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spk01: Hello, everyone, and welcome to the Well Health Technologies Corp. Fiscal First Quarter 2022 Financial Results Conference Call. My name is Michelle, and I'll be your operator for today's call. At this time, all participants are in a 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 today, May 12, 2022. I would now like to turn the call over to Pardeep Sangha, Vice President, Investor Relations. Mr. Sangha, you may begin.
spk04: Thank you, Operator, and welcome everyone to Well Health's 2022 Fiscal First Quarter Financial Results Conference Call for the three months ended March 31, 2022. Joining me on the call today are Hamed 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 yesterday. Portions of today's call, other than historical performance, include statements of forward-looking information within the meaning of applicable securities laws. These statements are made under the safe harbor provisions of those laws. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management, are inherently subject to significant business, economic, and competitive uncertainties and contingencies. 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 yesterday'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, consumptions, or circumstances on which such statements are based, except if it is required by law. We may use such terms as adjusted gross profit, adjusted gross margin, adjusted EBITDA, Shared EBITDA, adjusted net income, and free cash flow on this conference call, which are all 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 in Management Discussion Analysis. The company believes that adjusted EBITDA is a meaningful financial metric as it relates to measuring 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. With that, let me turn the call over to Mr. Hamed Shabazi, Chairman and CEO. Hamed.
spk07: Thank you, Pardeep, and good day, everyone. We hope that you're all keeping safe and healthy. We truly appreciate everyone for joining us today. First quarter 2022 was an exceptional quarter which exemplified our organic growth potential. We're very pleased with our Q1 results in which revenue increased by 395% year over year compared to Q1 2021, catapulting the company to over half a billion in annualized revenue run rate. Organic growth was 15% based on a year over year basis in the first quarter despite the effects of seasonality that normally exist in the first quarter in our CRH medical business, which is a substantial business for us. This represents a 50% acceleration from the previous quarter's figure of roughly 10% organic growth. These impressive results were driven by strong patient visits in the quarter. During Q1 2022, well delivered more than 1 million combined omni-channel diagnostic and asynchronous patient interactions. We've added significant scale to our business and increased our leadership position as the preeminent end-to-end healthcare company in Canada, while our U.S. businesses continue to flourish in their respective sectors. For the benefit of new investors and listeners on this call, I'll first provide some background on the company. Well, it's a practitioner-focused digital healthcare company. While technology has touched nearly all facets of our lives, healthcare is being slow to innovate. Basic applications such as empowering patients with their medical record, accessing practitioners through telehealth, and booking and managing appointments online has only been a recent phenomenon. Due to the fragmented nature of healthcare IT, we found that individual practitioner operators find the suite of services available in the marketplace to be confusing, difficult to implement, and navigate, and has resulted in low adoption of most technologies. Thus, the under digitization that we all see when we go to the doctor's office. Well, we believe that post-COVID now we are entering a golden period where healthcare practitioners are finally actively seeking and implementing digital tools and technologies to help them modernize their practices. This is an exciting time because it means that care providers are finally starting to see significant improvements in their operating efficiency. in terms of improving their economic output, and most importantly, delivering better patient outcomes as they take on more of these tools and technologies. Make no mistake, healthcare is still driven by care providers. Doctors, nurses, allied health professionals, and clinicians take care of people when they need help. And these healthcare practitioners are the precious resource in the healthcare ecosystem. In fact, of the $300 billion healthcare ecosystem here in Canada, More than 14% of the sum goes to pay doctors, a loan representing over $40 billion annually. Well's big idea is to offer healthcare practitioners its own practitioner enablement platform, which has a myriad of features, including but not limited to comprehensive end-to-end practice management tools, inclusive of virtual care and digital patient engagement capabilities, such as electronic medical records, revenue cycle management, e-referral, digital apps, and data protection services. WELL uses this platform to power healthcare practitioners, both inside and outside of WELL's own omnichannel patient services offering. As we've discussed before, WELL offers this platform in two ways. One is through an a la carte SaaS offering, and the second is through a fully managed service. Healthcare practitioners have a choice. They can pay for our tools and implement them in their own patient services business, or they can join one of our virtual or physical clinics and have us provide a fully managed service, which