HealWELL AI Inc.

Welcome to the Well Health Technologies Corp. Fourth quarter 2024 and fiscal year 2024 financial result conference call. My name is Kim, and I will be your operator for today's call. At this time, all participants are in listen-only mode. We will conduct a question and answer session later in the call, which will be restricted to analysts only. Please note that this conference is being recorded. I will now turn the call over to Tyler Baba, manager in Zestor Relations. Mr. Baba, you may begin.

Thank you, operator, and welcome everyone to Well Health's fiscal fourth quarter and full year 2024 financial results conference call. For the three months and full year ended December 31, 2024. Joining me on the call today are Hammad Shabazi, chairman and CEO, and 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. 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 Well's 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 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 securities 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 attributable to shareholders 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's discussion and analysis. 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 interests, 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, let me turn the call over to Mr. Hamid Shabazi, Chairman and CEO.

Thank you, Tyler. Good day, everyone. We appreciate everyone for joining us today as we discuss our Q4, an annual 2024 financial results. Before we get into our discussion, I'd like to address two exceptional items that impacted our 2024 results, which impacted two of our US subsidiaries, one Circle Medical, which is a non-holy owned subsidiary and CRH Medical, which is wholly owned. Let's start with Circle Medical first. As previously disclosed just a couple of weeks ago, on March 29th, Circle Medical received a request from US regulators investigating certain of Circle Medical's billing practices in the United States. In the annual consolidated financial statements for the year ended December 31, 2024, the company recognized an expense of 2.8 million US dollars for the year ended December 31, 2024, for estimated settlement costs on its audited financial statements. As the company was finalizing its annual filings for fiscal 2024, it was determined that Circle Medical had billed and received payment for patient services that had been delivered during 2024, for which had not yet met all of the required criteria to recognize such revenue under applicable IFRS standards. As a result, the company has recorded a revenue reduction of $56.6 million for fiscal 2024 and recognized cash received from customers of 53.9 million as deferred revenue as at year end. The company expects to recognize substantially all of this deferred revenue during fiscal 2025 with the remainder recognized in fiscal 2026. As of April 11th, 2025, Well has already satisfied the criteria for revenue recognition in fiscal 2025 for approximately $6.7 million of this deferred revenue. The company expects to recognize substantially all of this deferred revenue during fiscal 2025 with the remainder in 2026. As of April 14th, as I mentioned, we've recognized already 12% of this deferred revenue. Note that when the revenue is recognized, there won't be any costs recognized against this revenue resulting in full contribution to adjusted EBITDA in 2025. Therefore, we expect a significant boost in our reported adjusted EBITDA in 2025. And that hasn't been embedded in our guidance. I wanna stress here that all the revenue that is being deferred is related to patient care that was already delivered in 2024. It is expected that we will not lose any revenue here. Circle Medical had thousands of patient visits in 2024 where we provided care for patients related to these patient visits. We billed for them and consequently received payment for them. The impact is a revenue recognition policy where a portion of Circle's revenue is being deferred to the future, even though the delivery and payment happened in 2024. Hence, we are seeing revenue in EBITDA decline in 2024, but will have the positive impact of increasing both revenue and EBITDA accordingly in 2025. The billing errors relate only to Circle Medical and have no effect on the rest of Wells Business. Circle Medical has since made changes to its billing practices and revenue recognition policies to remediate the issues causing this deferral. As previously disclosed, we had initiated a process last year to seek strategic alternatives for Circle Medical. The companies committed to carrying out this process in due course. I'll discuss this further later on in the call. And now an update on the Change Healthcare Cybersecurity impact on CRH. As previously discussed last year, CRH anesthesia's primary billing partner, Change Healthcare, experienced a cybersecurity attack in February of 2024, which sidelined the Change Healthcare Revenue Cycle Management Service relied upon by the company for billings and collections. This resulted in the company experiencing delayed billing and cash collections on claims process for several months during 2024. Due to this business interruption affecting a significant number of healthcare companies across the United States, which rely on Change Healthcare for revenue collection, Change Healthcare's affiliate provided advanced funding to many of its customers, including CRH, in lieu of the cash collections CRH would normally receive related to these claims. During the fourth quarter of 2024, CRH updated key assumptions in its revenue recognition model related to the Change Healthcare Cyber Attack and determined that it would delay the recognition of approximately 24.5 million Canadian dollars of revenue in the fourth quarter of 2024, that otherwise would have been recognized during 2024 had the cyber attack not occurred. CRH expects to recognize these revenues if and when collections from patients and third-party payers occur and when settlement terms have been reached with Change Healthcare. Once this occurs, such earnings will result in almost 100% contribution to adjusted EBITDA. Due to the uncertainty regarding the timing and the amount that will be recovered, this has been excluded from our 2025 guidance. Notwithstanding to our revenue from the Circle Medical Revenue Deferral and the Change Healthcare Cyber Attack matters, we're very proud of our overall achievements in 2024. Simply put, the fundamentals and outlook of our business have never been stronger. Despite these two IFRS revenue impacts, well-delivered record