Shares of Canada-based health-tech company Well Health (TSX:WELL) have taken investors on a roller-coaster ride since its IPO (initial public offering) in May 2016. The TSX stock surged from $0.15 in May 2016 to a record high of $8.7 in July 2021. Today, Well Health stock trades at $3.6, which is 61% below all-time highs.
Despite its pullback, Well Health has returned a monstrous 3,490% to shareholders, easily outpacing the broader markets. Let’s see if the growth stock can recover and reclaim all-time highs in 2024.
Is Well Health stock a good buy right now?
Valued at $881 million by market cap, Well Health aims to disrupt legacy healthcare services in Canada and the United States. It offers omnichannel patient services delivered at scale via a network of primary, secondary, and integrated care facilities. Well Health operates the largest outpatient medical clinic network in Canada while providing virtual services such as telehealth, ePharmacy, digital bookings, workflow automation, revenue cycle management, and more.
Over the years, Well Health has aggressively acquired companies, allowing it to increase revenue from $50 million in 2020 to $776 million in 2023. Earlier this month, Well Health Clinic Network, a subsidiary of Well Health, entered an agreement with Shoppers Drug Mart to acquire all primary care medical clinics under the Health Clinic by Shoppers brand. The acquisition includes 10 clinics and four physicians, which should contribute $8 million in annual sales.
Moreover, Well Health aims to enhance operational and service capabilities across the newly added clinics while optimizing cost structure, integrating digital workflows, adding patient engagement technologies, and implementing AI (artificial intelligence) tools and capabilities.
How did Well Health perform in Q4 of 2023?
Well Health ended 2023 with record sales, adjusted EBITDA (earnings before interest, tax, depreciation, and amortization), net income, and patient visits. While organic growth stood at 15% for the company in 2023, acquisition-adjusted revenue growth was much higher at 36%, as Well Health continues to attract clinics to its network.
Well Health reported revenue of $231.2 million in the fourth quarter (Q4) of 2023, an increase of 48% year over year, compared to sales of $156.5 million in the year-ago period. Well Health attributed the growth to acquisitions, seasonally strong patient visits in primary care, and healthy organic growth in the virtual services segment. The company recorded 1.2 million patient visits in Q4, up 30% year over year.
In 2024, Well Health is focused on improving profitability and capital efficiency. It aims to end the year with revenue of close to $1 billion and adjusted EBITDA of between $125 million and $130 million. Further, Well Health emphasized that it would reduce capital allocation towards mergers and acquisitions and prioritize organic growth, given its growing attractiveness to care providers in Canada and the U.S.
Is Well Health stock undervalued?
Analysts tracking Well Health expect sales to rise by 23% to $956 million in 2024 and by 9.7% to $1.05 billion in 2025. Comparatively, its bottom line is forecast to improve from a loss per share of $0.03 in 2024 to earnings per share of $0.17 in 2025.
So, priced at less than one times forward sales, WELL stock is quite cheap and trades at a discount of 110% to consensus price target estimates.
