Why This Digital Health Stock on the TSX Remains a Solid Long-Term Pick!

Aditya Raghunath
·4 min read
consider the options

Investing in growth stocks remains one of the top strategies for equity investors to build long-term wealth. Growth stocks generally grow revenue and earnings at a higher pace compared to the broader market. This allows them to derive outsized gains over a period of time.

One such company on the TSX is WELL Health Technologies (TSX:WELL) which has been a top-performing stock ever since it went public back in 2016. WELL Health stock has returned a staggering 7,000% since its IPO. So, a $1,000 investment in WELL Health soon after its Initial Public Offering (IPO) would be worth over $70,000 today.

However past returns don’t matter much for future investors. We need to see if the stock remains a top bet for 2021 and beyond.

WELL Health aims to disrupt the telehealth space

WELL Health wants to consolidate and modernize primary healthcare assets by leveraging digital technologies and processes to improve patient experience and operational efficiency. It believes that technology can be used to solve several challenges plaguing the healthcare space in Canada. Digital tools such as virtual care, waiting room automation as well as precision medicine can improve care delivery and increase clinic operational efficiency.

The company is now the largest owner of healthcare clinics in British Columbia that includes a chain of 20 medical clinics and a majority stakeholder position in an integrative care clinic known as Spring Medical. WELL Health also operates five clinics in Quebec post its acquisition of ExcelleMD.

It is one of Canada’s leading digital health companies and has grown top-line at a rapid clip by focusing on accretive acquisition over the years. In the Allied Health space, Well Health is a majority stakeholder in both SleepWorks which treats sleep disorders, and Easy Allied Health which is a mobile team of allied healthcare professionals.

WELL Health has over 2,800 clinicians that provide virtual care services while it is also the third-largest EMR (emergency medical record) provider in Canada.

Recent acquisitions will drive revenue

On April 4, WELL Health completed the acquisition of Intrahealth which is an enterprise-class EMR provider that has a global customer base across Canada, Australia, and New Zealand. It made a seed investment into a start-up fertility clinic in March, while in February, WELL Health completed an upsized offering amounting to $302.5 million to fund the acquisition of CRH Medical.

WELL Health recently completed the acquisition of CRH Medical which was valued at US$373 million. This was the company’s largest-ever acquisition to date. CRH reported revenue of US$36.8 million in the December quarter, indicating year-over-year growth of 21%. In fact, CRH sales in the last year were close to US$120 million and the company also enjoys a healthy EBITDA margin of 40%, while its free cash flow margin is 25%.

Acquiring CRH will allow WELL Health to gain a foothold in the U.S. which is the largest digital health market in the world. WELL Health is optimistic that CRH Medical will improve its cash flow position which in turn will help the former focus on similar acquisitions without having to dilute shareholder wealth by raising additional capital.

Strong revenue growth

WELL Health’s acquisition-based business model has ensured its top-line growth has been phenomenal. In 2018, the company reported sales of $5.9 million. WELL Health increased sales to $32.8 million in 2019 and $50.24 million in 2020. Similar to several other growth companies, WELL Health continues to report an operating loss as it has sacrificed profit margins to increase market share and revenue.

In 2020, its operating loss stood at $10.4 million which was 20.7% of total sales. Comparatively, its operating loss accounted for 35% of total sales in 2018 and 19% of sales in 2019.

Bay Street analysts expect WELL Health sales to rise by a whopping 353% to $227.6 million in 2021 and by 44% to $328 million in 2022. This growth in revenue will allow WELL Health to turn profitable as analysts expect the company to report earnings per share of $0.08 in 2022 compared to a loss of $0.03 per share in 2019.

The stock is trading at a price of $7.2 at the time of writing and analysts have a 12-month price target of $11.66. It shows us that WELL Health stock has significant upside potential and is trading at a discount of 62% right now.

The post Why This Digital Health Stock on the TSX Remains a Solid Long-Term Pick! appeared first on The Motley Fool Canada.

Speaking of Canadian stocks to invest right now....

Looking for the Next Potential Netflix? We’ve Got You Covered with These 3 Free Stock Picks

Motley Fool Canada's market-beating team has just released a new FREE report that gives our three recommendations for the Next Gen Revolution.
Click on the link below for our stock recommendations that we believe could battle Netflix for entertainment dominance.

Click Here to Get Your Free Report Today!

More reading

Fool contributor Aditya Raghunath has no position in any of the stocks mentioned.

5 Years From Now, You’ll Probably Wish You’d Grabbed These Stocks…Click here now for your free subscription to Take Stock, The Motley Fool Canada’s free investing newsletter. You aren’t on the list to receive our newest stock picks — but it’s not too late. 2021

  • Up next
  • Up next
  • Up next
  • Up next

Latest Stories

  • Magnificent Seven Stocks: Nvidia Stock Rallies; Tesla Climbs Ahead Of Q1 Earnings

    Magnificent Seven stocks, including AI leader Nvidia, are among the best stocks to watch in today's stock market.

  • AI Chip Leader Arm Stock Plunges 31%, Is It A Buy Right Now?

    AI chip stock Arm Holdings surged more than 152% past a recent buy point. Following that advance, is Arm stock a buy in today's stock market?

  • Israeli forces kill Palestinian man during West Bank raid

    Israeli forces killed a Palestinian man and wounded two people including a child during raids in the occupied West Bank city of Jericho and adjacent refugee camps, Palestinian health authorities said on Tuesday. There was no immediate comment from the Israeli military on the incident, the latest in a series during a surge in violence in the West Bank since the start of the war in Gaza, with frequent raids by Israeli forces, as well as rampages by violent Jewish settlers and street attacks by Palestinians on Israelis. The dead man, identified as 44-year-old Shadi Issa Galaita, had been standing outside his house in Jericho city, watching troops as they carried out a raid but had not been involved in the events his uncle, Shafiq Jalayta, said.