annual revenue and free cashflow attributable to shareholders in fiscal 2024. Well-achieved annual revenue of 919.7 million in 2024, an increase of 19% compared to the prior year. As you can see here, revenue was negatively impacted by a delay in the recognition of earnings related to Circle Medical and CRH in the amounts of 56.6 million and 24.5 million respectively. All of the deferred Circle Medical revenue is expected to be recognized, as I mentioned earlier in 2025, and the CRH revenues will be considered recognized once collected or earned as other income when terms are confirmed with Change Healthcare. Excluding such impacts, the company was on track to achieve record revenue of $1 billion Canadian in 2024, which had been a clear beat on our consensus results and reflected an increase of 29% as compared to the prior year. We think it's important for shareholders to be aware of this as well, management has a culture of being highly accountable to its guidance and excluding the two IFRS revenue impacts we had beaten again. As you can see here, as a result of revenue recognition delays related to Circle Medical and CRH, our adjusted EBITDA in 2025 was 46.7 million as compared to adjusted EBITDA 113.4 in 2023. Adjusted EBITDA was impacted by 56.6 million as a result of the Circle Medical revenue deferral and 23.8 million as a result of the revenue deferral delay, pardon me, related to the Change Healthcare cyber attack. Although Circle Medical contributed a net loss to consolidated income and only contributed .7% to the company's consolidated adjusted EBITDA in 2023, under IFRS for fiscal 2024, the company is required to recognize 100% of the expenses related to the 56.6 million that was deferred, which resulted in a significant reduction in adjusted EBITDA for fiscal 2024 and cause a significant positive contribution to adjusted EBITDA for fiscal 2025, once the deferred revenue is recognized. The graph on the right shows excluding the impacts from these two matters, adjusted EBITDA would have been 127 million and increase of 12% as compared to 2023, which is within the range of our previously provided annual guidance for 2024. The company continues to seek strategic alternatives for Circle Medical and we are committed to carrying out this process. Again, we will discuss this further. This slide shows some of our key annual financial highlights. For fiscal 2024, we achieved net income of 29.1 million, representing 75% year over year growth compared to 16.6 million in 2023. Free cashflow attributable to shareholders was 49.3 million in 2024 and increase of 16% as compared to the prior year. We were trending to be higher than 50 million in free cashflow, but had more significant cap specs at the end of the year, as we had suggested could happen in our Q3 conference call. On a per share basis, free cashflow attributable to shareholders was 20 cents per share. Our Canadian business continues its strong momentum with 30% year over year growth and 20% year over year organic growth and our adjusted EBITDA in Canada grew 22% year over year to 56 million. I will now share with you some of our operational highlights for 2024. As at the end of Q4 2024, well had over 4,100 providers and clinicians delivering care across our entire network of physical and virtual clinics. Of that number, I'm proud to announce that we now have over 2,500 providers within well-owned clinics in Canada, which includes approximately 1,000 physicians, which is over 1% of all physicians practicing in the country. We have a tremendous runway to continue to expand our footprint across Canada. In addition, there are more than 41,000 providers benefiting from our SaaS and technology services, most of which are physicians. We estimate that well over 40% of all physicians in Canada touch our well-starred technology platform in some way. As we enhance our digital offerings and provide leading AI products and services, we can see the increasing importance, relevance and role that our company is playing in the country's healthcare ecosystem. And we're determined to make a positive impact. Looking at our patient visits, as our revenues are generally underpinned by patient visits, as such it's very important to track them, especially in this quarter, as we are experiencing some delays in revenue recognition under IFRS. We delivered 5.7 million patient visits in 2024, a 32% -over-year increase from the prior year with strong organic growth of 30%. These results demonstrate our strong fundamentals and unique platform, which is winning in the marketplace. Canadian patient visit metrics continue to demonstrate that this is one of the most prominent growth drivers of the company as visits grew by 35% -over-year with organic growth at 32%, inclusive of absorptions and same clinic growth. US patient visits grew by 28% -over-year with all of it related to organic growth. Total care interactions, which is defined as total patient visits plus technology interactions plus biller provider hours were over 8.7 million in 2024, which was a 37% increase as compared to the last year and represented 34% organic growth. Turning to our guidance for 2025, Well is expecting its strong fundamentals and operational performance to continue into 2025 with a greater focus on leveraging all the product and corporate synergies he has access to, given its gaps of product and technology at WellSTAR and now HealWell. Moreover, the company continues to focus the substantial majority of its M&A and capital allocation activity in Canada where it is experiencing its strongest returns. Management will continue to pursue its focus on optimizing its operations for organic growth and profitability. With that, Well is pleased to provide a positive outlook for 2025 with annual revenue guidance of between 1.4 and 1.45 billion. For adjusted EBITDA, we're providing annual guidance in the range of 190 to 210 million. Note that we've included over 90% of the 56.6 million deferred circle medical revenue in our 2025 guidance. This IFRS revenue associated with circle medical deferral will have a close to 100% contribution as I noted to adjusted EBITDA. And it's important to consider when evaluating the company's performance. We expect circle medical deferred revenue will be recognized primarily in the matters noted on a quarter by quarter basis. Note that as of today, the company has already recognized again, approximately $6.7 million of this deferred revenue. Our guidance does not include contribution from the $24.5 million in delayed earnings on CRH until this matter is resolved