WELL Health Technologies Corp.
(WELL-T) C$4.23
Highlights from Investor Meetings; Looking to Unlock Value
Event
Yesterday, we hosted investor meetings with CEO Hamed Shahbazi.
Impact: NEUTRAL
Canadian clinic footprint poised for big expansion. WELL is focused on expanding on its leadership position as the largest owner/operator of outpatient medical clinics in Canada. It is targeting ~100 clinics by year-end (vs. ~83 currently), with a footprint of >500 clinics across Canada, similar to dentalcorp currently, being its long-term goal. Given the very attractive valuations for clinics (e.g., WELL paid <2.0x-2.5x EBITDA for its last three clinics) and a large fragmented market, including ~3,300 clinics that already use its digital solutions, we believe WELL can rapidly grow its clinic footprint in a capital-efficient manner.
Selectively building out a U.S. clinic network. In part driven by the eventual end of U.S. federal telehealth waivers covering patients requiring prescriptions for controlled substances, Circle is expanding its clinic footprint beyond the Bay Area, with flagship locations planned for NYC, Los Angeles, and Florida, and low-cost, co- working medical spaces in other states, including Arizona, Illinois, New Jersey, and Pennsylvania. Circle is also planning to leverage CRH's growing network of banding clinics. Despite its planned larger bricks-and-mortar clinic presence in the future, virtual care revenue is still expected to account for the vast majority of revenue.
Potential Circle/Wisp monetization event upcoming? Mr. Shahbazi highlighted the exceptional growth at Circle and Wisp, particularly at Circle, where we believe ARR is up nearly 10-fold since the acquisition announcement two years ago. Given the rapid and profitable growth at Circle and Wisp, Mr. Shahbazi indicated that WELL continues to evaluate potential monetization opportunities, including a potential spin-out/IPO, which could help unlock significant value, in our view, even in these challenging markets.
Making life better for care providers. Despite the ongoing doctor shortage, WELL continues to attract and retain healthcare practitioners to its clinic network, with >2,300 now on its roster. Physicians retain ~50-80% of total medical billings, while WELL takes over management of the clinic and provides physicians with its full suite of digital tools and services, enabling them to spend significantly more time on patient care.