This 1 Stock Is Better Than Shopify (TSX:SHOP)

WELL Health Technologies Corp (TSXV:WELL) is up 240% to date. Is it time to invest?

| More on:

As I write this article, I am slightly conflicted as to whether I should recommend the company or not. The reason being that despite WELL’s (TSXV:WELL) stock increasing 240% since the beginning of the year, it has suffered a net loss in each of the past five fiscal years.

For those of you unfamiliar with WELL, it’s a healthcare-tech company. The company owns and operates Primary Hclinics, which provide healthcare related services. This is coupled with its Electronic Medical Records (EMR) service that aims to make clinics digital.

The company collaborates with doctors and clinics to achieve its mandate. Fiscal 2017 was a dismal year for the company with revenues of $415 thousand and a net loss of $5.6 million.

Things are looking up in fiscal 2018, however, with revenues of $10.6 million and a net loss that has improved to $2.8 million. I believe that the company’s stock price will continue to increase due to the growth of the company and a high working capital.

Growing company

The company has been on an acquisition frenzy in the past couple of years, having acquired 19 clinics in fiscal 2018 alone.

The company purchased six medical clinics in February of 2018 and complemented this with an additional 13 clinics in November 2018. Its revenues are derived solely from services rendered by these clinics.

In January of 2019 the company acquired all issued and outstanding shares of Northwest Electronics Records and Design (“NerdEMR”) that has a portfolio of 220 clinics in British Columbia and services 2000 registered practitioners, 1700 non-medical staff and almost five million patients.

The company’s growth is so noteworthy that renowned Hong Kong businessman, Li Ka-shing, is a principal investor in the company, having purchased a portion of the 2.17 million shares along with Horizons Ventures.

Further to this, seven of the company’s management team have purchased shares amounting to $1.73 million. This is a good sign and is a strategy also used by Pollard Banknote – which is 67.5% owned by the Pollard family – in which it has achieved great success to date.

Second quarter 2019 revenues are $7.4 million which suggests annualized revenues of $29.6 million, up 179% since fiscal 2018. The company also acquired OSCARprn – Treatment Solution Ltd, KAI Innovations and SleepWorks Medical Inc. in fiscal 2019 thus far.

The company reports a cash and cash equivalents balance of $6.7 million at the end of second quarter 2019.

High working capital

Working capital is calculated by subtracting current liabilities from current assets. It is a measure of the surplus of assets to liabilities the company has to dedicate toward business growth.

As of fiscal 2018, the company has $1.5 million in working capital surplus, which is a significant amount given the size of the company. Investors should be excited to hear this, as the company is able to use the assets to generate additional revenues which ultimately drives the bottom line.

Summary

WELL is a company on the verge of a breakthrough.

With its technology-centric approach to health care and its acquisition-focused growth model, there is every indication that this company will continue to grow in the future and ultimately deliver greater returns for investors.

The $1.5 million in working capital surplus isn’t too shabby either, as it means the company will be able to dedicate a significant portion of its current assets to generate additional revenue. This is definitely a win in my books.

For those of you who are more risk-oriented, check out this stock as well.

If you liked this article, click the link below for exclusive insight.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Chen Liu has no position in any of the stocks mentioned. Shopify is a recommendation of Stock Advisor Canada.

More on Investing

Dividend Stocks

The 2 Best Canadian Blue-Chip Stocks to Buy Now

Blue-chip stocks can be some of the best stocks to have in any portfolio. But when they're trending upwards, investors…

Read more »

Canadian dollars in a magnifying glass
Dividend Stocks

Here Are My Top 3 Dividend Stocks to Buy Now

These top dividends stocks have consistently paid and increased their dividends. Further, this trend will continue.

Read more »

Lights glow in a cityscape at night.
Investing

Canadian Infrastructure Stocks to Buy Now

These two Canadian infrastructure stocks offer interesting investment opportunities whether you’re focused on income or price appreciation.

Read more »

A plant grows from coins.
Tech Stocks

3 Growth Stocks Wall Street Might Be Sleeping on, But I’m Not

Don’t miss your chance to load up on these three beaten-down stocks.

Read more »

tsx today
Stock Market

TSX Today: What to Watch for in Stocks on Tuesday, November 5

Updates related to the U.S. presidential election will remain on TSX investors’ radar today as the third-quarter corporate earnings season…

Read more »

think thought consider
Tech Stocks

Is CGI Stock a Buy Even With No Dividend Yield?

CGI stock may not have a dividend to speak of. But does that necessarily mean you should ignore this top…

Read more »

A robotic hand interacting with a visual AI touchscreen display.
Tech Stocks

Why Now Is the Time to Invest in Canadian AI Stocks

Are you looking for one of the most solid Canadian AI stocks out there? This one is probably your best…

Read more »

The letters AI glowing on a circuit board processor.
Tech Stocks

Why AI Stocks Should Be in Every Canadian Investor’s Portfolio

AI stocks continue to be one of the best options out there for long-term investing, especially when considering Canadian options.

Read more »