WELL Health Technologies Corp. announced it has completed its acquisition of CRH Medical Corporation, a company that provides of anesthesia services to the GI (Gastroenterologist) community. The transaction, valued at $372.9 million, improves the omnichannel digital health company’s free cash flow profile and its U.S. operations.
CRH marks WELL Health’s (WELL) largest acquisition to date, with the company paying $4.00 per share for a total equity consideration of $286.6 million. The purchase price climbs to the aforementioned $372.9 million once the outstanding credit facilities assumed by WELL Health are factored in.
WELL Health Chairman and CEO Hamed Shahbazi said, “CRH is our largest acquisition to date and it is a fantastic opportunity to apply WELL’s expertise in digitization and modernization of healthcare assets as well as its best-in-breed data security services to GI practices in the United States. With this acquisition, WELL’s financial and operating profile makes it an emerging leader in the tech-enabled healthcare market across North America. Furthermore, CRH’s profitability and cash-flow generation will provide WELL with ample opportunities to allocate capital and increase inorganic growth.”
CRH gives WELL Health deep access to the U.S. healthcare market, where CRH has access to 3,200 GIs. In addition, this acquisition represents a straightforward method for the company to increase revenue in an inorganic way. CRH reported 4Q 2020 revenue of $36.8 million and adjusted operating EBITDA of $16.1 million. (See WELL Health Technologies stock analysis on TipRanks)
Two weeks ago, Desjardins analyst David Newman reiterated a Buy rating on the stock with a C$13.11 price target (89.2% upside potential).
WELL Health recently expanded its presence in Ontario by acquiring Ottawa-based healthcare provider ExecHealth. Newman stated, “While the transaction is small, we view it favorably given ExecHealth’s omnichannel model, model, accretive margin accretive margin profile, recurring revenue, strategic geographical expansion and strong fit within WELL’s overall portfolio and strategy.”
Overall, WELL Health stock scores a Strong Buy consensus rating based on 6 Buys, 0 Holds, and 0 Sells. The average analyst price target of C$11.82 implies an upside potential of about 70.6% to current levels.