I’d like to start off by reviewing how Well Health Technologies (TSX:WELL) continues to experience strong momentum. Then, I’ll review the latest news out of the company. And finally, I’ll cover Well Health stock’s price performance, valuation, and future.
Let’s take a look at all of this to help us decide what to do with Well Health stock.
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Well Health: Momentum continues
The company’s latest quarter, Q3 2024, was another record-breaking quarter. This was driven by continued strong demand for the company’s technological solutions and acquisitions. In fact, revenue increased 27% to $251.7 million. Also, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) increased 16% to $32.7 million.
As a result of this continued momentum, Well’s management once again increased its revenue guidance for 2024 to between $985 million and $995 million. The company has hit an annual revenue run rate of $1 billion. As the growth continues, management is increasingly focusing on cash flows, returns, and profitability. This will increase shareholder value for investors. This is part of what makes Well Health stock very interesting.
The latest acquisition expands its footprint
The primary care market in Canada remains a very large and pretty much untapped market. In fact, of the $40 billion of physician spending, Well Health has roughly $400 million. Long term, Well Health is targeting revenue of $4 billion from the Canadian primary care market. This is approximately 10 times current levels and would only represent 5% of the market.
This week, Well Health announced another acquisition in this space. The company purchased Canadian clinical assets, which include a network of 13 owned and operated clinics and 59 licensed clinics, which generated revenue of $9 million in the last 12 months. In addition to this, Well Health also entered an agreement with Walmart Canada that would support further expanding Well Health clinics within 400 Walmart locations.
The acquired clinics will be profitable in 2025 following synergies and Well’s clinic transformations.
Well Health stock skyrockets
As this news was released, Well Health stock immediately reacted positively. In fact, it has rallied 16% this month alone. Year to date, Well Health stock has rallied 70% as the company has continued to drive rapid revenue growth as well as focus on shareholder returns and profitability.
Looking ahead, the company is looking to extract the value of its many businesses by exploring strategic alternatives for two of its U.S. businesses. For example, the company is looking to divest Circle Medical, Well Health’s national U.S. telehealth provider. This would bring extra cash into Well Health and effectively arm the company with more funds to pursue its Canadian primary care opportunity.
Furthermore, the acquisition pipeline remains large, with numerous letters of intent outstanding and many others pending. Finally, Well Health is investing in artificial intelligence (AI). Well’s AI Decision Support is just one of the company’s AI technologies. It helps doctors detect, discover, and diagnose diseases. This technology screens patient data using AI technology to identify risk and support the diagnosis of over 100 diseases, including diabetes and hypertension.
The bottom line
In summary, Well Health continues to look forward to strong opportunities ahead. Yet, Well Health stock trades at a discount, in my view. Analyst expectations are likely too low, and these estimates will likely continue to be revised upwards as the company continues to barrel forward.
