In an Aug. 23 research note, analyst Daniel Rosenberg reported that his firm Haywood increased its price target on WELL Health Technologies Corp. (WELL:TSX.V; WLYYF:OTCMKTS) to CA$1.80 per share from CA$1.70 because the company, continuing to invest in growth, is likely about to acquire another entity.
Already, WELL Health is buying a 51% interest in SleepWorks Medical for CA$1.134 million and the option to purchase the remaining 49%, noted Rosenberg. The transaction is slated to close in September.
This deal comes on the heels of WELL Health recently completing a bought deal financing for gross proceeds of CA$15 million. Even after the SleepWorks transaction, WELL Health currently has an estimated $20 million in cash on hand, "leaving it ample room to pursue mergers and acquisitions (M&A)," Rosenberg indicated.
In other news, Rosenberg reported that WELL Health's Q2/19 results "were positive and ahead of expectations on the topline." Q2/19 revenue was CA$7.4 million versus consensus' forecast of CA$7 million. This represents a 258% revenue increase year over year.
WELL Health operates primary healthcare facilities and an electronic medical records business. The former accounts for most, or 88%, of total revenue, however, recent M&A activity will "shift more revenue toward tech," Rosenberg commented. "We expect new initiatives within clinics and recent M&A to provide incremental revenue for the year and help drive some margin improvement."
Haywood has a Hold rating on WELL Health because "shares remain ahead of themselves," given about "10% exposure of tech revenue and limited synergies from acquisitions extracted to date," explained Rosenberg. The current share price is about CA$1.65.
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Disclosures from Haywood Securities,WELL Health Technologies Corp., Research Report, August 23, 2019
Analyst Certification: I, Daniel Rosenberg, hereby certify that the views expressed in this report (which includes the rating assigned to the issuer’s shares as well as the analytical substance and tone of the report) accurately reflect my/our personal views about the subject securities and the issuer. No part of my/our compensation was, is, or will be directly or indirectly related to the specific recommendations.
Important Disclosures
Of the companies included in the report the following Important Disclosures apply:
▪ Haywood Securities Inc. or one of its subsidiaries has managed or co-managed or participated as selling group in a public offering of securities for Well Health Technologies Corp. (WELL-V), in the past 12 months.
Other material conflict of interest of the research analyst of which the research analyst or Haywood Securities Inc. knows or has reason to know at the time of publication or at the time of public appearance: n/a.
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