Q2/24 results ahead of estimates; 2024 revenue guidance increased, adj. EBITDA guidance reiterated
TSX: WELL | CAD 4.64 | Outperform | Price Target CAD 6.00
Sentiment: Positive
Our initial view: At first glance, we view WELL's Q2/24 report as slightly positive for the shares. WELL reported Q2/24 revenues of $243.1MM (+5% q/q; +42% y/y), ~2.2% above RBCe ($237.9MM) and ~2.8% above consensus ($236.6MM). Q2/24 adj. EBITDA of $30.9MM was ~4.2% ahead of RBCe ($29.6MM) and ~4.6% above consensus (~$29.5MM). Adj. EBITDA to WELL shareholders of $23.0MM (+8% q/q; +3% y/y) was below RBCe ($24.3MM). WELL provided updated 2024 revenue guidance of $970-990MM (+25-28% y/y), which was ~$10MM above the prior guidance of $960-980MM (+24-26% y/y). The updated revenue guidance compares to RBCe ($971MM) and consensus ($973MM). Management noted that the company is on track to achieve $1B in revenues by the end of 2024 including acquisitions that are currently in the pipeline. The company reiterated annual adj. EBITDA to be in the "upper end" of the $125-130MM (+10-15% y/y) guidance range vs. RBCe ($126MM) and consensus ($127MM). Management expects FCF attributable to shareholders to be ~$55MM (vs. $42.4MM in 2023 and $48.8MM in 2022) vs. RBCe ($59MM). The company has historically provided conservative guidance, in our view. On the earnings call later today, we expect the focus to be on a) the ongoing integration and turnaround of the acquired loss making primary care clinics in Canada; b) the company's M&A pipeline - WELL’s pipeline of new clinic opportunities consisted of ~40 clinics under LOI agreement of which ~10 were actionable under the clinic absorption model as of Q1/24; and c) updates on the strategic alternatives for Wisp/Circle and associated timelines.
WELL reported revenues of $243.1MM, ~2.2% ahead of RBCe ($237.9MM) and ~2.8% above FactSet consensus ($236.6MM).
WELL reported Q2/24 revenues of $243.1MM (+5% q/q; +42% y/y), ~2.2% above RBCe ($237.9MM) and ~2.8% above consensus ($236.6MM). The revenue strength vs. RBCe was led by better-than-expected performance in US Patient and Provider Services segment and CDN Patient Services partially offset by weaker-than-expected SaaS and Tech Services. US Patient and Provider Services revenues of $149.5MM (+45% y/y) were ~4% above estimates (RBCe: $144.0MM; consensus: $144.1MM). Within the segment, Circle Medical revenues were $32.0MM (+11% q/q; +53% y/y), ~7% ahead of RBCe ($29.9MM) and ~9% ahead of consensus ($29.3MM); Wisp revenues were $24.3MM (+15% q/q; +27% y/y), ~6% ahead of RBCe ($23.0MM) and ~2% ahead of consensus ($23.7MM); CRH and Radar combined revenues were $93.3MM (+3% q/q; +47% y/y), ~2% ahead of RBCe and consensus estimates. CDN Patient Services revenue of $76.7MM (+42% y/y) was ~1% ahead of RBCe ($75.9MM) and ~2% ahead of consensus ($75.5MM). SaaS and Technology revenue of $16.9MM (+27% y/y) was in line with consensus ($16.9MM) but ~6% below RBCe ($18.0MM). WELL reported 21% y/y of organic growth in Q2/24 including absorptions (16% y/y excluding absorptions).
Adj. EBITDA of $30.9MM (+9% q/q; +11% y/y) was ~4.2% above RBCe ($29.6MM) and ~4.6% above consensus ($29.5MM). Adj. GMs of 44.2% in the quarter increased q/q (44.1% in Q1/24) and was slightly below RBCe and consensus (~44.3%). Adj. EBITDA margin of 12.7% was up q/q (12.2% in Q1) and ahead of RBCe and consensus (~12.5%). Adj. EBITDA to shareholders of $23.0MM (+3% q/q; +8% y/y) was below RBCe ($24.3MM). Free cashflow attributable to WELL shareholders was $8.7MM during Q2/24 ($9.4MM during Q2/23). During the quarter, WELL paid down $14MM in debt and reduced the leverage ratio to 2.67x for bank debt and 3.45x for all debt including convertible debentures.
Increased revenue guidance by $10MM; Reiterated adj. EBITDA guidance. WELL provided updated 2024 revenue guidance of $970-990MM (+25-28% y/y), which was ~$10MM above the prior guidance of $960-980MM (+24-26% y/y). The update revenue guidance compares to RBCe ($971MM) and consensus ($973MM). Management noted that the company is on track to achieve $1B in revenues by the end of 2024 including acquisitions that are currently in the pipeline. The company reiterated annual adj. EBITDA to be in the "upper end" of the $125-130MM (+10-15% y/y) guidance range vs. RBCe ($126MM) and consensus ($127MM).