After seeing its share price rise from the mid-C$1 range in March 2020 to almost C$10 per share in February 2021, Well Health Technologies’ (TSE: WELL) shareholders have endured a painful decline over the past year to a current price of C$3.69.
This is despite seeing significant growth in revenue while also becoming free cash flow positive. Indeed, the company raised its revenue guidance for 2022, increasing from C$500 million to C$525 million.
Nevertheless, the share price took a hit following its recent earnings report after the company announced a C$34 million bought deal offering of common shares at a price of C$3.70, below the market price when the offering was announced. This move dilutes existing shareholders, which is the reason why it is generally viewed negatively.
However, CEO Hamed Shahbazi believes that the company will be able to deploy this capital in a highly accretive manner. Since Well Health’s main growth strategy is acquiring smaller companies, this move makes sense considering that the valuations of all companies have decreased.
Insider Buying Confirms Management’s Confidence
Since the latest earnings report, there has been some notable insider buying at Well Health. Eva Fong, the company’s CFO, bought almost C$10,000 worth of stock, while CEO Hamed Shahbazi acquired just over C$25,000. In addition, Tara Mccarville added another C$9,250.
However, it appears that both the CEO and CFO tend to have good timing with their purchases of the stock given that they have a higher star ranking. Thus, this highlights management’s confidence that the recent equity raise will create value for shareholders.
Wall Street’s Take
Turning to Wall Street, Well Health Technologies has a Moderate Buy consensus rating based on eight Buys assigned in the past three months. The average Well Health Technologies price target of C$9.07 implies 145.8% upside potential.
Price targets range from a low of C$6 per share to a high of C$12 per share.
Final Thoughts
Investors of Well Health have had a tough year, seeing the stock fall significantly. Although selling shares at such a low price is not ideal, it is evident that management believes that it will be very beneficial in the long term, since insiders have bought following the close of the equity raise.
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