through a more exhaustive collection effort performed by Change Healthcare or formal agreement with Change Healthcare itself as it relates to their advances. Our guidance includes 100% consolidation of HealWell financial starting in Q2 2025 as per IFRS control requirements. We're currently expecting this will add approximately $120 million in annual revenue with positive adjusted EBITDA contribution. Note that Wells voting interest in HealWell is currently approximately 69%, pardon me, and its economic ownership with HealWell is currently at approximately 37%. Our guidance reflects healthy organic growth expectations in our Canadian operations. Importantly, this guidance does not include any unannounced acquisitions and we have a very strong pipeline with a strong balance sheet. Separately, while this is not part of our official 2025 guidance, we're pleased to note that with the strong outlook and fundamentals of our Canadian business, we are now targeting to reach $800 million in revenues and $100 million in adjusted EBITDA in Canada alone by the end of next year. We're confident in our fundamentals and outlook and are expecting 2025 to be a great year for the company with record revenue, EBITDA, and cashflow. I'd now like to provide the listeners today with an overall view of what Well Health family will look like in the future. We anticipate Well will be comprised of three operating subsidiaries and two publicly listed entities. The three operating subsidiaries will include Canadian Clinics, Well Health USA, and our cybersecurity business unit. The two publicly listed entities will include WellStar and HealWell. HealWell is currently listed on the TSX under the ticker AIDX and WellStar is expected to debut with an IPO on the TSX by early 2026. Well Health is the largest shareholder in each of WellStar and HealWell. We have a majority ownership position in WellStar and a majority voting share ownership in HealWell. Both WellStar and HealWell are independent companies that will have their own capital allocation strategies, fundraising plans, and acquisition opportunities. However, both WellStar and HealWell will continue to work very closely with Well and our clinical footprint in Canada. Now that we've covered off some of the key results, I'd like to cover off a few key topics. We'll do a deeper dive into HealWell, our WellStar and Bi-Canadian theme, our Canadian Clinics update, and as well an update on the Wismith Circle Sale processes. Let's start with HealWell. We're very pleased with the progress of HealWell AI, a company that redeveloped a plan and took a major leadership role in recapitalizing and relaunching 18 months ago after we acquired its MCI clinics and formed a pure play AI software company. With HealWell's recent acquisition of Orion Health completed on April 1, HealWell is building the world's leading company in healthcare data interoperability and artificial intelligence. In conjunction with HealWell acquisition of Orion Health, Well increased its holdings in HealWell to an approximate 37% economic interest and an approximate 69% voting interest. As a result, the company will begin to fully consolidate HealWell in its financial results starting in Q2 2025. We're very excited about the progress made at HealWell and its future. HealWell's commercial success is underscored by part, its partnerships with seven of the top 10 pharmaceutical companies in the world. This robust client base reflects its ability to deliver unparalleled value to the healthcare ecosystem. HealWell is not just revolutionizing patient care through AI, but through building a scalable and sustainable platform that is shaping the future of healthcare. HealWell strategic acquisition of Orion Health significantly enhanced HealWell's market position, accelerating its path to profitability. Orion Health was generating approximately $100 million in annualized revenue run rate, the majority of which is coming from large enterprise staff with strong operating EBITDA margins. Orion Health provides significant strategic benefits to HealWell and now Well, which includes, one, financial benefits of its strong recurring revenues, two, significant scale benefits as Orion Health currently services a total population of 150 million lives throughout all of its customers worldwide. Three, significant distribution opportunity for HealWell's AI offerings, as well as WellSTAR's best in class provider-focused tech. And four, significant data science and data interoperability expertise. The four public sector clients can use AI, which they really want to do in any meaningful manner, they must get their data normalized and organized and achieve interoperability. This is not an easy task and Orion is one of the best in the world at helping public sector healthcare groups organize their data. This is a very important thematic to be aware of. This map shows how HealWell has strengthened its position with the Orion Health acquisition as the global leader in AI-driven healthcare solutions. Today, Orion operates across 11 countries delivering cutting-edge software solutions to public and private sector customers globally. Its technology is deployed across 70 sites, more than 70 sites globally supporting healthcare systems that collectively manage, again, over 150 million patient records. This global presence combined with deep integration into healthcare ecosystems positions HealWell for sustained growth. The company solutions are powered by 500 global employees working out of 15 global offices in 11 countries. As a leader in AI-driven healthcare solutions, HealWell has large referenceable customers globally. Its ability to execute at scale is evident in the successful deployment of digital care records or DCR and digital front door or DFD solutions for major healthcare systems across the world. Some of these customer deployments include, for example, in Saudi Arabia where HealWell is, Orion is powering the world's largest digital care records deployment globally covering 35 million people. This system integrates data from over 5,000 governmental and private healthcare providers creating a single comprehensive view of each patient's medical history. In Ontario, Canada, HealWell or Orion has delivered a digital front door platform serving 15 million people and is now executing on the deployment of a unified digital care record system to enhance clinical interoperability. In Abu Dhabi, Orion has deployed its first ever digital care record solution in the Middle East seamlessly connecting 100% of all hospitals, clinics and pharmacies to