HealWELL AI Inc.

Welcome to the Well-Held Technologies Corp. Second Quarter 2024 Financial Results Conference Call. My name is Ina, and I'll be your conference operator today. At this time, participants are in a listen-only mode. We'll conduct a question and answer later in the call, which will be restricted to analysts only. Please note that this conference is being recorded. I'll now turn the call over to Mr. Tyler Baba, Manager, Investor Relations. Mr. Baba, you may begin.

Thank you, Operator, and welcome everyone to Well Health's Fiscal Second Quarter Financial Results Conference Call for the three months ended June 30th, 2024. Joining me today on the call are Hamed Shabazi, Chairman and CEO, Eva Fong, the company's CFO. I trust that everyone has received a copy of our financial results press release that was issued earlier today. Please also note that we will be using some slides to assist us in our presentation today. If you are on a webcast, you will automatically see these, If not, you will need to download these from our investor site on our financials page. Portions of today's call, other than historical performance, include statements of forward-looking information within the meaning of applicable securities laws, including feature-oriented financial information and financial outlook information. These forward-looking statements involve known and unknown risks, uncertainties, assumptions, and other factors, many of which are outside of wealth control, that may cause the actual results performance, or achievements of well to differ materially from the anticipated results, performance, or achievements implied by such forward-looking statements. These factors are further outlined in today's press release and in our management discussion and analysis. We provide forward-looking statements solely for the purpose of providing information about management's current expectations and plans relating to the future. We do not undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement to reflect any change in our expectations or any change in events, conditions, assumptions, or circumstances on which any such statements are based, except if it is required by law. We may use the terms such as adjusted gross profit, adjusted gross margin, adjusted EBITDA, shareholder EBITDA, adjusted net income, and adjusted free cash flow on this conference call, all of which are non-GAAP and non-IFRS measures. For more information on how we define these terms, please refer to the definition set out in today's press release and in our MD&A. The company believes that adjusted EBITDA is a meaningful financial metric as it measures cash generated from operations, which the company can use to fund working capital requirements, service future interest and principal debt repayments, and fund future growth initiatives. Adjusted EBITDA should not be construed as an alternative to net income or loss, determined in accordance with IFRS. And with that, I will turn over the call to Mr. Hamed Shabassi, Chairman and CEO.

