The Toronto Stock Exchange has been riding a wave of volatility. Last week’s turbulence rattled many investors, but the underlying signs still point toward a broad rally. In markets where new highs are constantly being tested, the challenge is no longer simply finding a stock that can rise in the short term. The real task is identifying companies that can continue creating value well into the future.
The best candidates are businesses that combine innovation, visionary leadership, and exposure to sectors undergoing rapid expansion. One company that checks all of those boxes is WELL Health Technologies (TSX:WELL), a fast-growing Canadian healthcare technology firm that has been steadily outpacing the market since its public debut in April 2016.
What makes WELL especially interesting is its dual identity: part healthcare operator, part technology innovator. As the first Canadian health company to integrate with the iPhone and now moving aggressively into global markets, WELL is positioning itself at the intersection of digital health and primary care.
With shares currently down more than 25 percent from February highs, investors are looking at what could be a rare chance to buy into a long-term growth story at a discount.
Why WELL Health Stands Out
WELL Health carries a market capitalization of roughly $1.32 billion. The company is built around the belief that Canada’s primary healthcare system is decades behind in terms of digital adoption. This lack of modernization has created a system where patients endure lengthy wait times while doctors are left with heavy administrative burdens that take away from direct care.
The scale of the problem also points to the scale of the opportunity. Healthcare is one of the largest and most critical sectors of the Canadian economy, supported heavily by public funding. In 2017 alone, federal spending on healthcare delivery totaled $242 billion, which represented about 11 percent of the country’s GDP. That kind of spending, coupled with rising demand for efficiency, opens the door for companies like WELL to deliver solutions.
By combining its role as a healthcare operator with its investment in technology platforms, WELL is aiming to improve patient outcomes while simultaneously making physicians’ practices more efficient. This dual model gives it both operational expertise and a technological edge.
WELL has also built its reputation as an active acquirer. The company has been steadily adding both digital health platforms and brick-and-mortar clinics to its portfolio, creating synergies across its network. As of early 2021, WELL had become the largest single chain of primary healthcare clinics in British Columbia, giving it both a strong regional footprint and a scalable model it can replicate across other markets.
Record-Setting Quarterly Performance
The company’s growth is already showing up in its financials. In the first quarter of 2021, WELL reported revenue of $25.6 million, an impressive 150 percent increase compared with the same quarter a year earlier. The surge was fueled by software and services sales, which jumped by 345 percent year over year.
Equally important, WELL delivered its second straight quarter of positive adjusted EBITDA, reaching $1.1 million in Q1. For a company in aggressive growth mode, proving that it can already generate operating profitability is a strong signal to investors.
The momentum was further boosted by one of WELL’s most ambitious moves to date. In March, the company announced its acquisition of CRH Medical for US$372.9 million. The deal was financed through a $302.5 million subscription receipts offering along with a US$300 million senior secured credit facility administered by JP Morgan and a group of lenders. This acquisition not only adds scale but also gives WELL a foothold in the U.S. healthcare market.
CRH itself is expected to generate US$150 million in revenue in 2021, along with US$60 million in EBITDA and US$40 million in free cash flow. To put that in perspective, WELL’s total revenue for 2020 was $50.24 million. Post-acquisition, WELL’s combined pro forma revenue is now approaching $300 million, with more than $80 million in EBITDA on a run-rate basis. This transformation reflects how quickly the company is scaling from a small Canadian operator into an international health-tech player.
What Lies Ahead for WELL Health
Analysts on Bay Street are paying close attention. Forecasts call for WELL’s revenue to climb 367.5 percent year over year to $235 million in 2021, followed by another 40.4 percent jump to $330 million in 2022. At the same time, the company’s bottom line is expected to turn the corner, improving from a loss per share of $0.03 in 2020 to positive earnings of $0.08 in 2022.
Given WELL’s acquisition-driven strategy, these estimates may even prove conservative if management continues to add new assets at the same pace. For investors, this presents a unique blend of growth potential and contrarian appeal. The stock currently trades 27 percent below its record high, making it attractive both to those seeking high-growth opportunities and to those looking for undervalued entry points.
Analysts see more upside ahead. The average 12-month target price on WELL sits at $11.35, which implies a potential gain of about 67 percent from its current level. From a valuation perspective, the company trades at less than four times its projected 2022 sales. Considering the growth trajectory, recurring revenue streams from digital services, and proven track record of acquisitions, that multiple looks reasonable, if not outright compelling.
WELL Health is more than just a healthcare stock. It is part of a larger story about the digitization of one of Canada’s most important sectors. By bridging the gap between traditional primary care and modern technology, WELL is addressing systemic inefficiencies while unlocking new revenue streams.
For investors looking in May 2021, the combination of rapid revenue growth, profitable acquisitions, and discounted share price makes WELL Health one of the most intriguing healthcare plays on the TSX. It represents not only a chance to buy into a strong growth story but also to participate in the ongoing transformation of healthcare delivery in Canada and beyond.
