Competition Bureau probes Well Health

Vancouver-based Well Health Technology (TSX: WELL) is the largest owner of primary care clinics in Canada with 220 across the country. Its US subsidiaries also own clinics, some of which are for sale as the company shifts its focus to Canada.

Well Health is the third-largest Canadian vendor of Electronic Medical Records (EMR) software after Telus (TSX:T) and Loblaw (TSX:L). It offers a comprehensive platform for doctors to manage their practices including an AI-powered virtual assistant that can record and summarize patient visits.

The stock briefly traded above $6 in early October but then pulled back because of an investigation by the Competition Bureau. At the time of writing it is trading at $4.05.

Well Health’s strategy is growth by acquisition. It buys clinics and integrates their operations into its software platform, improving efficiency and adding economies of scale.

On Nov. 24, The Globe & Mail reported that the Competition Bureau was investigating Well Health about concerns that some of this year’s acquisitions are lessening competition for AI transcription and medical-record software.

The investigation relates to Well Health’s acquisition of a controlling interest in  Healwell AI Inc. (TSX:AIDX) on April 1 and Healwell’s concurrent acquisition of Orion Health Holdings Ltd., a provider of medical-record software based in New Zealand.

Healwell develops software that helps detect, diagnose, and manage diseases by unlocking siloed healthcare data. Siloed healthcare data refers to patient or medical information that is stored in separate systems that don’t communicate with each other. This makes it difficult for doctors to access a complete patient profile.

The Competition Bureau said this vertical integration of businesses could make it hard for other companies to compete in these markets.  As reported by The Globe on Dec. 9, a Federal Court approved the Competition Bureau’s request to obtain records related to the acquisitions, affecting such things as financial statements, pricing strategies, market share and relationships with its suppliers.

A Well Health official was quoted as saying the company is working with the Competition Bureau and is confident the investigation will not materially affect its business.

In a recent research note, RBC Capital Markets analyst Douglas Miehm said the investigation is  disappointing but expects it will have limited impact. He estimates that only 1–2% of the Canadian clinic market is consolidated and so sees little basis for concerns that Well Health can hinder competition or create barriers for competitive software providers.

He added that Well Health’s services are industry leading and are therefore preferred by clinicians and doctors. Through a competitive procurement process, the Ontario Ministry of Health recently awarded Well Health a contract to implement a province‑wide system that helps doctors send and track referrals.

He concluded: “While this situation could contribute to near term concerns, we anticipate that 2026 could see the shares rebound as asset sales are completed in the US and some of the proceeds are redeployed to pay down debt and into the Canadian primary care operations.”

His 12-month price target is $7, which is 70% higher than the current price. A Morningstar Research analysis puts fair value at $4.67, some 14% higher.

This article appeared in a recent issue of the Internet Wealth Builder.  For information on how to reprint this article please view this page.