  • Baby Reindeer star tells fans to stop trying to guess who fictional abuser is based on

    Baby Reindeer star Richard Gadd has warned that online sleuths are falsely accusing innocent people of being his abuser.

  • UPDATE 1-JPMorgan CEO Dimon says US economy is booming

    JPMorgan Chase CEO Jamie Dimon expressed confidence on Tuesday in a robust U.S. economy backed by strong employment and healthy consumer finances. "I want to help my country," said Dimon, 68, one of the most prominent voices in corporate America, who has headed the largest U.S. lender for more than 18 years. JPMorgan has previously declined to comment on such speculation, or said that Dimon had no plans to run for office.

  • S&P 500 Earnings Growth Rests On These 5 Magnificent Seven Stocks

    S&P 500: Positive Q1 earnings growth for the S&P 500 rests on these five Magnificent Seven stocks, including Alphabet, Meta and Microsoft, which report this week.

  • Jerry Seinfeld Admits He's Still 'a Little Bit' Bothered by “Seinfeld”'s Controversial End but Doesn't 'Believe in Regret'

    "I think it's arrogant to think you could have done something different," the comedian, 69, said of looking back on the sitcom finale

  • Big marshmallows are not sweets, rules judge

    Toasting marshmallows over a campfire has just become even sweeter after judges ruled the treats should be free from VAT.

  • Off-Duty Chicago Police Officer Fatally Shot While Driving Home From Work Days Before 31st Birthday

    Luis Huesca was a six-year veteran of the Chicago Police Department

  • Shogun: A guide to the hit Japanese samurai epic as its finale cuts deep

    A quick guide as the razor-sharp, critically-acclaimed samurai epic reaches its finale.

  • TCU football notebook: New defense continues to build confidence

    Namdi Obiazor says the new defense is the biggest reason TCU can have a bounce back season

  • Paju Mountain Run a-go in Red Rock

    Get those running shoes out of storage and start training, there’s a mountain to climb. Red Rock is set to host its annual 11-kilometre Paju Mountain Run on August 10, celebrating 41 years of running and local camaraderie. Registration for the Paju Mountain Run opens online on May 1. Speaking with Dougall Media, Red Rock’s Community Development Officer, Ashley Davis, said the township normally sees anywhere from 40-60 participants. “It’s a very exciting event. I encourage everybody to come out a

  • Kingsmill owner warns of price rises due to ‘very small’ expected harvests in UK

    ABF, which also owns Dorset Cereals, says it is not yet planning rises but it may need to import ‘quite a lot’ of grain

  • Iglulik’s Qiliqti Ivalu prevails in the Nunavut Quest

    This year’s Nunavut Quest featured a spectacular finish in ideal conditions as 10 out of the original 12 contestants traversed the final 52-km section of trail from Arctic Bay to Pond Inlet on April 22. The first and second place mushers — Qiliqti Ivalu and David Oyukuluk, respectively — made it to the finish line within a minute of each other after seven days of racing. Jubilant spectators hoisted race participants, still aboard their sleds, into the air while the sled dogs eagerly rolled in th

  • Commons descends into red and white madness

    Health questions on a Tuesday morning, nothing new there. One side says there are too few doctors; the other that there are, if anything, too many. But what is this? “Happy St George’s Day,” says Andrew Stephenson, the health minister. “Happy St George’s Day,” chirps Wes Streeting.

  • Giancarlo Esposito Has a 'Great Relationship' with His Four Daughters Because He's 'Not Afraid' to Be Honest

    The actor is dad to daughters Kale Lyn, Ruby, Syrlucia and Shayne, whom he shares with ex-wife Joy McManigal

  • 2024 Premiere Dates For New & Returning Series On Broadcast, Cable & Streaming

    Midseason is the new fall. As Hollywood and the broader industry continue to recover from the debilitating dual actors and writers strikes, the 2024 television landscape is coming into focus. All of the broadcast networks have set return dates for most of their shows, but there’s no usual Premiere Week to speak of. But as …

  • Plastic treaty talks in Ottawa get underway with pleas for high ambition, flexibility

    OTTAWA — The Ecuadorean diplomat tasked with shepherding the fourth round of talks for a global plastic treaty in Ottawa this week says the world cannot wait much longer for governments to get it right. Luis Vayas Valdivieso was tapped last fall to be the lead negotiator for the treaty negotiations which got underway in Ottawa this morning. It is the fourth of five planned rounds aimed at having an agreement by the end of this year to chart a course towards ending plastic waste by 2040. Valdivie

  • How a financial advisor can help improve your money management

    Financial planning has proven to be a challenge for many individuals, with two-thirds of Americans believing their financial planning efforts need improvement, according to a study conducted by Northwestern Mutual. Domain Money Founder and CEO Adam Dell joins Wealth! to discuss the benefits of seeking guidance from a financial advisor, saying, "nobody plans to fail, they fail to plan." Dell notes that when seeking an advisor, it's important to find one "who will work with you where you are in your financial life". He suggests that a financial advisor can provide individuals with "a clear understanding" of their current financial health and a well-defined roadmap to achieve their goals. Additionally, Dell emphasizes that for those seeking to embark on a journey toward financial success, a financial strategy is an essential first step. This strategy should prioritize addressing immediate needs, such as debt management or savings goals, "then you can get into bigger hopes and dreams." For more expert insight and the latest market action, click here to watch this full episode of Wealth This post was written by Angel Smith

  • Google fires 20 more workers who protested $1.2bn Israel contract: ‘Ultimately we are a workplace’

    The protests took place inside Google’s offices in New York and Sunnyvale, California