BC Business
A planned spinoff of its software division has helped push WELL stock up 87.6 percent this year
The stock: The provision of primary health care is a dependable if low-margin business. People need to see a doctor in good economic times and bad. Information technology, by contrast, is a high-risk, high-return proposition. Since going public in 2018, Vancouver-based Well Health Technologies Corp. (TSX:WELL) has tried to straddle those seemingly incompatible domains by developing a platform to digitize the notoriously hidebound outpatient services process while also buying and operating doctors’ offices that could benefit from the productivity improvements it provides. Its efforts met with limited success—until this fall. Closing at $7.09 on Tuesday (December 17), the long-languishing stock is up 87.6 percent year to date.
Material change: Much of the upbeat talk around Well Health lately stems from the planned 2025 spinout of Wellstar, its software-as-a-service subsidiary (formerly Well Provider Solutions). It was recently the subject of a $50.4-million private placement that translated into a total enterprise value of $285 million, which raised the eyebrows of several analysts. An initial public offering for Wellstar would not only fully monetize the software side but finally set some boundaries between it and the company’s health-care operations, although the parent is expected to maintain firm (around 85 percent) control of Wellstar.
Well Health has also floated the idea of selling its Circle Medical and Wisp divisions in the U.S. to focus on further consolidation of the medical clinic space. It has a growing track record of boosting both revenues and margins in the clinics it buys.
With third-quarter revenues of $251.7 million, the company is now looking at a full-year run rate topping $1 billion. Virtually all the $75.7-million loss over the period was attributable to one-time expenses. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for 2024 are expected to range between $125 million and $130 million.
Word on the street: “WELL continues to deliver growth driven by its accretive consolidation strategy. Backed by strong management and key shareholder support, we continue to view WELL as the name to own in Canada for exposure to primary healthcare digitization,” Haywood Capital Markets analyst Gianluca Tucci wrote in a December 12 note to clients. He maintained his “buy” rating and raised his target price to $10 from $8 previously.
Coming and going: Lithium Americas (Argentina) Corp. (TSX:LAAC) is planning to move its domicile from Vancouver to Switzerland under the name Lithium Argentina AG. The move is the subject of a special meeting of shareholders to be held on January 17, 2025.