HealWELL AI Inc.

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

Thank you, Operator, and welcome everyone to Wealth Health's Fiscal Third Quarter Financial Results Conference Call for the three months ended September 30th, 2024. Joining me on the call today are Hammad Shabazi, Chairman and CEO, and Yiba Fong, the company's CFO. I trust that everyone has received a copy of our Financial Results Press Release that was issued earlier today. Portions of today's call, other than historical performance, include statements of forward-looking information within the meaning of applicable securities laws, including future-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 wealth 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 statements to reflect any change in our expectations or any change in events, conditions, assumptions, or circumstances on which any such statement is based, except if it is required by law. We may use terms such as adjusted gross profit, adjusted gross margin, adjusted EBITDA, adjusted 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 management discussion and analysis. The company believes that adjusted EBITDA is a meaningful financial metric as it measures cash generated from operations, from which the company can use to fund working capital requirements, service feature interest, and principal debt repayment, 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, let me turn the call over to Mr. Hamid Shabazi, chairman and CEO.

Thank you, Tyler, and good day, everyone. We appreciate everyone for joining us today and discussing our Q3 2024 financial results. The third quarter of 2024 was one of the best quarters in the history of the company by just about every objective and important metric. Well-delivered record quarterly performances for revenue, adjusted EBITDA, free cash flow, patient visits, and organic growth. We're also pleased to report that we surpassed $1 billion in annualized revenue run rate, one quarter ahead of our previously stated plan. Just to put this in perspective, five years ago in the same quarter, we reported $8.189 million in quarterly revenue, which reflects an annualized revenue run rate at that time of 32.8 million. Our current run rate represents a 30-fold increase over five years. Also in the same quarter five years ago, we reported an annualized adjusted EBITDA loss of approximately $2 million, while this quarter our results reflected more than $130 million in annualized positive adjusted EBITDA. These record results were driven by robust revenue growth of 35% in our Canadian patient services business and 23% overall organic growth, which would have been .1% without Canadian clinic absorbance. Both our US and Canadian businesses grew extremely well with the US business growing at 25% and the Canadian business growing at 22% organically. If one were to strip out absorbance as part of the Canadian business organic growth, the result would have been 7.4%. Well delivered $32.7 million in adjusted EBITDA, which I noted earlier was our best ever performance. This reflected 16% year over year growth and 6% sequential -over-quarter growth. Our growth rate of 16% in adjusted EBITDA was twice as much as the adjusted EBITDA growth of 8% that we experienced in full year 2023. In addition, Wells adjusted free cash flow to shareholders increased by 69% in Q3 compared to Q3 of last year and 85% -over-quarter as compared to Q2 2024. The free cash flow figure of 6.5 cents per share was the highest ever quarterly performance we've ever delivered on free cash flow, which was mainly driven by our improved EBITDA performance. We also paid down a significant amount of debt during the quarter and improved our leverage ratio to approximately 2.5 as compared to 2.67 in the prior quarter of Q2 2024. As a reminder, this is based on net covenanted debt to shareholder EBITDA. If you incorporate our convertible notes, which are turned out for another couple of years, our leverage ratio ended up at 3.26 for the quarter. Overall, we're pleased to report that all our business units are performing exceptionally well and we anticipate closing out 2024 with continued strong execution across the board. Thus far, we've had an intense focus on enhanced profitability, capital efficiency and organic growth. We move to the next slide, the operational highlights. As you're all aware, the centrifugal force that drives well is our healthcare providers and we're committed to serving and supporting them. At the end of Q3 2024, well, that work included 4,000 providers and clinicians delivering care across our physical and virtual clinics. Of that number, I'm proud to announce that we now have almost 2,500 providers which includes doctors and other care staff, serving patients within our well-owned clinics in Canada, which includes approximately 1,000 physicians, which is just over 1% of all the physicians practicing in the country. In addition, there are more than 38,000 providers benefiting from our staff and technology services, most of which are physicians. We estimate that well over one third of all physicians in Canada touch our digital platform in some way. As we enhance our digital offerings and provide leading AI inspired products and services, we can see the increasing importance, relevance and role that our company's playing in the country's healthcare ecosystem and we're determined to make a positive impact. Well achieved a record 1.5 million patient visits in Q3 2024, an increase of 41% as compared to the previous year representing 5.9 million patient visits on an annualized run rate basis. Patient visits had 31% organic growth. Patient visits were comprised of 798,000 patient visits in Canada and 682,000 patient visits in the US. Canadian patient services visits increased 46% while US patient visits increased 35% on a year over year basis. On an organic basis, Canadian patient visits grew by 26% including absorptions as 6% without absorptions. While the US figure was all attributable to organic growth without any absorption volume. Total care interactions, which is defined as total patient visits plus technology interactions plus biller provided hours, billed provider hours were 2.2 million in Q3, which was a 41% increase compared to Q3 last year and represented 35% growth. As far as our annual guidance, we are very pleased to increase our 2024 annual revenue guidance to between 985 million to 995 million. This increase in guidance reflects recent clinic acquisitions and healthy organic growth. This revenue guidance does not include any unannounced acquisitions. We are maintaining our annual adjusted EBITDA guidance which is expected to be in the upper half of 125 to 130 million. We increased our annual revenue guidance but maintained our adjusted EBITDA guidance because we added three primary care clinics in Q3 which contributed to revenue but had marginal impact to EBITDA. Plus the negative impact of hurricanes to our CRH business otherwise would have, in which otherwise we would have likely raised as well. Our annual guidance for adjusted free capital available to shareholders expected to be approximately $55 million in 2024. To do our strong cashflow this year and as we enter into a lower interest rate environment, we are currently evaluating our use of cash in these last couple of months of the year. Hence we may choose to increase our capital expenditures in Q4 with higher capitalized development costs related to our AI product development and additional capitalized equipment costs to support our clinic transformation efforts. In addition, cash flows in Q4 could also be impacted by the timing of some of our tax payments. Notwithstanding, we're still expecting this to be our best.