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Well Health Technologies Continues to Prove out a Successful Business Model

DISCLAIMER: Any written content contained herein should be viewed strictly as analysis, observation & opinion and not in any way as investment advice. No compensation was received for this report. Visitors to this site are encouraged to conduct their own due diligence.


Earlier this week, Well Health Technologies Corp (WELL-T) reported yet another quarter of record revenues with the Q4/2022 figure amounting to $156.5M, representing a gain of +35% from Q4/2021 and bumping the FY/2022 figure to a record $569.1M. Moreover, the adjusted EBITDA figure of $27.2M for the quarter pushing up the FY/2022 figure to a record $104.6M, representing a +73% increase over FY/2021. Moreover, FY/2022 adjusted net income came in at $53.7M or $0.24 per share ($12.5M or $0.05 per share during the Q4/2022 period) representing an increase of +228% as compared to the FY/2021 adjusted FY/2021 figure. On the operational front, patient visits and patient interactions continue to grow. Over the course of FY/2022, ~3.5M omni-channel patients were achieved along with ~4.9M patient interactions. This represents growth of 50% and 86% respectively when compared to FY/2021.

Along with the top and bottom line growth, what we continue to like about the business model was nicely demonstrated during this past year – the strength of the recurring revenue model. Of the $569.1M in FY/2022 revenues, 96% was either recurring or highly recuring in nature. Moreover, the company’s recurring or subscription related revenues grew to 10% of total revenues while the highly recurring patient services revenue accounted for 86% of total revenues. This proves that the SAAS services coupled with the digital patient service business continues to gain traction. There is considerable value in demonstrating this type of growing and predictable business model.

As for FY/2023 guidance, the midpoint for revenues has been set at $675M, representing robust growth of nearly +20% y/y. On the call, continued confidence was pointed out for both Circle Medical and Wisp, both currently running at a combined ~$160M revenue run-rate. Adjusted EBITDA is expected to grow by +10% over the $104.6M achieved in FY/2022. The targeted 20% EBITDA margins are expected for the Canadian clinics. Note that during Q4/2022, the company handily surpassed its Rule of 30 benchmark by achieving 20% organic growth along with 17%EBITDA Margins (equating 37, clearly a figure closer to 40 than the targeted 30). Note that the expansion of Circle Medical has already resulted in new locations including Illinois, Florida and New York (to go along with San Francisco). Expansion into ten additional states is expected in the weeks ahead.

With nearly C$50M of cash in treasury (and access to ~300M in undrawn credit facilities) along with drastically lower debt ratios (debt/shareholder EBITDA declining from ~5.6x at the start of 2022 to the current ~2.8x at exit 2022), the growth and acquisition model will continue for this proven consolidator well into 2023 and beyond. The company currently has signed six letters of intent (LOIs) and has communicated ambitious plans to expand its current 200+ labs and facilities to encompass between 300-500 over the next 4-5 years. Management has already proven their worth in making timely acquisitions and integrating the operations into the larger whole, both in Canada and into the US.


Continued sector strength has carried over from 2H/2022’s M&A frenzy. The highlights being:

-November 2022: Walgreens Boots Alliance’s (WBA) Village MD announced a $8.9B merger with medical care center operator Summit Health

- 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 despite the higher rate environment, recent inflows into the sector have been strong with the peer group advancing +20% YTD (see below) and Well Health in particular advancing by +63%. For context, the broader S&P has gained +2.8% thus far YTD.

The sector as a whole continues to exhibit strength – note that strong financial figures were also disclosed last month from TELUS' (T-T) Health Division. Over the course of FY/2022, health service revenue increased by +75%, nearing the $1.0B revenue milestone (inclusive of LifeWorks). Digital health transaction increased by +5% y/y to reach 580M while 1.7M new virtual healthcare members were added over the course of the last 12 months, bumping the total number to 4.5M, an increase of +61% y/y.

Ultimately when we look for the fine balance between sector strength, company growth, a successful management track record and a proven business model, we see Well Health at the crossroads of all of those crucial markers.

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