improve patient outcomes through real-time data integration. This is an exceptional solution and result of which there are in the United States, HealWell is delivering or Orion's delivering digital health care records for state and regional health information exchanges or HIEs in Maine, Minnesota, Pennsylvania, New Mexico, North Dakota and Idaho reinforcing its presence in the US healthcare ecosystem. Now I'd like to talk a little bit about the strategic spin out of WellSTAR. During Q4, we created WellSTAR, a well subsidiary which we intend to spin out as a publicly listed high growth profitable pure play software as a service or SaaS healthcare technology company which would still be majority owned by Well. WellSTAR is the technology platform that powers Well's clinical ecosystem. WellSTAR is dedicated to empowering healthcare providers with innovative solutions that enhance patient care and optimize operational efficiency. WellSTAR addresses the diverse needs of the healthcare providers by streamlining care delivery, integrating fragmented care systems, reducing burnout and improving patient care and experiences and outcomes. There are over 4,000 clinics across the country that are customers of WellSTAR and as we noted earlier, over 40% of all providers in the country touch the platform in some way. WellSTAR is currently on a $70 million annual revenue run rate, generates 80% gross margin, is operating as a rule of 40 or better business with 20% organic growth and 29% adjusted EBITDA margins before shared services. WellSTAR is already one of the most relevant and consequential companies in the Canadian healthcare technology landscape and has firmly established itself as a de facto market leader in technology enabling clinicians across the country. We believe WellSTAR will be a very strong IPO candidate on the TSX main board sometime in early 2026. We continue to believe that pursuing a spin out and public listing for WellSTAR will accelerate the growth of the company, providing it with attractive cost of capital for M&A purposes and position it to be a multi-billion dollar company itself in the pure healthcare software vertical. We've already completed the first step in the WellSTAR Go Public plans which was to add significant capital to WellSTAR's balance sheet so it can execute on its acquisition plans. As such, during Q4, WellSTAR closed on a $50.4 million equity placement entirely supported by Mauer Investment Management, Edge Point Wealth Management and PenderFund Capital Management, three very reputable investment firms with a strong track record of investing in Canadian technology leaders. Well and WellSTAR Management also participated in this financing to fund WellSTAR's pre-spin out growth objectives. Well did not issue any shares as part of this transaction. Step two for WellHealth and WellSTAR is to acquire scale in its business. WellSTAR completed acquisition of two healthcare technology companies, MicroQuest and Bluebird, which boosted WellSTAR's annualized revenue to approximately $70 million. WellSTAR has a compelling pipeline of target acquisitions in its portfolio. Before WellSTAR does its public listing, our plan is to build additional scale by completing additional acquisitions that will position WellSTAR towards $100 million in annual revenues. Step three is the actual IPO which we expect to occur in the next three to four quarters. As a majority voting shareholder, we expect to continue consolidating the financial results as I mentioned earlier. We're now pleased to report that the bi-Canadian sentiment is presenting significant strategic advantages for WellHealth, especially in the WellSTAR and HealWell areas of our business. As policymakers across the federal and provincial levels increasingly prioritize domestic healthcare solutions, WellHealth is uniquely positioned to benefit from this shift and further solidify our leadership in Canadian healthcare ecosystem. In recent months, we've had a 200% increase in the size of our public sector pipeline as our deep-rooted presence in the Canadian healthcare landscape has led to unprecedented engagement from various different federal and provincial governments. We're currently seeing over 70 opportunities across Canada representing $300 million in deal value. In the past, despite there being high-quality technology vendors available in Canada, public sector procurement managers were mostly buying U.S. products and services to power many aspects of the Canadian healthcare ecosystem. The recent U.S. tariff policies have completely changed this perspective and accelerated the demand for homegrown digital health solutions. This policy-driven shift has created new revenue opportunities for WellHealth as one of the few companies in the country with the technology to deliver on large projects, particularly in the areas such as digital health infrastructure, AI-powered solutions, virtual care, and primary care enablement. Our acquisition of Orion Health through HealWell has further solidified our position as a leading provider of provincial health information exchange platforms while the expansion of OceanMD's e-referral platform in BC and other provinces is streamlining patient care coordination. Our extensive network of health care providers as well as our own and operated network, which is the largest in the country, positions us very well to support policymakers in their efforts to enhance patient outcomes. We also believe that Well will benefit from a reduction in engagement from U.S. companies internationally. Note that with Orion Health, we now have boots on the ground in 11 countries globally and will be working with Orion to sell more of our WellSTAR capabilities internationally. This is a unique catalyst not previously considered before within Well's business. The third theme I'd like to discuss this morning is the success of our Canadian business. As you can see from these charts, the historical performance of our Canadian clinics business has been exceptionally strong. Canadian clinics achieved revenue of $319 million in 2024, handily beating our previous revenue guidance of $300 million. Over the past four quarters, our Canadian clinics business had exceeded 50% compound annual growth rate. Adjusted EBITDA attributable to our Canadian clinic business has grown at a CAGR of 44% and achieved $40.7 million in 2024. Our Canadian clinics network has grown to 210 clinics at the end of 2024 compared to 167 at the end of 2023. We expect this number will continue to decrease in 2025 as we have a significant eminent pipeline. In