HealWELL AI Inc.

Good afternoon, ladies and gentlemen, and welcome to the WellHealth Technologies Corp. Third Quarter 2025 Earnings Release Conference Call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you need assistance, please press star zero for the operator. This call is being recorded on Thursday, November 6, 2025. I would now like to turn the conference over to Tyler Bhabha, Investor Relations Manager. Please go ahead.

Thank you, Operator, and welcome everyone to Well Health's fiscal third quarter financial results conference call for the three months ended September 30th, 2025. Joining me on the call today are Hamed Shabazi, Chairman and CEO, and Iba 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 factors, many of which are outside of laws 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 features. We do not undertake 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 EBITDA margin, shareholder EBITDA, adjusted net income, and adjusted pre-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 our management's 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 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, let me turn the call over to Mr. Hamed Shabazi, Chairman and CEO.

Thank you, Tyler, and good day, everyone. We appreciate everyone for joining us today as we discuss our Q3 2025 financial results. Q3 2025 was an excellent quarter for Well, driven by strong performances network-wide, but especially in our core Canadian business. We're seeing our technology-enabled approach, which is increasingly AI-enabled, drive real business results across the enterprise. We feel qualified and authentic to say that we're firmly delivering on our mandate of delivering high-quality, tech-enabled care and or supporting physicians across the continent in delivering high quality tech enabled care in their environments. We generated approximately $365 million in revenues for the quarter, which were up by 56% year over year and surpassed a billion dollars in revenue and 137 million in adjusted EBITDA in just the first nine months of the year. Five years ago, for perspective, our quarterly revenues were $12 million And year-to-date revenue as of Q3 2020 was approximately $33 million, with negative adjusted EBITDA. Our revenues have grown more than 30 times in five years, while our adjusted EBITDA is trending to meet our stated guidance of between $190 and $210 million this year. We also witnessed improvements in a number of operations and productivity metrics, which we'll discuss later on this call, which we feel demonstrate that we're not just growing, but delivering real value and efficiency to the healthcare markets we serve. We achieved adjusted EBITDA of 59.9 million in Q3, an increase of 296% as compared to 15.1 in Q3 of 24. If one were to exclude the impact of circle medical deferred revenues, Q2 Q3 would have been 347 million, representing 48% year-over-year growth, while adjusted EBITDA would have been 42.3 million, representing a 180% increase compared to the previous year. Also very pleased to report that given management's very intense focus on margins, we've improved our gross margins by 510 BIPs to 45.5% from 40.4% last year, and our operating adjusted EBITDA margins have improved by 990 bits year over year. Free cash flow attributable to shareholders in Q3 was 30.2 million, including one small divestiture we had in our CRH platform, and 15.1 million in Q3 without it. Eva will speak to this in greater length later. I will now share with you some of our operational highlights for Q3. As at the end of Q325, Well had over 4,500 billable and non-billable providers delivering care across our entire network of physical and virtual clinics. Of that number, we now have over 1,300 physicians in Canada operating with Well, which is just over 1% of all physicians practicing in the country. We continue to focus on achieving 10% market share within 8 to 10 years, so that we have a tremendous amount of runway left to continue to expand our footprint across Canada. As a reminder, we are the market leader. In addition, over 43,000 healthcare providers across the country, the majority of which are physicians, continue to benefit from our SaaS and technology services. We estimate that more than 40% of all physicians in Canada engage with our WellStar technology platform in some capacity. Looking at our patient visits, which are a strong indicator of our revenue growth and progress, Patient visits are very strong for the quarter, especially in Canada. Total care interactions were over 2.7 million in Q3, which represented a 29% increase compared to last year and represented 19% organic growth. For the second quarter in a row, Canadian patient visits surpassed 1 million in a single quarter, reaching 1.08 million patient visits in Q3 2025. Total patient visits increased 38% year over year, including organic growth of 9%, accounting for both clinic absorptions and same clinic expansion. System-wide, inclusive of U.S. and Canada, we delivered over 1.7 million patient visits in Q3, a 19% increase from the prior year, with organic growth of 3%. We note that the slower organic growth in patient visits system-wide was attributable to Circle Medical's whose patient visits were lower than last year because of the significant focus on compliance. However, I'm pleased to note that Q3 was a bounce back quarter for Circle Medical compared to Q2. We'll talk a bit more about these positive results at Circle Medical later in the call. I'd like to now share with you an updated overview of Well Health and its