WELL maintains $10.00 price target at Stifel

Stifel analyst Justin Keywood remains bullish on WELL Health Technologies after the company’s second-quarter results were announced (WELL Health Technologies stock quotes, charts, news, analysts, financial data TSX:WELL).

On August 14, WELL reported its Q2 2024 results. The company reported adjusted EBITDA of $30.9 million on revenue of $243.1 million, an increase of 42% compared to the same period a year earlier.

“The second quarter of 2024 exceeded expectations, demonstrating the strength of our technology-enabled care platforms,” said CEO Hamed Shahbazi. “We are pleased to report a 42% year-over-year revenue increase, driven by an accelerated 21% organic growth, which includes the contribution from our absorption program, where we are recruiting clinics to our network at a nominal cost. This marks our 22nd consecutive quarter of record revenue, underscoring our continued momentum. We are proud to once again raise our full-year revenue guidance to $970 million to $990 million and report that we are on track to reach $1 billion in revenue by the end of 2024, including acquisitions currently in our pipeline. Additionally, we maintain our Adjusted EBITDA guidance in the upper range of $125 million to $130 million, despite additional costs as a result of our forecast of significantly reduced equity issuances to achieve equity-based compensation. “We remain focused on improving profitability and capital efficiency and continue to forecast a 30% year-over-year increase in free cash flow to shareholders in 2024. Our strong organic growth and healthy cash flow increasingly allow us to fund acquisitions, out-of-pocket payments and employee incentives with cash. We remain on track to deliver record revenue, adjusted EBITDA and net income in 2024, while increasing cash flow, reducing debt, improving leverage, reducing equity issuance and reducing out-of-pocket payments.”

The analyst presented a summary of quarterly results.

WELL reported strong second-quarter results, in line with estimates but with strong points including raised guidance and positive operating cash flow generation to shareholders (removing NCI),” he wrote. “With a $1 billion sales target in sight for 2024, optimization efforts continue to improve margins for recently “acquired clinics” that are currently non-marginal but with expected future expansion. WELL is also in the process of potentially selling two U.S. assets, WISP and Circle Medical, which could add $200 million in net income to WELL, reduce balance sheet leverage, and serve as near-term catalysts.”

In a research update to clients on August 14, Keywood reiterated his “Buy” rating and $10.00 price target on WELL shares.

The analyst believes WELL will post EBITDA of $127.1 million on revenue of $982.6 million in fiscal 2024.

Disclosure: Nick Waddell is an owner of WELL Health stock and the company is an annual sponsor of the Cantech Letter.