CIBCPotential for them to raise their target in the next day or two. GLTA
EQUITY RESEARCH
November 7, 2024 Flash Research
WELL HEALTH TECHNOLOGIES CORP.
Q3/24 First Look: Primary Care & Circle Medical Drive Growth
Our Conclusion
WELL reported second quarter revenue that was 1.5% ahead of consensus
while adj. EBITDA of $32.7MM was 2% ahead of the Street and adj. EBITDA
margin of 13% was 10 bps better than expected. Organic growth of 23%
(clinical absorptions contribution not disclosed) was driven by Primary Care
and significant growth at Circle Medical (currently up for sale) which was up
61% Y/Y organically. Outperformance there offset Y/Y declines in revenue
and adj. EBITDA at CRH . Revenue guidance was increased by 1% at the
midpoint while profitability and free cash flow guidance was maintained.
Key Highlights
Consolidated Results: WELL reported Q3/24 revenue of $251.7MM, up
23% Y/Y (23% organic with 4% acquired growth offset by divestitures), +2%
vs. consensus and CIBCe ($247.8MM/$247MM). Adj. operating EBITDA of
$32.7MM was +2% vs. consensus and +1% vs. CIBCe ($32.0MM/$32.3MM),
while margin of 13.0% was 10 bps above consensus (12.9%) and 10 bps
below CIBCe (13.1%). WELL generated adjusted FCF of $16.2MM, on track
to management’s annual target of $55MM.
Full-year Guidance: WELL slightly increased 2024 guidance this quarter,
taking revenue guidance up 1% at the midpoint from the previous $970MM–
$990MM to $985MM–$995MM, with the midpoint now very slightly ahead of
consensus ($983MM). Adj. EBITDA is still expected to be at the upper end of
the $125MM–$130MM guidance range, as the shift from stock-based comp
to cash incentive comp weighs on adjusted margins. FCF available to WELL
shareholders is still expected to be “over $55MM”, +30% from 2023. $55MM
is before the impact of increases in CapEx in Q4 and timing of tax payments.
Segmented Performance
• Canadian primary care revenue was $47.8MM, up 63% Y/Y and adj.
EBITDA was $2.9M (6.1% margin), up 27% Y/Y.
• WELL Diagnostics revenue of $30.2MM was up 6%Y/Y with adj.
EBITDA of $6.7MM (22.3% margin) up 2% Y/Y. Margins were down
80 bps Y/Y.
• CRH revenue of $63.2MM was down 2.4% Y/Y with adj. EBITDA of
$17.6MM (27.8% margin) down 13% Y/Y. Margins were down 350
bps Y/Y.
• Circle Medical revenue of $36.7MM was up 61% Y/Y with adj.
EBITDA of $2.6MM (7% margin) up from ($1M) in Q3/23.
• WISP revenue of $26.9MM was up 35% Y/Y with adj. EBITDA of
$1.5MM (5.4% margin) up from $0.2MM in Q3/23.
• SaaS and Tech revenue of $15.6MM was down 2.4% Y/Y. Adj.
EBITDA of $4.4MM (29% margin) with margins up 810 bps Y/Y.