If there were one healthcare stock that absolutely dominated over the last few years in Canada, it has to be WELL Health Technologies (TSX:WELL). And yet, you wouldn’t think so from looking at its share price.
After all, shares of WELL stock have all but collapsed since the pandemic. Despite proving its worth during COVID-19 and afterwards, the company continues to struggle to win back investors. Today, let’s look at why long-term investors may want to consider WELL stock once more.
The finances
WELL Health Technologies has demonstrated impressive financial performance, achieving record revenues and net income. In the first quarter of 2024, the company reported revenues of $231.6 million, a 37% increase from the first quarter (Q1) of 2023. Additionally, WELL posted a net income of $15.1 million, a significant turnaround from a $14.4 million loss in Q1 2023. The profit margin improved to 6.5% from a previous net loss margin.
For the full year of 2023, WELL reported record annual revenue of $776.1 million, a 36% increase compared to 2022. The company’s adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) also saw a rise. It reached $88.4 million, a 15% increase from the previous year.
More to come
WELL Health Technologies operates in the rapidly growing digital healthcare sector. This provides a wide range of services, including practitioner-focused healthcare solutions in Canada, the United States, and internationally. The company has capitalized on both organic growth and strategic acquisitions to expand its market reach and service offerings. The recent acquisition of HEALWELL AI and Proack Security Inc. exemplifies WELL’s strategy to enhance its technological capabilities and service portfolio.
Looking forward, WELL’s revenue is forecasted to grow at an average annual rate of 9.6% over the next three years. This would outpace the Canadian healthcare industry average of 8.9%. The growth is driven by the increasing adoption of digital health solutions and the company’s continued expansion into new markets and services.
Yet the valuation remains low
Despite its robust financial performance and growth prospects, WELL Health Technologies is trading at a relatively low valuation. As of the latest reports, WELL’s stock price has increased by approximately 4% in the last year. During that time it reached a new 52-week high of $5.05. However, the stock remains undervalued compared to its peers in the healthcare sector. These hold an average price target of $7.13, suggesting a potential upside of nearly 47%.
Therefore, WELL Health Technologies presents a compelling investment opportunity due to its strong financial performance, growth prospects, and attractive valuation. The company’s focus on digital health and strategic acquisitions positions it well to benefit from the ongoing transformation in the healthcare industry. Investors looking for a high-growth stock in the healthcare sector should consider WELL Health Technologies as a promising candidate for their portfolio.
Bottom line
Altogether, WELL Health Technologies’s impressive financial results, strategic growth initiatives, and attractive valuation make it one of the most undervalued stocks on the TSX. As the digital healthcare market continues to expand, WELL is well-positioned to capitalize on this trend and deliver substantial returns for its investors.