means that we not only use our platform to provide improved efficiency and patient engagement, but we also provide patient origination if needed, hiring and firing of MOAs or medical office assistants and support staff. We help run these businesses for doctors so that they can focus on the care. Increasingly, we are seeing more and more doctors and care providers want to focus on the care and not on the business. This is a clear and unmistakable trend. What is unique here is that the vast majority of our business is comprised of the fully managed solution. This means that while our SAS offering is used by almost one out of every four doctors in Canada, it is still far outweighed by our non-SAS business. This is because when we sell our SAS tools, we capture roughly 1% to 4% of the economic output of a physician, whereas when that care provider joins a well patient services business, we capture anywhere from 20% to 50% of their economic output, and they are happier. Well's strategy of empowering and modernizing healthcare practitioners is working. Practitioners that use Well's tools have consistently demonstrated that they have more time to focus on patients, and spend less time on the burdens of back office and administration and running a business. This not only increases their billable hours, but also improves their operating environment and lessens physician burnout, a significant and serious matter that is an understated aspect of healthcare. Another way of thinking about the wealth story is that we're providing investors with a unique opportunity to not only have economic exposure to this phenomenal group of humans who provide care, but also derive benefits as care providers, generating operating efficiencies and improvements as a result of innovation. Over the past four years, we have grown both organically and inorganically into a category leader across numerous verticals within the Canadian and U.S. healthcare systems. We have sought to build a compelling ecosystem that leverages technology to empower practitioners. We believe Well is the most consequential health system in Canada, and we have a burgeoning business in the U.S. Our businesses serve millions of patients, empowering tens of thousands of practitioners, and employ thousands of talented people. Operationally, Well has organized all of its businesses into two key lines of business, the first being omni-channel patient services and the second being virtual services. These two lines of business are both profitable and growing. Omnichannel patient services includes all patient services that have any material exposure to in-person operations. This includes our clinic network, My Health, and CRH. Omnichannel patient services generates most of our revenue in EBITDA. However, it is a slower growth business. Our second line of business, virtual services, is comprised of businesses that are almost entirely digital in nature, inclusive of SaaS and services, revenues from the company's practitioner enablement platform, or patient services businesses that have little to no exposure to in-person care, and is comprised of highly scalable digital businesses, which today generate less revenue nipita in the company as a whole, but are growing at a much faster rate. I would now like to provide some color on our recently announced spot deal financing. Yesterday after market closing, well announced a bought deal offering of common shares. The offering was a comparatively small offering as compared to our previous financing, providing $34.5 million inclusive of the underwriters option or green shoe. We're pleased to report that even during these unprecedented times, the offering quickly sold out and was significantly oversubscribed and completed shortly after launch. Despite This additional demand, we did not upsize the offering as we were looking to minimize dilution to less than 5%. However, we did accept a little bit of dilution here because we felt that given these unprecedented times, it was important for us to improve our defense and enhance our offensive posture. Let me first speak to the defense. We're entering into a new phase of macroeconomic uneasiness brought upon by war, escalating inflation, increasing interest rate environment, and continued COVID-related uncertainties, including recent harsh lockdowns in markets such as China that are rippling through the supply chain. While we have a solid balance sheet, given the period that we're entering, we felt that it was prudent to have more cash on the balance sheet to address any rainy day scenarios that could arise. To be clear, I don't anticipate such rainy days, but I often feel that management teams are too focused on optimizing for price and put themselves in a position where they cannot withstand shocks to their business and put themselves in a position to suffer catastrophic value loss because they have not practiced good risk management. As a result of these additional funds on the balance sheet, we have further improved our net debt and have put the company on a more resilient footing. This is all about risk management, and I believe this financing positions us as having a better risk posture. Now I'll speak to how these funds position us for improved offensive posture. As of late, we have seen the weakness in the market produce some very significant opportunities for highly accretive capital allocation, opportunities which in our view are unprecedented and only available while the markets continue these declines as a result of the challenges that the world is facing. We felt that this was absolutely the right thing to do. Otherwise, we would need to be in a fairly defensive posture given market conditions and could not participate