CIBCHave an $8.00 target. GLTA
EQUITY RESEARCH
May 11, 2022 Flash Research
WELL HEALTH TECHNOLOGIES CORP.
Q1/F22 First Look: Hybrid Care Model Remains Resilient;
Guidance Increased
Our Conclusion
WELL reported a strong Q1/F22, with revenue 6% above consensus and
Adjusted EBITDA 18% above consensus. The strong results were driven in
part by organic growth improving to ~15%, as well as growth in patient visits.
The company increased its 2022 outlook, with revenue now expected to
exceed $525MM, up 5% from the previous guidance of exceeding $500MM
and introduced adjusted EBITDA guidance of “approaching $100MM.”
Despite the Omicron wave in Q1, results remained resilient given the hybrid
care model. We will be looking for more details regarding segmented results,
sources of organic growth and improved profitability, and capital deployment
plans for 2022 on tomorrow’s earnings call at 1:00 p.m. ET.
Key Points
Q1 Results: WELL reported Q1/F22 revenue of $126.5MM, above
consensus and CIBCe ($119.2MM/$120.2MM) and better than expected
given the pre-released result of “exceeding $120MM.” Organic growth of 15%
was up from ~10% in the prior quarter. Management noted strength across
all segments and across both in-person and online channels. Gross margins
(ex-D&A) of 54.8% were 320 bps above consensus and our estimate
(51.6%), driven by higher-margin revenue at CRH, MyHealth and Virtual
Services. Adjusted EBITDA of $23.5MM came in above consensus and our
estimate ($20MM). Adjusted EBITDA margins were 18.6%, 180 bps ahead of
consensus and our estimate (16.8%).
Updated 2022 Outlook: WELL increased 2022 revenue guidance by 5%
from $500MM to $525MM given the strong organic growth in the quarter.
WELL also introduced 2022 EBITDA guidance of “approaching $100MM.”
The new guidance is 3% ahead of consensus on revenue and in line with
consensus on EBITDA, implying that margins will be ~30 bps weaker than
expected. WELL is expecting run-rate revenue in the U.S.-based Virtual
Services businesses to exceed $130MM by the end of 2022.
Patient Visit Metrics: Total omni-channel patient visits of 772,093
represented a 62% Y/Y increase and a 10% increase over the prior quarter.
MyHealth conducted 149,906 visits in the quarter, while Wisp recorded
142,988 asynchronous visits. In total, WELL achieved 1,064,987 patient
interactions during Q1.
Bought Deal Details: WELL announced a $30MM bought deal at
$3.70/share, a 7% discount to today’s closing price. Proceeds will be used to
fund growth initiatives, including potential M&A in areas such as physician
acquisition, higher-margin specialty clinics, and executive health.
Conference Call Details: WELL will be hosting a conference call at 1:00
p.m. ET tomorrow. Dial in: 888-664-6383 (conference ID: 17765709