After his research found “significant strain within the global healthcare system emerging from the pandemic,” Stifel analyst Justin Keywood initiated coverage of HealWELL AI Inc. with a “buy” recommendation, seeing artificial intelligence as a potential solution.
“Our physician survey revealed a deteriorating healthcare system, emerging from the pandemic with a worsening doctor shortage, leading to record emergency room wait-times and lengthening delays for imaging, specialist appointments and surgeries,” he said. “Patients also deferred regular check-ups during the pandemic, leading to more health issues and rise in diseases. Primary-care physicians spoke to this dynamic as leading to 6-8 issues raised/appointment, vs. 2-3, pre-pandemic. As a result, doctors’ time to review patient records for preventative care is severely impacted, where we believe HEALWELL AI’s platform could help solve, leading to better patient outcomes. HEALWELL AI is already serving Life Science customers, including six/top 10 pharma, but we see the platform building through M&A and commercialization broadening. Backing HEALWELL AI is WELL Health Technologies (WELL) as the largest shareholder and #1 Canadian health network, along with U.S. healthcare access, serving as a competitive advantage.”
In a research report released Thursday, Mr. Keywood said M&A activity could help build out the Toronto-based company’s platform, which screens patient medical/health records for risk factors and early disease detection with prescription analysis and Pharmacovigilance capabilities, and broaden commercialization.
“”HEALWEALL AI has commercialized its AI platform, mostly to Life Sciences customers, including six/top 10 pharma, validating the offering and providing wide data insights including early disease detection and high-valued therapeutics prescribed,” he said. “HEALWELL AI has patient-data/privacy protections in place, including PHIPA/PIPEDA-compliance. We see HEALWELL AI as continuing to build out its global platform by acquiring commercial grade, profitable software and other AI applications but also electronic health/medical record software (EHR/EMR) for data insights. As indication, we forecast sales to expand from $22-million (run-rate) to $40-million by year-end with $30-millllion in cash to support and $32-million of in-the-money warrants.”
The analyst set a target of $3.60 per share, exceeding the current average on the Street of $3.18.
“Evaluating AI & technology companies at an early stage, in a rapidly evolving and dynamic area presents valuation challenges, risk and volatility where some peers could have multiples soar to more than 20 times sales with limited financials,” said Mr. Keywood. “HEALWELL AI has revenue from different sources, including AI and data science, medical health records software, physician care and CRO as the platform builds out through M&A. To value AIDX, we take into consideration the early-stage, rapid growth trajectory, expected improvements in profitability, market demand for AI solutions to fix healthcare and perceived investor sentiment and compare to other rapidly evolving and dynamic stocks/industries. HEALWELL AI has also recently added management bench strength including a new CFO and two Co-COOs with CEO, Dr. Alexander Dobranowski, continuing to drive the vision as a hands-on medical and entrepreneurial-focused leader.
“From our assessment, we believe an elevated EV/sales multiple can be sustained in the near-term and use 11 times 2025 estimated sales to derive our $3.60 target. Our methodology is not without risk, but the rewards could also be outsized, reflected in our rating as HEALWELL AI can continue the momentum to become a much larger market cap, publicly traded AI play where few TSX/TSXV options exist.”