key operating subsidiaries. We think it's important to convey what the company will look like as the dust settles on its journey to simplify, and streamline operations, especially with the divestiture processes we have underway in the United States currently. As you can see, our core operating business and capital allocation focus is our Canadian Clinics Network. This is where we have a leadership position in Canada and where we are able to generate the highest return on invested capital or ROIC. Our three key areas of focus here are primary care, diagnostics and specialized care, and of course, our preventative and executive health line of business. Complementing our Canadian clinic network assets, we have our strategically controlled operating platforms. This includes WellStar, for which we are planning an IPO next year on the TSX, and HealWell, which is already a publicly listed company on the TSX. WellStar is focused on providing digital enablement solutions for healthcare providers and clinics, while HealWell is building AI solutions and data science healthcare information systems for public health, as well as other solutions for big pharma and life sciences companies. An easy way to think about this is that Wellstar generally serves SMB, or small and medium-sized businesses, clients, such as outpatient medical clinics and doctors, whereas HealWell serves large enterprises around the globe, such as the NHS. It is important to note that both HealWell and WellStar are able to fund their future acquisition plans through their own fundraising and capital allocation programs. This structure is very capital efficient for Well shareholders who will continue to benefit from the consolidated financial statements and enterprise value of both WellStar and HealWell without seeing any dilution in Well's own share capitals. Incidentally, CyberWell is another strategically controlled operating platform, but is being excluded from this slide for the moment due to its small size. It is currently generating less than 1% of Well's total revenue. Now that we've covered off the key results, I'd like to go over a few key presentation themes we'll be covering in the rest of the presentation. One, of course, will be our Canadian Clinics Update, two, WellSTAR, three, HealWell AI, And fourth, we'll provide an update on the strategic alternative processes for our U.S. assets. The first key theme I'd like to address 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. Over the past four years, our Canadian clinics business has exceeded 50% compound annual growth rate. During the nine months ended September 30th, Canadian clinics achieved revenue of $325.3 million. Our year-to-date revenues have already surpassed our total revenue for all of 2024. For perspective, five years ago, our Canadian clinic's revenue was $9.7 million for the quarter and $26.4 million on a year-to-date basis. So again, well over 10 times. Adjusted EBITDA attributable to our Canadian clinic's business has grown at a compound annual growth rate of over 44%. During the nine months ended September 30th, 2025, Canadian Clinics achieved adjusted EBITDA of $45.7 million. Notably, our year-to-date adjusted EBITDA for the first nine months has also surpassed our total adjusted EBITDA last year with an additional $5 million so far. Our Canadian Clinics network has grown to 227 clinics at the end of Q3 2025. Our Canadian Clinics business continued its strong growth trajectory in Q3 2025. Patient visits in our Canadian Clinics Network totaled 1.08 million in the third fiscal quarter. Our second quarter in which we surpassed 1 million patient visits and up 38% from 780,000 in Q3 2024. The number of billable providers within the network reached 2,068 in Q3, up 17% from 1,769 in Q3 of last year. highlighting the growing magnitude of our scale. Note that the number of doctors here is just over 1,300, as mentioned earlier. In the quarter, we recruited 44 physicians versus acquiring 64 physicians into our platform through our M&A program. We're pleased to note that we are now recruiting more physicians than ever before, as the Well brand is gaining recognition as an attractive place for physicians to work and build their practice. This is due to the hard work we're doing to win the hearts and minds of doctors by making their lives easier and helping them be more successful in their practice. A major goal of our platform is to allow providers to spend more quality time seeing patients without having to worry about the overhead tasks or managing a clinic or spending countless hours on charting patient records. This shows that our business model is working. In fact, in Q3-25, our number of patient visits per billable provider was 524 compared to 441 in Q3 of last year, representing a year-over-year increase of 19% in this very important metric. With patient visits growing faster than the number of billable providers in Well's Canadian Clinic Network, we're demonstrating increasing efficiency in our clinics. While there are many more contributors to this improvement, we believe improved tooling and technology to be one of those key reasons. And looking at our Canadian business, including Canadian Clinics, WellStar, and CyberWell, but excluding HealWell, our Well Canada business is experiencing accelerating growth, as you can see from both of these graphs. In Q3 2025, Well Canada generated revenue of $129.3 million compared to $93.5 million in the prior year's quarter, an increase of 38%, as compared to the prior year's growth of 27%. We're also quite proud to report that