TD's Take Guiding to a Better-than-Expected Q4/F21
Event
This morning, WELL provided a business update, including better-than-expected Q4
guidance.
Impact: POSITIVE
Guiding to Q4 revenue and Adj. EBITDA ahead of consensus. WELL provided
updated Q4/F21 guidance:
Q4 annualized revenue run rate of >$450mm, implying >$112.5mm in Q4 revenue,
which is in-line with, if not better than, our $112.8mm estimate (at the high end of
the Street) and ahead of consensus of $109.8mm. We believe the results imply
continued healthy organic growth of >10% y/y.
Q4 annualized Adj. EBITDA run rate approaching $100mm, implying Q4 Adj.
EBITDA of close to $25mm, which is in-line with, or better than, our estimate of
$23.9mm (at the high end of the Street) and consensus at $22.5mm.
The updated revenue guidance is better than what was provided in the Q3/F21
release (i.e., Q4/F21 pro forma ARR approaching $450mm) while the Adj. EBITDA
run-rate was unchanged.
Q4/F21 omni-channel patient visits were ~693k, up 121% y/y and 19% q/q. WELL
also delivered ~146k diagnostic visits at MyHealth and ~126k consultation at WISP.
Strong execution in the U.S. WELL highlighted strong performances across its U.S.
businesses:
Circle Medical and WISP's combined ARR is nearing US$70mm, up almost 10%
from its update last month (ARR >US$64mm). Their combined ARR is expected
to exceed US$100mm (>40% above current levels) later this year.
CRH is expected to generate US$43mm in FCF in 2021 before tax and leverage
costs. It completed one acquisition in Q4/F21 (adds US$2.5mm in Adj. EBITDA
annually) and opened two haemorrhoid treatment clinics in B.C. and Ontario
(51%-owned) with plans to open more clinics in Canada and the U.S. We believe
its solid performances should help alleviate concerns about WELL's largest
acquisition, which previously has had inconsistent performances.
Planning to buy back stock. With the significant decline in the stock in recent
months to a 52-week low, WELL indicated it plans to begin buying back its shares
under its NCIB once it comes off of restriction after the Q4 results are released
(expected in mid- to late-March). We have WELL exiting Q4/F21 with close to
$100mm in cash, so WELL could be very active with the buyback.
Recommendation: BUY
Risk: HIGH
12-Month Target Price: C$9.00
12-Month Dividend (Est.): C$0.00
12-Month Total Return: 135.0%