Thank you, Tyler, and good day, everyone. We appreciate everyone for joining us today. We're extremely pleased to be with you today and discuss our strong momentum and quarter in which we achieved our 22nd consecutive record-breaking revenue quarter, underscoring the enduring momentum of our company. And for the first time, we'll be using some slides to assist us in our presentation. As Tyler indicated earlier, if you joined via webcast, you should already see these. If you don't, you can go to our investor section of our website and either join the webcast or download the slides. The second quarter of 2024 exceeded all our expectations, showcasing the continued strength and momentum of our technology-driven care delivery platforms. We're very proud to report a robust 42% year-over-year revenue growth, of which half or approximately 21% came from organic growth, which includes our clinic absorptions. Note that if you exclude our absorption program, enterprise-wide organic growth would have been 16%. The company also experienced 11% year-over-year growth in adjusted EBITDA. Eva will expand on this later, but we're very pleased to have paid down a significant amount of debt and reduced our leverage ratios in Q2. We're also pleased to have improved annual guidance yet again this quarter. This quarter we've increased revenue guidance to between $970 million and $990 million for the year. It should be noted that for the purposes of assessing 2024 annual organic growth, we estimate that our 2023 performer revenue would have been approximately $849 million if all of our 2023 acquisitions excluding clinic absorptions that occurred on January 1st, 2023, and excluding all but one month of intra-health, which was sold on February 1st, 2024. Note that this number differs from what was disclosed in the notes to our 2023 audited financial statements, as that performer number included clinic absorptions, intra-health, and a number of other adjustments. As such, the midpoint of our updated guidance infers an organic growth rate including absorptions of 15.4% for the year. As for adjusted EBITDA, we're maintaining our previous guidance, which was just increased last quarter to the upper range of $125 million to $130 million, despite incurring higher costs due to our projection of significantly lower share issuance and stock-based incentives. We also reiterate our guidance introduced last quarter for free cash flow available to shareholders to be approximately $55 million for the year. Keep in mind that this target guidance does not include any unannounced acquisitions. If we include any material acquisitions, there's a fairly good chance that we would be ahead of our current guidance range, notwithstanding any potential material divestments. Our pipeline of acquisitions continues to be strong, particularly in our Canadian clinics division, where we have significant opportunities for acquisition or absorption of clinics. In addition, keep in mind that the second half of the year is typically stronger for us in terms of EBITDA generation, and we continue to maintain guidance for improving free cash flow attributable to shareholders to approximately $55 million, representing a 30% year-over-year increase from 2023. Moving on to operational highlights, central to our identity is our commitment to providing highly competent, reliable, and tech-enabled support to healthcare providers. As of the end of Q2 2024, over 3,900 providers and clinicians delivered care across our physical and virtual clinics. Of that number, I'm proud to announce that we've achieved approximately 1,000 physicians serving patients within our well clinics in Canada. Remember that there are likely less than 100,000 physicians in the entire country serving our $330 billion healthcare ecosystem. So we can proudly state that approximately 1% of all healthcare providers or physicians make a well clinic their place of practice, truly a remarkable milestone. In addition, there are more than 37,000 providers benefiting from our SAS and technology services which is approaching approximately 40% of all physicians in Canada supported by our platform in some way. Well achieved a record 1.4 million patient visits in Q2, an increase of 38% as compared to Q2 of 2023, representing 5.6 million patient visits on an annualized run rate basis. Patient visits were comprised of 759,000 patient visits in Canada, and 640,000 patient visits in the United States. Canadian patient services visits increased 41%, while U.S. patient visits increased 34% on a year-over-year basis. I'd like to point out that organic growth in patient visits, including absorptions in Canada, was 25.5%. If you strip out absorptions, same clinic growth in visits was 11.4%. which one must remember is much higher, and we would guess to be about triple the growth rate of traditional organic growth figures in terms of Canadian healthcare, which are typically in the 3 to 4% range. I would like to now move on to describing some of the key themes for today's call. One, our various strategies to unlock sum of parts value. Two, our plans to spin out our SaaS and services provider solutions line of business as a controlled public company. And three, our efforts to improve per share metrics by reducing dilution and stock-based compensation, improving profitability, and improving shareholder value. And four, we will also be making some important commentary about our clinic consolidation programs. and the progress we've been experiencing there too. On to unlocking some of the parts. This is something that we covered off at Investor Day, but we'd like to revisit a bit today. Well is a diverse and multifaceted healthcare technology company with multiple business lines operating across both the U.S. and Canadian markets. While it's natural for there to be a small discount to the multiple holdings of the conglomerate such as Well, We believe that the discount currently associated with wealth far exceeds a normal conglomerate or holding company discount. And we believe this is an opportunity for those investors who are looking for hidden but realizable value. While some of that discount has been corrected since our investor day, we believe that there's still an approximately an $800 million to $1 billion discount to our true sum of parts. As you'll see in today's presentation, these overlooked segments are not only strong performance but they're also experiencing significant growth and momentum. Therefore, we propose a sum of parts valuation approach to more accurately assess the company's worth. We believe that unlocking the value of some of our assets through third-party arms-length investments or divestments could go a long way to highlight this value. In the case where divestments occur, such cash benefits could be material and could be likely used to pay down debt or to issue a special buyback. or make additional accretive acquisitions. Last quarter, we indicated that we had begun considering strategic alternatives for our U.S. digital patient services businesses, Circle Medical and WISP. We do not believe that the capital markets are assigning a fair value for these two assets as part of, well, given their high growth and improving fundamentals. Both Circle and WISP are higher growth businesses that would essentially be valued generally on a price-to-sales basis, given their limited but improving EBITDA generation, whereas Well is primarily valued on a price-to-EBITDA basis, which creates a dislocation in value which results in unrealized or hidden sum-of-parts value. In addition, Well has a call option for both of these businesses, which provides us with several alternatives, including acquiring the remaining ownership of the businesses, speaking an IPO or RTO, or selling the businesses entirely. we have hired professional advisors to help us with these processes. In the case of Circle Medical, the call option has a timeline which has now been extended with the approval of the minority shareholders well into 2025. We are pleased to announce that Circle Medical has retained JP Morgan to evaluate strategic alternatives and help identify a partner or partners that will support Circle in its next phase of growth. On the WIS side of things, we're similarly pleased to report the CIBC capital markets is assisting us with our evaluation of strategic alternatives. We will provide updates as they become available on both of these processes, but do not expect updates until later this year or especially in the case of Circle Medical early next year. In addition to evaluating strategic alternatives for Circle and WISP, we started to look at additional opportunities for unlocking value. and we're very pleased to disclose that we are working on another important initiative that we believe will yield significant shareholder value, and that's related to our platform solutions business. We believe our SaaS and services provider solutions business is a very strong candidate as a potential spin-out as a well-controlled standalone public company. Excluding cybersecurity, our provider solutions group achieved external revenue of $10.4 million in Q2 2024 with 86% gross margins, 30% EBITDA margins, and 24% organic growth with over 90% of its revenues contractual and recurring in nature. This is a very healthy and profitable SaaS business with great growth prospects. We believe provider solutions group would be valued at a much higher valuation multiple than the value that is currently being afforded to Well Health. In addition, we believe we could accelerate the growth of this business as a standalone public company, which would then ramp up its own capital allocation program to ensure it is growing methodically, both organically and inorganically. The provider solutions group is an integral part of the Canadian clinic's ecosystem that tech enables doctors and other healthcare providers in our clinic. It's also an area where we have clear market leadership to support healthcare providers nationally. While our market share ownership in EMR in Canada is third, if you look at the full platform requirements of a healthcare provider, which include billing management, productivity apps, and other elements, to our knowledge, there is no bigger market share owner in the country than Well's provider solutions entity. Even after a perspective spin out of our provider solutions group, This group will continue to work closely with and support our clinics and clinic transformation team. As such, Well's intentions are to maintain a strong economic and voting majority in this entity, even after it spun out as a separate publicly listed company. As such, there should be no real changes to how this entity operates and interacts with our own clinics, which is very important to our own development within our Well Clinics ecosystem. We're very excited about this initiative and we'll provide more updates in the coming weeks and months. The third key theme is one of the most important for the call today, our commitment to delivering improved shareholder value. Last quarter in our conference call, we talked about an important inflection point where Will was going to focus more intently on optimizing our profit per share metrics by not only improving our overall organic growth and profitability, but also paying strict and significant attention to our dilution and pulling all the levers we could to reduce and eventually fully eliminate and then reverse dilution. I'm pleased to note that this quarter we made excellent progress towards these stated goals. And as Eva will demonstrate later, we were able to actually reduce our fully diluted share totals during the quarter slightly by paying out all of our earnouts in cash, not issuing any new incentive share awards, and actually electing to pay some of our incentives in cash, which our long-term incentive plans allows for, and buying back some stock. We will be applying the same intensity to managing dilution, driving organic growth, and improving our profitability in subsequent quarters as we work hard to realize some of parts value and significantly elevate shareholder value. With that, I'd now like to turn the call over to our CFO, Eva Fong, who will provide some financial context and color on some of the most important themes of unlocking shareholder value. I'll then come back and provide some further commentary on our lines of business. Diva.