our adjusted EBITDA is growing faster than our revenues now, which was not the case last year. In Q3 2025, adjusted EBITDA for our total Well Canada business reached $21 million, up from 14 million year-over-year, representing an increase of 50% as compared to the prior year growth rate of 16%. On to our Canadian Clinics capital allocation track record slide. If you were on last quarter's conference call, you would have likely remembered this slide. We've updated it to include, to demonstrate our capital allocation record at Canadian Clinics. As a reminder, this slide speaks to all of our clinical acquisitions and absorption since inception. On the right hand of this slide, we provided total figures relative to our capital allocation record in Canadian clinics. As you can see, we've allocated about $280 million overall in 31 separate transactions where we have acquired $273 million in revenues. Our total deal multiple for all acquisitions was 9.4 times EBITDA at the time of acquisition. Since then, we've grown the EBITDA of all of our acquired assets by 117%, re-rating the implied multiple to 4.3 times. If one takes out My Health, the specialized care and diagnostic imaging platform, which was our single largest and most expensive acquisition to date in Canada, the average original multiple that we transacted against was 5.8%. times EBITDA, but given that we've substantially improved the EBITDA for these businesses, the implied multiple after these improvements currently stands at just 2.2 times shareholder EBITDA. This yields an adjusted EBITDA growth of 164%. In Q3 2025, we continued executing on our strategic growth plan through the expansion of our clinic network. During Q3, we acquired five clinics generating over $27.5 million in annual revenue. Our owned and operated clinic network welcomed 68 new billable providers in the third fiscal quarter, further strengthening our capacity to deliver high-quality care. As we articulated at the beginning of our call, the main focus of our capital allocation focus is our Canadian clinics business. As such, we have picked up the pace of our M&A program relative to Canadian clinics. Year to date, we have already completed 12 transactions and acquired $67 million in clinical revenue, which includes acquired and absorption revenue, which exceeds our full year metrics in the prior year. By comparison, last year, we completed 10 transactions in the full year, accounting for $53 million of acquired business. We continue to tool up our M&A program and are getting ready to improve these numbers as we get into 2026. we have now spent considerable time and effort streamlining, automating, and where possible, AI enabling our corporate development efforts with the goal of evolving our M&A efforts into a true efficient machine. As for our growing M&A pipeline, we're pleased to report that we are working on some of our largest acquisitions to date in Canadian clinics and have approximately $235 million in clinics under LOI with approximately a quarter of a billion overall under LOI enterprise-wide, including Wellstar and HealWell. The $235 million figure reflects eight signed LOIs and 61 clinics and includes some of the largest targets we've had locked down in quite some time. As a comparison, on our prior call in August, we had 25 clinics and only $48 million in annual revenue under LOI. We also have a very large pipeline of target acquisitions that are in the pre-LOI stage. For our total pipeline, including both LOI and pre-LOI, we now have more than 35 targets engaged, representing over $350 million in annual revenue and more than 130 clinics. The second theme I'd like to talk about is well-started. As a reminder, WellSTAR is 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 laser focused on addressing the diverse needs of healthcare providers by streamlining care delivery, integrating fragmented healthcare systems, reducing provider burnout, and improving patient experiences and outcomes. Last week, we announced a $62 million equity financing for WealthStar, which is expected to close by early December 2025. The financing was led by a syndicate of investors, including three of Canada's most prominent fund investors, Mower Investment Management, Edgepoint Wealth Management, and Picton Mahoney. We're very grateful for the support provided by these investors and extremely proud to have the support of such outstanding Canadian institutions. This equity offering was done at $1.50 per share, which is a 50% premium compared to the prior Wellstar financing that we completed at $1 per share in December of 24. On a fully diluted basis, the post-money valuation for Wellstar is approximately now $535 million, and Well's ownership stake is approximately 70%. This would imply that WellSTAR should contribute approximately $375 million to Well's valuation on a sum of parts valuation. Thus, you can see we are unlocking the value of WellSTAR as we believe it is not properly reflected in the total value of Well Health, which we believe remains undervalued. We continue to believe WellSTAR would be a very strong IPO candidate on the TSX main board sometime early in 2026. depending on market conditions. Our plan is to build additional scale before going forward with the GoPublic initiative by completing additional acquisitions that will position WellSTAR towards achieving more than $100 million in annualized revenue run rate. WellSTAR has already signed an agreement to acquire a healthcare billing company, which is expected to close in early December and subject to regulatory approval.