Q4, we continued executing on our strategic growth plan through the expansion of our clinic network. We acquired 20 clinics generating over $30.8 million in annual revenue. This does not include our affiliate clinic acquisition from Jack Nathan Health, which would increase our total clinic count to 57, including both owned and affiliate clinics. We also, our owned and operated clinic network welcomed 111 new healthcare providers in Q4, further strengthening our capacity to deliver high quality care. We continued this momentum in Q1, in which we acquired 11 clinics generating $31.5 million in annual revenue and added 71 providers. With a diversified clinic strategy and a growing physician base and a scalable expansion model, we're well positioned to drive long-term growth and operational efficiency. And now a little bit about our M&A pipeline. We have a very healthy pipeline of clinic acquisitions, opportunities which we believe is directly correlated with the challenges doctors are feeling in the marketplace. We continue to focus on acquiring Canadian clinics under both our absorption model and acquisition model. Our current pipeline of Canadian clinic acquisition opportunities is very active. In Canadian clinics, we currently have five signed LOIs representing five clinics and approximately $31 million in annual revenue. In total across the entire organization, including Canadian clinics, WellSTAR and WellUSA, we currently have seven signed LOIs representing approximately $40 million in annualized revenue. We have a very large pipeline of target acquisitions that we are in a pre-LOI stage with. We have more than 130 targets engaged representing over $390 million in annual revenue. This pipeline includes more than 130 clinics. Our Canadian business and including our Canadian clinics and WellSTAR businesses are doing exceptionally well and is performing in many ways that I've already mentioned earlier on this call. Our pre-tax, unlevered ROIC or return on invested capital in Canada is expected to rise, driven by growth, acquisition integration and cost optimization. Meanwhile, our adjusted EBITDA continues to be driven by organic and inorganic growth. Now looking a little bit more closely at our ROICs, WellSTAR currently operates at a ROIC of 11%. The WellHealth Diagnostic Network has achieved a historic ROIC of 12%. Note that the diagnostic network has a lower ROIC than our primary care acquisitions because we had not done any tuck-in acquisitions after acquiring the platform in 2021 until quite recently. We expect that the diagnostic ROIC to improve as we just completed our first diagnostic tuck-in with the acquisition of Alberta Bay Sea Health in late 2024. The historical ROIC in our primary care business is approximately 22%, demonstrating our ability to create value. We expect our Canadian clinic ROIC figure should improve given that our costs have reduced and our ability to execute on clinic transformation has improved in recent years. This is also demonstrated by the primary care ROIC for the last three years at approximately 30% per year for each of the three-year cohorts. The three-year primary care ROIC also benefits from the absorption model which we started post-COVID and has an extremely high ROIC. Well's high pre-tax unlevered ROIC metrics indicate that the company is consistently creating returns well above its cost of capital, demonstrating the company's disciplined approach to capital allocation and operational execution. Turning to adjusted EBITDA growth for Well Canada, as you can see from the graph on the right, our -over-year adjusted EBITDA of Well Canada, including Canadian clinics and WellSTAR, has been accelerating while it achieved annual adjusted EBITDA of $56.3 million 2024, a 22% increase as compared to last year. In 2025, we're expecting our adjusted EBITDA Canada to experience an over 25% growth, inclusive of both organic and inorganic growth. We're very confident in our Canadian business and are now targeting over $100 million in adjusted EBITDA in Canada alone by the end of next year. We think this is very much an achievable goal and our focus in making it a reality. The fourth theme I'd like to talk about is our current strategic review process of WISP and Circle Medical. First of all on WISP, we concluded the first phase of our strategic review process for WISP, resulting in the receipt of numerous proposals from prospective acquirers. While interest in WISP was significant, the board has determined that none of these proposals adequately reflected WISP's exceptional operational performance, accelerating growth trajectory, and substantial market opportunity in women's healthcare. Throughout the review process, WISP continued to demonstrate strong business fundamentals with consistent revenue growth and operating margin expansion. This performance reinforces the board's conviction in WISP's long-term value potential beyond what was reflected in the proposals received. The company and its advisors continue to actively work on the strategic review process and we remain committed to our strategy of divesting the company's U.S. digital assets in order to allocate more capital into Canada and will continue to provide updates as appropriate. Operationally, WISP had a very strong 2024 with record annual revenue of $101 million, an increase of 30% from 2023, and it achieved record-adjusted EBITDA of $25 million in 2024, a 235% increase from the previous year. WISP is performing very well and we're expecting WISP to have improved EBITDA performance in 2025, which we believe may assist in attracting a more favorable valuation. Moving on to Circle Medical, we've already discussed Circle extensively on this call, so we won't go into it too much further, but we will remind shareholders that last year we engaged a global investment bank to consider strategic call terms for Circle Medical. We're still relatively early in the process, which has recently slowed down due to the regulatory inquiry. Nonetheless, we're still very committed to continue to move forward on the sale of Circle Medical and currently have a number of discussions and engagement occurring with prospective buyers. We do not necessarily believe that the regulatory matter needs to be fully resolved before a sale takes place. This is, of course, after consultation with U.S. legal providers. We continue to believe that unlocking the value from WISP and Circle could result in significant cash benefit to well, which we would use in a variety of ways, including redeploying the capital into our expanding Canadian

