Canadian investors looking for a top-quality long-term stock with strong fundamentals and significant growth potential could consider WELL Health (TSX:WELL). Its operations include the largest network of clinics supporting primary care, specialized care, and diagnostic services. In the U.S., the company extends its reach with omnichannel patient services and solutions, catering to diverse healthcare needs.

WELL Health also develops and sells proprietary software and technology solutions to clinics and healthcare practitioners, creating a unique blend of healthcare and tech innovation.

The company is growing rapidly, delivering record sales and generating significant positive cash flows. Despite its rapid growth, WELL Health's shares are trading at an attractive price, offering investors a buying opportunity. Looking ahead, its accretive acquisitions are likely to accelerate its growth. Also, the company is reducing share dilution, which is positive.

With this background, let's explore three reasons why this Canadian stock is a must-buy for long-term investors.

#1. Solid growth potential

WELL Health has emerged as a leading digital healthcare company in Canada due to its impressive growth and growing scale. The company has delivered solid top-line growth, with its Canadian clinic revenues achieving a CAGR of 47% since 2021.

WELL Health's recent financial performance was impressive. The company delivered solid growth across all key metrics. Further, the company reached an annualized revenue run rate of over $1 billion, one quarter ahead of its initial forecast. This reflects the solid demand for its offerings.

WELL Health's strategic focus on acquisitions further enhances its growth prospects. The company's solid acquisition pipeline represents over $100 million in annual revenue. Notably, most of this growth will come from WELL Health's Canadian operations, strengthening its position in the domestic market.

In addition to its aggressive acquisition strategy, WELL Health benefits from a complete technology stack that allows for the seamless digitization and optimization of its acquired clinics. The company also sees a significant high-margin opportunity in affiliate clinic licensing, further boosting its profitability.

In the long term, the momentum in its business, driven by organic growth and strategic acquisitions, is expected to continue. WELL Health is on track to deliver record revenue, adjusted EBITDA and adjusted net income for the full year 2024. Furthermore, the company's cost optimization program and reduction of debt will enhance its earnings, cash flow, and overall financial position, supporting its share price.

#2. Reducing Share Dilution

WELL Health is taking steps to enhance its shareholder value by focusing on reducing share dilution. The company has been actively managing its acquisition strategy, with the earnouts from past acquisitions now rolling off. This marks a significant turning point, as these earnouts had previously been a source of dilution but will no longer affect shares moving forward.

In addition, recent acquisitions have been smaller in scale, resulting in less impact on dilution. This approach allows the company to accelerate its growth while minimizing the issuance of additional shares.

WELL Health also plans to reduce its share-based compensation and shift toward a more sustainable model. By addressing share dilution and adjusting its compensation structure, WELL Health is positioning itself for long-term growth, ultimately boosting shareholder value.

#3. Attractive valuation

From a valuation standpoint, WELL Health stock trades at an attractive next 12-month enterprise value (EV)-to-sales multiple of 1.9. This multiple is significantly lower than its historical average of about five, presenting a buying opportunity for long-term investors seeking value.

The bottom line

WELL Health is a high-quality stock with significant growth potential. With its strong market position, strategic acquisitions, and initiatives to reduce dilution, the company is poised to deliver solid long-term growth. Further, its attractive valuation makes it enticing near current levels.