WELL Health Technologies Corp WHTCF

TD Raise Target

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WELL Health Technologies Corp.

(WELL-T) C$4.79

Clinic Tour Highlights Event

We toured two of WELL's Vancouver clinics and are updating our forecasts to reflect recent acquisitions.

Impact: SLIGHTLY POSITIVE

Benefiting from the digitalization of the clinic. We visited WELL's City View Medical Clinic to see how WELL is deploying its comprehensive suite of technology solutions in its clinics to help improve clinic workflow/efficiency and also patient care and experiences. There have been significant changes since we last visited the clinic pre-pandemic. Most of the patient journey has now been automated/digitized, from initial patient engagement (i.e., booking) to in-clinic check-in to post-appointment feedback. With >50% of clinic appointments now booked online (vs. via phone previously) and automated patient check-in, medical office assistants (MOAs) are freed up to perform higher-value work, which has helped lead to an improvement in clinic margins by ~200-300bps.

WELL's primary clinic Adjusted EBITDA margins (LTM) have trended upward (~15% in Q1/F23 vs. ~9% last year), and we believe there could still be material improvements ahead, especially since WELL's other clinics are further behind in their digital transformation and more work is planned to improve clinic workflow (e.g., patient way-finding). Another benefit of automated check-ins is more accurate patient data, with ~40% of patients visiting the clinic updating their information.

Furthermore, the deployment of WELL AI Voice, a GenAI solution that captures patient interactions and generates succinct patient chart notes, helps reduce the administrative burden of doctors. WELL's doctors who have used it have had time- savings of up to 30%, which could help them earn more (i.e., allow them to see more patients), and thus drive stronger revenue growth and/or reduce burnout/improve retention by providing them with more free time.

TD Investment Conclusion

Due to an increase in our estimates and in peer valuations, we are increasing our target price to C$8.50 (from C$7.50), based on our sum-of-the-parts valuation. Our valuation implies an ~2.5x multiple of our F2024 revenue forecast. WELL remains our top pick. We expect its superior execution to-date to continue, highlighted by its strong organic and M&A-driven growth and healthy margins and FCF that we believe should allow it to take advantage of a very attractive M&A environment.