clinic footprint. And now I will pass the

mic over to Eva Fong.

Thank you, Hamid. Overall, our fiscal year 2024 results were positive, excluding the revenue recognition impact Hamid discussed earlier on the call. As Hamid has already covered revenue and adjusted EBITDA results, I'll focus on wealth net income. We'll report a net income of $29.1 million or 13 cents per share in 2024, an increase of 75% as compared to a net income of $16.6 million or zero cents per share in 2023. The higher net income this fiscal year was primarily driven by the fair value gains on the company's investment in Hillel. From the graph, you can see that the IFRS revenue recognition impact had a material impact on our 2024 net income figure. Excluding this impact, well was on track to achieve approximately $90 million in net income. Now looking at our balance sheet as at the end of Q4 2024. Well ended 2024 with a solid balance sheet. As at December 31st, 2024, well had cash and cash equivalents of $131.7 million. Well continues to be in good standing and fully compliant with all companies related with its two credit lines, JP Morgan in the US and Royal Bank in Canada. The debt from the two credit lines was approximately $292.4 million in Canadian dollars as of December 31st, 2024. Our balance sheet is strong and getting stronger as we continue to grow our free cash flow generation capabilities. We should see 2025 result again in a record year of free cash flow generation. I'm also very pleased to report that we have the cash and available resources to continue to fund our M&A program. This is true for Canadian clinics, WellStar and CRH Medical where substantially all our M&A pipeline is focused on. That is my financial update and I now turn the call back to Hamid.

Thank you Eva. In final here, I'm very excited about our outlook for this year which we expect to achieve record revenue, record adjusted EBITDA, record net income and record free cash flow. First of all, I want to reiterate that our 2025 guidance for revenue of $1.4 to $1.45 billion and $1.5 billion. This guidance does not include any NNF acquisitions and we have a tremendous pipeline of potential acquisitions that could significantly boost guidance upwards. In addition, we have not included any amounts from the $24.5 million in delayed earnings on CRH until the claims affected are collected or there is formal agreement with Change Healthcare. Our guidance also includes fully consolidated financial statements from HealWell as we noted. We're also very excited with the potential IPO of WellStar. We're expecting WellStar to reach $100 million in annual revenues by 2026. WellStar will continue to be a guiding light in the delivery of technology solutions to healthcare providers. Despite the challenging economic and backdrop of the geopolitical stability of tariff, we remain committed to the sale processes of our U.S. digital assets. These businesses continue to be desirable given their historical growth rates and they both reflect the future of healthcare as telemedicine businesses. Divestment of these assets will allow us to redeploy the capital in attractive ways as we discussed. Our Canadian business including Canadian Clinics and WellStar is outperforming and we have many tailwinds in the Canadian healthcare market driving and supporting the business including the strong bi-Canadian sentiment that we talked about. And as I noted earlier we're expecting WellCandidate's adjusted EBITDA to grow by at least 25 percent in 2025. Our longer term view of the Canadian market remains bullish again as I noted with our two-year goal of achieving $800 million in revenue and $100 million in inclusive acquisitions just in Canada. And in addition our WellStar as a technology leader in Canada we believe its growth will only accelerate with a future IPO. So in summary we're very pleased with the strengthening fundamentals of our business and look forward to delivering strong results in 2025 and beyond. Well's growth engine has never been stronger. Our organic growth is operating at its optimal level while we are executing on a very healthy M&A pipeline. We have a strong balance sheet in our well position to improve shareholder value. We have a committed and disciplined team to ensure we can execute on our objectives. I'd also like to thank Well's senior management team and all our employees and contractors for their tremendous effort. And in particular I'd like to thank our team of healthcare practitioners and other frontline workers who continue to provide unbelievable patient care. They remind us every day why we're here and we're here to support them. I also want to thank you all for joining us on this call and thank our shareholders and investors for their continued support. The capital markets have been very supportive of our vision and have provided us with the funding needed to pursue our goals. Finally on behalf of the management team we sincerely apologize for the lateness of today's report. In my 27 years as a public company CEO this was the first and only time I personally or we as a company have experienced anything like this and I am extremely sure it will never happen again. And we very much appreciate your patience with us. We are accountable to you and we look forward to delivering for you. And with that we will now open the call to questions. Operator would please help us take questions.

