As a Canadian growth stock, Well Health Technologies Corp. (TSX:WELL) has been delivering far beyond expectations for quite some time now. This performance has been driven by soaring demand for the company’s digital solutions, as well as an aggressive acquisition strategy.
Well Health stock has rallied 70% in the last year. Read on as I share why I believe this is the smartest growth stock to buy today.
Digitizing the healthcare system
Well Health started out with a simple but noble goal – modernize the healthcare system. This means getting technology to work for doctors, patients, and clinics. And Well Health’s growth in the last five years has shown that this company was onto something big.
Since 2020, just five or so years ago, Well Health reported annual revenue of $50 million. In 2023, Well Health reported revenue of $776 million. That’s 1,452% higher, for a compound annual growth rate of 149% during this time period. We can clearly see that the healthcare system has been dying for the technological help that Well Health offers.
More acquisitions fuel growth
As part of Well Health’s strategy, the company has continued to make acquisitions. In the last month alone, the company has made seven acquisitions, which represent $100 million in annual revenue, at EBITDA margins of between 12.5% and 13%.
The acquisitions included one of the largest physician recruitment firms in Canada and two Canadian primary care clinics. Altogether, 75 new clinics were added to Well Health’s Canadian business. As a reminder, the primary care market in Canada is a large opportunity for Well Health, as it remains a pretty much untapped market. Long term, Well Health is targeting revenue of $4 billion from Canadian primary care. This is approximately 10 times current levels and would still only represent 5% of the market.
The recent acquisitions have allowed Well Health to capture a meaningful share of this market. Also, they expand the company’s geographic footprint and deepen its range of healthcare services.
Financial matters: Funding growth with cash
Importantly, all of these acquisitions were paid for with cash. Also, the company estimates that its leverage ratio is less than the leverage ratio announced at its last quarterly release. This is a reflection of the strong and growing cash flows that the business has been generating.
Looking ahead, Well Health’s mergers and acquisitions pipeline includes 12 letters of intent (LOI). These LOIs represent approximately $65 million in revenue. Clearly, the company’s growth is going strong. 2025 should be another strong year.
Guidance
So, what kind of growth can we expect from Well Health? Well, management’s guidance for 2024 is for revenue of between $985 million to $995 million. This represents an annual growth rate of between 26.9% and 28.2%.
Also, its adjusted EBITDA guidance is $125 million to $130 million. This represents an annual growth rate of between 10.2% and 14.6%. Well Health stock trades at 33 times 2024 estimated earnings. This is not cheap but considering that there’s very likely upside to earnings estimates, I think it is well worth the current price.
The bottom line
Well Health is a growth stock that I think everyone should consider buying. It’s up big in the last year, with more room to move considerably higher over time.
