Should have scrolled down a bit further before posting the previous one. GLTA
WELL HEALTH TECHNOLOGIES CORP.
Guidance
Our Conclusion
WELL Health announced the acquisition of CarePlus Management, a
provider of recruiting, services, and revenue cycle management for the
anesthesia market. CarePlus was acquired through WELL’s CRH Medical
subsidiary with cash on hand, and further terms of the acquisition were not
provided. However, in connection with the deal WELL increased 2023 annual
revenue guidance, with revenue now expected to be $740MM-$760MM, 7%
above the midpoint of the previous guide of $690MM-$710MM. We expect
that revenue from CarePlus is the primary source of the increased guidance,
implying that CarePlus will contribute ~$100MM in annual revenue. Adjusted
EBITDA guidance of 10%+ growth is unchanged, further implying CarePlus
will contribute minimal EBITDA and that the deal will be margin dilutive to
CRH and to WELL’s consolidated business. We expect further details on
potential synergies between CarePlus and CRH, future margin potential
across CarePlus, and consideration paid during WELL’s Q2 earnings call.
Our sum of the parts valuation uses an EBITDA multiple on the CRH
business and despite the 12% increase to our 2024E revenue forecast, our
price target increases 7% from $7.00 to $7.50 given the more limited
EBITDA contribution from CarePlus.
Key Points
About CarePlus: CarePlus is headquartered in Atlanta and has three
primary businesses: 1) RADAR Healthcare Providers, a full-service
recruitment company that provides temporary and permanent placement
anesthesia staffing solutions. The RADAR division contributes the majority of
CarePlus’ revenue, and CRH plans to expand the scope of RADAR to other
specialties and healthcare professionals. 2) An anesthesia services division,
similar to CRH’s existing business, which operates in 18 ASC locations
across nine states, including South Carolina, Mississippi, Alabama, South
Dakota and Illinois, where CRH previously did not operate. We expect
Anesthesia services to generate the majority of CarePlus’ limited EBITDA.
3) Premier Choice Billing, which provides billing, revenue cycle management
(RCM) and collection services for healthcare entities. RCM is a newer
business and is the smallest of the three segments, likely contributing
negative EBITDA as it looks to grow its footprint.
Guidance Increased: In connection with the acquisition announcement,
WELL Health increased 2023 annual revenue guidance to $740MM-
$760MM, 7% ahead the midpoint of the previous guide of $690MM-$710MM,
and 7% ahead of consensus and our estimate based on the midpoint.
Adjusted EBITDA guidance of 10%+ growth is unchanged, implying limited
EBITDA contribution from the CarePlus business. While we expect limited
EBITDA from CarePlus, we also believe that a number of WELL’s
businesses - including Circle Medical and WISP - are facing increased costs
and margins are unlikely to return to the 18%+ levels seen prior to 2023.