Thank you. Ladies and gentlemen we will now begin the question and answer session. Should you have questions please press star followed by one on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process please press the star followed by two. If you are using a speakerphone please lift the hands before pressing any key. One

moment please for your first question. And for your first question comes

from Mr. Michael Freeman from Raymond James. Please go ahead.

Good afternoon. Thanks so much for the extremely thorough overview of your 2024. I have a question and follow up both on Circle Medical. I guess just to start could you describe the service obligation under IFRS that Circle Medical didn't meet in order to qualify this revenue for recognition during 2024?

Thanks Michael for the question. We are not able to go into a significant amount of detail given that the conversations with the regulators are ongoing. But I can tell you this is more of an administrative matter in nature. It sort of deals with because as you know we delivered the service we got paid. But in terms of our compliance with the actual contract the view was we may have not met the IFRS requirement for recognizing revenue. So we took the very conservative step in order to defer this

revenue. Okay that's helpful. Then now very quickly could you provide some color on how you estimated the settlement amount related to the Circle Medical USIO investigation?

You know this is done really with the help of advisors. This is a civil matter. There's a lot of I guess track record in terms of how these things typically go. You know there's specialized counsel that deals with these sorts of matters. This was sort of an element that we were able to get this advice through advisors. Certainly these figures were audited. Auditors need to feel comfortable that these settlements were reasonable. Expert kind of feedback was sought in order to substantiate that these are reasonable provisions to be taking.

Okay thank you very much. I'll pass it on now. Thank you

and your next question comes from Mr. Rob Koff from Ventum. Please go ahead.

Thank you very much and you know we're very pleased with the underlying performance. It's just such a shame but very pleased with the fundamental growth. Thank you

Rob. We feel the same way.

Now in terms of the bi-Canadian could you perhaps elaborate a bit more in terms of the 70 plus opportunities and the deal value of 300 million? Like is that 300 million the total deal value across say an average of the five-year term? Are these deals lumpy like some are 50 and what sort of timing?

Yes yes so we've effectively in fact that was sort of the lower part of our range. I will tell you that the deal pipeline is we were conservative here when we sized the potential lengths of the different contracts. It's more like 300 to 500 million depending on how far some of these contracts would go out. But yeah they effectively involve different types of implementations of technology at the public sector level, mostly provincial you know working with with with provincial vendors. Of course there's also you know federal procurement that occurs through you know the Infoway entity which is which is always you know promoting and driving digital health kind of advancement in Canada. So clear across all those opportunities we're seeing at least 70 plus opportunities. Mind you this does not include Orion. This is really important to note because Orion already has very significant installations within Canada. In fact it's the largest market that they operate in of all their different countries. And so they are incredibly prominent in terms of their work in not only Ontario but also Alberta and a number of other provinces. So we think that the door opens here for you know again more opportunity for non-US vendors of which there's not many of them that can deliver these types of solutions. So we're talking about more of Ocean MD's type products and services are ambient scribe services various different you know digital products and services across

the country. Thank you very much.

Thank you and our next question is from Daniel Rosenberg from Praradine. Please go ahead.

Hi thanks for taking my question. I wanted to continue on the theme of circle. I was wondering given the delayed revenue if you had to make any changes to process or operations at the division and has it changed your thoughts on you know the growth potential within the asset as it's been a big driver in the past and you know effectively what that value what kind of value you could crystallize from the asset as well?

Yeah look we don't anticipate any sustained impact over the long term. In the short term we expect growth to slow a bit as the company focuses on reviewing compliance and transitioning to a new revenue cycle management vendor. This was one of the real keys that was you know resulted in some of these administrative challenges. This work will position the company for the next phase of growth and look there continues to be strong interest in circle. We believe the current compliance focus may delay things a little bit but we don't think that it necessarily has to have a big impact on value.

