Well Health Technologies pops after earnings which reveal they have $17.5M on the balance sheet and continued to acquire companies throughout COVID.
What Does Well Health Technologies Do?
For those of you who don’t know what Well does, they provide digital health SAAS and operate their own health clinics in BC. Their mission started to form in 2018 as the company went through various name and vision changes.
Company History And Highlights
They also pulled in the 30th richest man, Sir Li Ka-Shing as an investor for 4 CONSECUTIVE rounds. This man is one of the richest people in Hong Kong. He owns businesses like the Watson brand which are in the pharmaceutical space. This is positive momentum for Well to get such a strategic investor who continues to invest in their business.
Throughout 2019, they acquired 4 EMR companies and continued to acquire 2 more in 2020. Within 2 years, they became the 3rd largest EMR provider within Canada through acquisition. They don’t plan to stop acquiring to grow their market share and do so diligently. They look for companies that are selling for 4x EBITDA which is a fair value in my opinion.
They have seen a 300% growth in their revenue year over year although the losses have increase. This is mainly due to all the expenses of acquiring companies and costs of optimizing operations between them.
The CEO has a good track record as he has already had one successful company exit (Tio Networks). He is very value oriented and also is only taking stock compensation, no salary. This shows that he is putting his money where his mouth is. As a result, the stock price has continued to rise because of investor confidence in the company to run a successful business.
Quick Thoughts On Recent Stock Price And The Future
There has been a drop in the stock price from its latest all time highs because as a small cap company, there bound to be a great number of day traders and swing traders playing this stock. This is the same with all small cap stocks as big funds usually have a minimum market cap criteria. This is supported by Yahoo Finance’s brake down of shareholders showing that around 35% of the company is held by insiders and institutions. However once Well Health Technologies grows to ~$1B, larger funds will start to take positions in this company.
I think Well Health Technologies is poised for success in the future because the health system is highly fragmented and archaic. Technology has penetrated almost every other industry and its only a matter of time before the healthcare system gets up to date. The reason why the healthcare system is slow though is due to regulation and privacy policies. This makes it a “high hanging” fruit. All the other low hanging fruit software businesses have been built out.
Well Health Technologies has the tenacity and expertise to navigate the waters of regulation. The barrier to entry into this space is quite high already. As they continue to grow, this will only increase their moat.
I currently hold a position in Well Health Technologies