Currently have a $6.50 target. GLTA
EQUITY RESEARCH
WELL HEALTH TECHNOLOGIES CORP.
Q3/23 First Look
Our Conclusion
WELL reported a third quarter that was ahead of consensus and our estimate
on revenue, while adjusted EBITDA of $28.2MM was in line with the Street
and adjusted EBITDA margin was 20 bps below. WELL revised its 2023
guidance upwards slightly, now expecting revenue between $755MM-
$765MM, and provided 2024 revenue guidance of $900MM, also slightly
above the Street ($893MM). Guidance for adjusted EBITDA was not
provided, but we expect adjusted EBITDA margins to remain in the 14%
range given that the recent acquisitions of CarePlus and additional MCI
Onehealth clinics are expected to add revenue, but limited EBITDA. We will
be looking for more granular information on business-level performance as
well as additional details on the company’s recent AI solutions, including
WELL AI Decision Support and WELL+ Longevity services, on the call at 1
p.m. ET this afternoon.
Key Highlights
Q2 Results: WELL reported Q3/23 revenue of $205.4MM, above consensus
and our estimate ($199.4MM/$198.3MM). Adjusted EBITDA was up $12.3M
on an organic basic, implying acquisitions contributed ($11.9M) in adjusted
EBITDA. Gross margin (ex-D&A) of 46.1% was down 750 bps from 53.6% a
year ago and below consensus of 50.8%. Adjusted operating EBITDA of
$28.2MM was in line with consensus and 3% above our estimate
($28.0MM/$27.4MM) while margin of 13.8% was in line with our estimate
(13.8%) and 20 bps below consensus (14.0%).
Revenue Guidance Raise: WELL increased 2023 guidance again this
quarter, taking guidance up from the previous $740MM-$760MM to $755MM-
$765MM, with the low end in line with consensus ($755MM). The company
also provided 2024 revenue guidance of $900MM, slightly above consensus
of $893MM. Guidance was not provided for adjusted EBITDA; however,
management noted the company is focused on growth while delivering solid
and sustained adjusted EBITDA and cashflow. We expect adjusted EBITDA
margins to remain in the 14% range given that the recent acquisitions of
CarePlus and additional MCI Onehealth clinics are expected to add revenue,
but limited EBITDA.
Segmented Results: Canadian patient services revenue was $57.8MM, an
increase of 40% Y/Y and slightly below our expectation of $58.9MM. U.S.
patient services revenue of $130.7MM increased 27% Y/Y and was above
our estimate of $122.1MM, driving the majority of the revenue beat relative to
our numbers. SaaS and Technology services revenue was $15.9MM, an
increase of 10% Y/Y and below our estimate of $17.2MM