Investors seeking a solid long-term stock with strong fundamentals and promising growth potential could consider WELL Health (TSX:WELL). This digital healthcare company operates the largest network of clinics offering primary care and other diagnostic services in Canada. The company also operates in the U.S. and provides omnichannel patient services tailored to diverse healthcare needs.
WELL Health also provides proprietary software and technology solutions to clinics and healthcare professionals. This blend of healthcare services and technological innovation positions it well to deliver strong growth in the coming years.
The digital healthcare company has been delivering solid financials, reflected through its record sales (surpassed $1 billion in annualized revenue run rate) and strong cash flows. Further, its accretive acquisitions position it well to sustain this growth momentum and deliver significant returns. While the company is growing rapidly, WELL Health stock is trading attractively on the valuation front, providing a buying opportunity for long-term investors.
Against this backdrop, let’s look at three reasons to buy this Canadian stock like there’s no tomorrow.
Reason #1
WELL Health is on track for impressive growth and profitability, driven by a steady rise in patient visits and strategic acquisitions. In the third quarter of 2024, patient visits surged by 41%, reaching an annualized run rate of 5.9 million visits. The company also surpassed $1 billion in annualized revenue one quarter ahead of schedule, signalling strong momentum.
Looking ahead to 2025, WELL Health is taking steps to accelerate growth and achieve its long-term goal of generating $4 billion in revenue from its Canadian operations. Acquisitions play a crucial role in this strategy, with a robust pipeline of opportunities in the healthcare sector. The company has 165 clinics in its merger and acquisition pipeline, representing over $440 million in annualized revenue with strong margins.
WELL Health’s ability to acquire and integrate high-quality clinics at attractive valuations sets it apart. The return on investment for its recent acquisitions has consistently outperformed the company’s overall average, highlighting the value of its strategic expansions. With a mature acquisition platform, the company is well-positioned to integrate and optimize additional clinics, further enhancing its operations and capital efficiency.
On the financial front, WELL Health is leveraging technology to boost cash flow and profitability while reducing debt and minimizing share dilution. With its strong growth trajectory, focus on profitability, and commitment to reducing share dilution, WELL Health is well-positioned for continued growth.
Reason #2
WELL Health’s business remains immune to the U.S.-Canada tariffs as it doesn’t engage in cross-border sales between the two countries. The company’s management stated that WELL Health does not offer its healthcare software platform capabilities or care delivery services on a cross-border basis. Beyond trade concerns, WELL operates in the healthcare sector, an inherently defensive and recession-resistant industry.
WELL Health also reassured investors that it does not anticipate any significant supply chain impacts. Moreover, the company is well-positioned to benefit from currency fluctuations. With over 60% of its revenue generated in U.S. dollars through its U.S.-based entities, WELL gains a natural hedge against currency volatility.
Reason #3
WELL Health stock appears attractive in terms of valuation. With a next 12-month enterprise value-to-sales multiple of 1.8, it’s trading below its historical average. Additionally, its strong growth prospects enhance its appeal, making it a solid long-term investment for those seeking value.
The bottom line
WELL Health’s high growth and profitability, resilience to U.S.-Canada tariffs, and low valuation make it a compelling long-term bet.
