Stifel initiates Custom Health at Buy with C$12 target; firm acquires Evergreen Pharmacy

Proactive | Thu, July 23, 2026 at 9:28 AM PDT | 3 min read

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Custom Health Holdings Inc (TSX:CHLT) has received a Buy rating from Stifel, with analysts setting a C$12 price target and pointing to potential upside as high as C$18 per share.

The investment thesis centers on the company's pill-dispensing platform, which addresses one of healthcare's most costly challenges: medication non-adherence.

The Problem and the Solution

Medication non-adherence costs the US healthcare system approximately $0.5 trillion annually. Only about half of prescriptions are taken as directed, leading to hospitalizations, emergency room visits, and disease progression.

Custom Health's full-stack system includes:

• Spencer – a home device that dispenses and monitors pills
• AdhereNet – an AI-powered platform
• A network of automated pharmacies

Stifel reports that the system achieves a 98% adherence rate, significantly above the industry norm.

Insurer Adoption and Growth

Custom Health has more than 100,000 patients contracted through deals with major US health plans, including:

• Humana (NYSE:HUM)
• Elevance
• BlueCross BlueShield
• Commonwealth (pain management)
• BKC (pain management)

Stifel expects the company to nearly triple its active patient count next year, from approximately 6,000 to 17,000, supported by its recent acquisition of InnovativeRx. Revenue is projected to more than double.

Opioid Management and Regulatory Tailwinds

The platform assists physicians in safely weaning patients off opioid prescriptions, aligning with the NOPAIN Act, which took effect in January 2026 and enhances Medicare reimbursement for opioid-reduction efforts. Improved adherence also boosts Medicare Star ratings, leading to higher rebates and bonus payments for health plans.

Patient Demographics

The typical Custom Health patient is in their 50s or 60s and manages more than 10 chronic medications – a demographic set to grow as the US and Canadian populations continue to age.

Revenue and Margin Outlook

Stifel believes the InnovativeRx deal could unlock 4x revenue growth over the next two to three years as Custom Health works through 30,000 of the 100,000 patients already under contract, with additional acquisitions possible.

Key margin highlights:

• The Spencer device alone represents nearly $200 million in recurring revenue opportunity
• Gross margins above 60% for the device
• Traditional pharmacy dispensing margins around 20%
• Stifel sees a path to EBITDA margins in the high teens, well above pharmacy peers

Evergreen Pharmacy Acquisition

Custom Health has signed a binding letter of intent to acquire Evergreen Pharmacy LLC, based in Wisconsin. The deal is expected to add more than US$78 million in annual revenue.

Deal terms:

• Total price: US$3.5 million
• Includes at least US$1 million in prescription drug inventory
• US$450,000 in net working capital
• Cash on closing, with US$175,000 held back for six months as an indemnity cushion

Evergreen Pharmacy profile:

• Licensed in Wisconsin, Illinois, and Michigan, with expansion potential into Minnesota
• Specializes in complex therapies across behavioral health, dermatology, gastroenterology, infectious disease, rheumatology, and neurology
• Generated approximately US$78.8 million in revenue and US$0.6 million in normalized EBITDA for the 12 months ended December 31, 2025
• Posted positive net income in both fiscal 2025 and the first quarter of 2026

The acquisition aligns with Custom Health's growth strategy: more patients on complex drug regimens, a larger Midwest footprint, and another step toward the four-times revenue potential outlined by Stifel.