- WELL Health Technologies (TSX:WELL) reported significant improvements in the financial performance of its acquired clinics, supported by its proprietary technology-driven transformation strategy
- The Vancouver-based digital healthcare team said it has increased efficiency and profitability across its expanding network
- WELL has confirmed that there are no material tariff threats to its business, as it does not engage in cross-border sales between Canada and the United States
- WELL Health Technologies stock (TSX:WELL) last traded at C$5.93
WELL Health Technologies (TSX:WELL) reported significant improvements in the financial performance of its acquired clinics, supported by its proprietary technology-driven transformation strategy.
Strong profitability and growth in recent clinic cohorts
By enabling clinicians with advanced technology, enhancing digital workflows, and centralizing administrative services, the Vancouver-based digital healthcare team said it has increased efficiency and profitability across its expanding network. This transformation has allowed care providers to focus more on patient care, leading to better outcomes.
Expanding M&A Pipeline and growth outlook
WELL’s acquisition strategy continues to fuel substantial growth, with a record-sized pipeline of opportunities in the Canadian healthcare sector. The team said its M&A prospect pipeline now includes 165 clinics generating over $440 million in annual revenue, with approximately double-digit adjusted EBITDA margins. In the near term, WELL has 19 signed letters of intent representing approximately $50 million in revenue, also with double-digit adjusted EBITDA margins.
The company’s clinic acquisition strategy has accelerated, making 2024 its most active year for clinic acquisitions in its history. The size of each new acquisition cohort has grown, and WELL expects this momentum to continue. The 2024 cohort alone is anticipated to contribute roughly the same amount of adjusted EBITDA as the combined 2022 and 2023 cohorts, marking it as the most EBITDA-additive acquisition year in the Canadian clinic program since 2021.
This expansion reflects WELL’s ability to find and acquire high-quality clinics at decent value. Incremental returns on invested capital for new acquisitions are materially higher than the company-wide average, reinforcing the value of tuck-in acquisitions. With WELL’s acquisition platform maturing, the opportunity grows to integrate more clinics.
Resilience to U.S.-Canada tariffs
WELL has confirmed that there are no material tariff threats to its business, as it does not engage in cross-border sales between Canada and the United States. While tariffs may contribute to a challenging macroeconomic environment, WELL operates in the healthcare sector, which has been defensive, recession-proof, and insulated from much of the volatility affecting other industries.
“Even if the potential tariffs between the U.S. and Canada escalates to include services in addition to goods, this would not affect our operations, as our technology and care delivery services are not sold across the border,” WELL’s CFO, Eva Fong, explained in a news release. “We also believe that the current environment may create a surge of ‘buy Canadian’ optimism which we believe could significantly boost opportunities for our WELLSTAR technology platform as it does compete from time to time with US companies for material Canadian public sector contracts.”
WELL also does not expect any material supply chain impacts on its operations, as per the impacted list shared by the Department of Finance Canada. WELL also has significant exposure to the U.S. dollar, with over 60 per cent of its revenues, adjusted EBITDA, and cash flow generated in U.S. dollars by its US-based entities, positioning the company favorably in the event of currency volatility.
WELL Health Technologies Corp. develops technologies and services that assist healthcare providers in positively impacting patient outcomes. Its business units include Canadian Patient Services, WELL Health USA Patient Services and SaaS and Technology Services.
WELL Health Technologies stock (TSX:WELL) last traded at C$5.93 and has climbed 58.98 per cent since this time last year.
Join the discussion: Find out what everybody’s saying about this stock on the WELL Health Technologies Bullboard investor discussion forum, and check out the rest of Stockhouse’s stock forums and message boards.
The material provided in this article is for information only and should not be treated as investment advice. For full disclaimer information, please click here.
(Top image via WELL Health Technologies Corp.)