I've owned WELL since the fall of 2020, have bought and sold along the way and I'm now left with a few thousand shares and a net loss of 24% in the name. To some extent due to optimistic forecasts from 5i I've thought that enough of a turnaround might be just around the corner to at least get back to even, and perhaps even make some money - but the longer nothing changes the more my optimism wanes. So, a few questions:
A fella on BNN the other day had VHI as a top pick. Are it and WELL competitors and do their respective addressable markets portend growth?,
If you had to choose one over the other now for a 3 year TFSA hold, which would you go with for some CDN healthcare exposure, and why?
Is there another name that you would choose over both of them?
Thanks 5i, I look forward to your thoughts.
Peter
WELL’s acquisition targets includes patient services to specific markets such as primary care, and mental care. While VHI’s solution focuses more on helping facilitate operations in the healthcare sector consisting of healthcare records, case management, etc. The overall portfolio of WELL’s businesses has an attractive margin profile (48%) but is still lower compared to VHI (80%) on average. The market also implies a higher multiple for VHI due to the recurring nature of the business model. We have been a fan of WELL for quite some time, VHI is pretty new with interesting fundamentals and momentum. That said, WELL’s current valuation is attractive, which may offer better upside potential longer term. But certainly VHI has better short term momentum. We could go either way here: WELL long term, VHI short term. These would still be the leaders of the Canadian sector, in our view.