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Well Health Technologies: Another Beat & Raise Quarter as M&A in the Sector Remains Hot

DISCLAIMER: Any written content contained herein should be viewed strictly as analysis & opinion and not in any way as investment advice. Visitors to this site are encouraged to conduct their own due diligence.


Last week on November 10, Well Health Technologies (WELL-T) reported record quarterly revenues and adjusted EBITDA while also announcing an increase to its FY/2022 revenue guidance. Specifically, the record quarterly revenues amounted to $145.8M representing a 47% y/y increase and topping expectations looking for $142.1M. This happened to be the 12th consecutive top line beat while adjusted EBITDA amounted to $27.5M, representing a 23% y/y increase. Given adjusted gross margins of 53.6% (50.3% in Q3/2021) adjusted EPS amounted to $0.07 ($0.05 in Q3/2021). The strong performance was underpinned by the Virtual Services which grew by 75% y/y (organically) to reach $52.2M and now represents the largest of the three main business lines at 36% of total revenue. FY/2022 revenue guidance was also bumped higher with the company now estimating $565M for the year, compared to the previously expected $550M. Lastly, the exit 2023 revenue run-rate is estimated to be $700M.

In terms of patient visits, total omni channel patient visits in Q3/2022 amounted to 892,966, representing a 53% increase as compared to Q3/2021. Moreover, MyHealth conducted 169,294 diagnostic visits in Q3/2022, while Wisp completed 186,952 asynchronous patient consultations. Combining WELL’s omni-channel patient visits, MyHealth’s diagnostic visits and Wisp’s asynchronous patient consultations, WELL achieved a total of 1.249M patient interactions in Q3/2022, representing an annual run-rate of 5.0M patient interactions.


These strong numbers from Well Health are hardly a one-off event. Financial momentum in the sector has also been confirmed from TELUS’ Health division. In light of TELUS' (T, T-T) previously announced Q3/2022 results on November 4, of particular note were the numbers coming from TELUS Health which were similarly robust. Health service revenues increased by 73% to reach $225M as 4.0M (end of Q3/2022) members enrolled in virtual care services, compared to the 1.7M members in Q3/2021. Moreover, at the end of the most recent quarter, healthcare programs covered 60.4M lives (spanning Canada and 30 other countries), an increase of 41.1M since Q3/2021. This growth was mainly due to the addition of approximately 37.0M lives covered from the acquisition of LifeWorks. This global platform encompasses a digital-first employee primary and preventative healthcare, mental health and wellness platform. Lastly during the quarter, digital health transactions amounted to 143.2M, representing an increase of 5.3M.

Retailers still making a push: Though not exclusively limited to the virtual or online space, M&A in the healthcare sector continues to be strong with large retailers becoming increasingly involved. Last week Walgreens Boots Alliance’s (WBA) Village MD announced a $8.9B merger with medical care center operator Summit Health, the parent company of urgent care provider, CityMD.

Other highlight acquisitions since the summer include:

- September 2022: CVS Health (CVS) acquired Signify Health for $8.0B

- July 2022: Amazon (AMZN) acquired primary care clinic 1Life Healthcare for $3.5B

- June 2022: TELUS (T-T) acquired LifeWorks for $2.3B.

Note that in conjunction with their quarterly figures, Walgreens raised its expectations for US healthcare sales to $14.5B-$16.0B by FY/2025, representing an increase from the previously expected $11.0B-$12.0B. Just as importantly, Walgreens expects its health care business to be profitable by 2023. With other retailers such as Walmart (WMT) and Loblaws’ (L-T) with PC Health (located in all Shoppers Drug Mart locations) already active in the space, it’s clear that in the post-pandemic world, retailers are looking to expand their client offerings specifically in what is considered to be a recession proof segment – that being the healthcare segment. Recall that recent Loblaws acquisitions in the health segment include QHR Technologies and Lifemark Health Group.

Lastly, it is important to know that Well Health Founder/Chairman and CEO Hamed Shahbazi has a track record of founding companies, growing them and then selling them. Prior to his establishing Well Health, Shahbazi founded TIO Networks, a payment processing fintech in 1997. TIO Networks was eventually acquired by PayPal (PYPL) in 2017. We see a similar evolution with Well Health. YTD the sector has been beaten up as rates have increased however certain fundamentals specific to the healthcare sector remain. We consider Well Health to be one of the few (still independent) companies with a proven growth track record underpinned by a quality management team.


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