last few years as it has been rapidly digitizing healthcare systems. Well Health stock remains below $4, but has rallied 150% from its 2019 close.
So, is it still a good time to buy the stock or is it too late?
Well Health stock and investor risk tolerance
In terms of the question of whether it’s too late to buy Well Health stock, there are a couple of different ways to answer this. The first way is to focus on the changing environment that we’ve seen in the last couple of years. In this respect, it might feel too late.
Clearly, much has changed since 2021/22. Risk tolerances are not as high, and the days of really cheap money are over, at least for now. This changes the valuation that investors are willing to give stocks.
We have seen this play out with growth stocks like Well Health. Back in 2021, investors were willing to pay for the bright future that they saw in Well Health despite the fact that the company was operating at a net loss. Today, while investors likely remain as bullish about Well Health’s future, the willingness to accept risk and pay up for it has diminished.
This is what happened with Well Health’s stock price, which has fallen 56% from highs of 2021.
The long-term view is good
Despite this negative stock price action since 2021, the company itself continues to grow rapidly. In its latest quarter, Q3 2023, the company reported a 40% increase in revenue to $204.5 million. This includes a 27% increase in Canadian patient services revenue and a 52% increase in USA patient care services. Organic growth was 16% and the rest of the growth was due to acquisitions.
Importantly, Well Health remains on track to continue growing. Demand is strong, visibility is good, and this wave of digitization in the healthcare sector has only just begun. The fact that the company continues to increase its guidance as time goes on is a testament to this. Clearly, Well Health is increasingly closer to its $1 billion revenue target.
For example, after last quarter, the company now expects revenue of $755 million to $765 million in 2023 and more than $900 million in 2024. This equates to a 34% revenue growth rate in 2023 and a more than 18% revenue growth rate in 2024.
Note that these estimates do not include unannounced acquisitions, and management has stressed that its pipeline is very strong. The company’s balance sheet remains strong, and this will support this period of growth.
The bottom line
My conclusion is that long-term investors are definitely not too late to buy Well Health stock. While the environment that we are in today does not favour this type of growth stock that’s posting net losses, this will pass. It is my view that Well Health will continue its growth phase and come out of this time really well positioned in this space. I don’t think Well Health’s stock price will remain this inexpensive much longer.
