Shares of Well Health Technologies Corp., WELL-T fell sharply Monday as the company disclosed it was delaying the release of annual financial statements because of an investigation into the billing practices of a U.S. subsidiary.
Well is one of the largest providers of medical-records software for doctors’ offices in Canada and also owns 200 medical clinics, including those offering primary care and diagnostic services. Its other technology products include Well AI Voice, which listens in on a physician’s appointment with a patient and automatically fills out some of the patient’s records.
On Friday night, Well put out a news release that said it would delay the publication of audited financial statements for the year that ended Dec. 31. The statements had been due for release by Monday.
The company disclosed that in September, the civil division of the United States Attorney’s Office for the northern district of California had requested documents for an investigation of the billing practices of Circle Medical. Well had bought a majority stake in the company in November, 2020. Circle is a telehealth provider that also owns more than two dozen brick-and-mortar locations around the U.S.
Well said it was continuing to work with investigators but did not otherwise release details of the probe.
Well noted in the release that Circle had contributed a net loss of $1.1-million to Well’s $16.6-million consolidated net income in the 2023 fiscal year. Well said it expected to release financial statements for 2024 on or before April 15.
The company’s stock fell 17 per cent on Monday to $4.14, putting it back in line with where it was trading for most of last year. Shares had rallied in the winter, along with many tech stocks, and reached above $7 a share in December and January.
Analysts largely kept their recommendations and price targets unchanged, despite the news and drop.
Canaccord Genuity’s Doug Taylor and Firuz Yakhyayev maintained their $8.50 target. “With that said, the uncertainty around timing and severity is likely to be viewed as a near-term negative until the matter is resolved or otherwise better understood,” they wrote in a note to investors.