Okay good to hear and then just turning to the guidance. Those are some big numbers even when I think of you know all the activity that you guys have executed on with Orion and Hillel etc. So I was curious if you could dive a little deeper on you know it sounds like the Canadian business is humming just the drivers and the confidence you have in being able to achieve those results.

Yeah I will say you know our elevated organic growth is one factor and then of course our deep M&A pipeline. I think we are very much expecting over the US assets and that will help us. The pipeline is effectively more than we can prosecute right now with the cash resources that we have which are strong and so we'll continue to be quite industrious and committed and demonstrative of what you're seeing quarter over quarter. That growth will continue with these sort of continued tuck-ins but as liquidity occurs we do think that that will just you know again help us drive additional opportunities. We also see some chunkier opportunities in the landscape and we're very much bearing down on those opportunities and we think that there's some opportunities here to potentially you know close some bigger deals while we go after that long tail in a very systematic manner.

Thanks for that and if I could squeeze one more in I was interested in your comments around WellSTAR and pursuing kind of global opportunities. Are there any specific product sets that you think scale better internationally or how are you thinking about the product suite at WellSTAR and those plans?

Yeah absolutely well look we think OceanMD we've always thought OceanMD has tremendous international potential. I mean with just the quality of product and the product portfolio that we have there with the e-referral, e-order and just kind of the whole provider network tools there. These are exceptional products. There's a reason why they're winning a lot of the RFPs that they participate in and I think they would resonate very well with international audiences that need these products as they build more accountable healthcare ecosystems and look we've just never tried because we've been focused on Canada because just going out and building that global sales force and getting into the right places. I mean that's what Orion's done over a I'll think I think close to 30 year period in building the types of relationships that they have with the NHS and these very significant countries you know France, Spain, you know Saudi Arabia, United Arab Emirates, Australia, New Zealand. I mean these are all candidates for us. I mean there's no doubt that we have opportunities to have them resell some of our capabilities which you know we think are meaningful.

Thanks for taking my questions. I'll pass the line.

Thank you

and

our next question is coming from Kevin from Scosche Bank.

Please go ahead. You know

if you I think it looks like if you if you exclude the HealWell contributions and then the circle medical deferrals and compare margins you know on a normalized basis from 24 to 25, it looks like they're going down a little bit. Just want to clarify that's the way you're thinking about it and what might be the you know some of the reasons for a slight slight dilution year over year.

Yeah that's a good question. I think if you look at we're not expecting significant EBITDA from HealWell and so I think that may be part of it. Also I think as you know as we grow organically and as we take on these absorptions you know there's sometimes a timing difference in you know relative to our profitability on those. So I generally don't think that we will have a significant difference over time in terms of our margins. In fact I think on a whole will improve over time because of higher margin revenues coming in through Wallstar and HealWell as those platforms continue to to gain momentum.

Makes sense. Maybe just one more again on the guidance on the top line just the range. Can you talk about sort of the assumptions there broadly what gets to the low end the high end and you know where do you where do you see the the opportunities for sort of outperformance towards the high end.

Yeah there's a lot going on in our guidance as you can see. I think that the that the real potential for outperformance really comes from Canada frankly. I think I think and this is why we're sort of throwing out that two-year target. We think it's very demonstrative of our confidence and the opportunities that we're seeing for capital allocation. And so I would think that you know as some of that M&A you know kind of gets fulfilled you know we could see and I think some of the some of the margin profile of that M&A could also impact things. So I would say that depending on that M&A I could see I could see you know to be you know certainly being at the top end or even exceeding that top end of the range.

Okay okay thanks a lot. I'll leave it there and I also wanted to say thank you for you know giving the full color and description for everything that happened in the quarter on the accounting changes. It was much appreciated.

So thank you actually for helping people understand that this is a very noisy quarter and hopefully everyone recognizes that this does not impact our fundamentals. Our patient visits grew. Our fundamentals are strong and in some of these administrative matters we will you know we will have full control of those and are working very hard at that. And certainly hopefully people recognize the CRH matter is really something that was completely out of our hands. A lot of people are dealing with these collection issues and this is just a fact of our collection policy and revenue recognition policy under IFRS that we had to take these steps. But again there is some upside to the to the guidance range as well coming from you know future potential revenue recognition from collections. So thank you. Thank you to all the analysts and and

all your support.

That concludes the question and answer session for today. I will then hand the call back to Mr. Hamid Shabazi for the closing comments. Please continue.

Again we want to really thank everyone for joining us today and again apologize for the delay in getting this report out. We look forward to speaking to you again I think in about a month and we look forward to a much more orderly process and again have a have a wonderful day and be well. Thank you.

Ladies and gentlemen this concludes today's conference call. Thank you for your participation. You may now disconnect.