in some of these growth opportunities. As capital allocators, we don't just look at the price at which we're issuing stock. We look at what multiples we can deploy such capital. If there's a significant improvement or arbitrage that can benefit well in a shareholder's meaning that we can continue to grow revenues, EBITDA, and free cash flow available to shareholders on a per share basis, we should do that. Again, the key here is to grow revenues, EBITDA, and free cash flow available to shareholders on a per share basis. So we are pleased to announce that we have a number of such targets already lined up and ready to transact within the next few weeks and months. However, we are not going to be proceeding very quickly. we are going to be proceeding very cautiously and only taking deals that demonstrate the greatest accretion. This means that there is really no deviation from our previously stated plan. We had indicated before we are not interested in large M&A and we're interested in focusing on smaller tuck-ins. This additional capital will put us in a position where we can actually continue with our plan. Otherwise, given market conditions, we would have needed to be more defensive than I would have liked. We will be measured and methodical as always, but we will have clearly demonstrated that we have what it takes to identify, acquire, integrate, and benefit from acquisitions of all sizes. This is why we went from buying a small amount of shares as part of our NCIB or buyback program to selling some stock and adding cash to Treasury. We understand that this could have come across as counterintuitive given that these actions occurred within a few weeks of one another, but we want shareholders to consider a few things here. One, we made very few purchases of stock before at $4.85, a total of 50,000 shares in total, which really was designed to demonstrate that we felt the price of the shares was undervalued. To be clear, we do not believe the fair price of our shares to be $3.70 or anything close to that. But we also understand that the sentiment in the capital markets is currently very bearish for the reasons I mentioned before. And we felt it was important to be practical. and necessary to raise a small sum at this juncture to improve our defensive and offensive posture. To that end, we've limited supply at these levels, and while we could have taken a lot more capital, we decided to restrict to the most patient and supportive investors. We do not anticipate much of the stock to be in the market anytime soon. It is phenomenally allocated. We believe when it's all said and done, the accretion dilution benefit associated with raising these funds will far outweigh in their benefit to shareholders. Lastly, investors should consider that in accepting these funds into our treasury, we are able to attract world-class investors to invest in this round at a time when the concept of a bought deal is virtually unheard of. Very few are happening, if any. We are pleased to announce that the lead orders in connection with the offering are from a large international sovereign wealth fund, in fact, one of the world's largest such funds, as well as Hong Kong businessman Li Ka-shing and his partner, Selena Chow. The financing also included orders from a large multibillion-dollar Canadian pension fund and another award-winning multibillion-dollar asset manager very much known for investing in top-tier management teams. Well, shareholders should feel very confident and reassured that their company has not only been enhanced from a defensive and offensive perspective, but it has also done so while enlisting the support of extremely powerful and supportive institutions who now have a reason to further support and back well. We have gone from strength to strength. The company intends to use the net proceeds of the offering to fund growth initiatives, including internal capital allocation opportunities with high IRR, as well as potential future acquisitions in the areas of physician acquisition, higher margin specialty clinics, and executive health opportunities. We are deeply appreciative to Mr. Li Ka-shing and one of the world's leading sovereign wealth funds for their support of this financing initiative. With that introduction, I would now like to turn the call over to our CFO, Eva Fang, who will review the financials for the first quarter of 2022. I will then come back and provide further commentary on how our business units and our future outlook
spk10: Thank you.
spk09: Thank you, Hamid.
spk00: Thank you, Hamid. I'm pleased to report that we have very strong results for the first three months ended March 31st, 2022. Our first quarter results were as follows. Well-achieved record quarterly revenue of $126.5 million in Q1 2022 compared to revenue of $25.6 million generated during Q1 of last year. An increase of 395% driven by acquisitions during the past year and organic growth. Well-achieved record adjusted gross profit of $69.4 million in Q1 2022 compared to adjusted gross profit of $10 million in Q1 2021, representing an increase of 591%. Well-achieved adjusted gross margin percentage of 54.8% during Q1 2022 compared to adjusted gross margin percentage of 39.3% in Q1 of last year. The increase in adjusted gross margin percentage is driven by the addition of higher margin CLH and My Health acquisitions, as well as an increase in virtual services revenue over the past year. Adjusted EBITDA was $23.5 million for Q1 2022 compared to adjusted EBITDA of $0.5 million in Q1 of last year. Adjusted EBITDA was positively impacted in the quarter by healthy EBITDA margins in the company's omnichannel patient services businesses. Adjusted EBITDA attributable to wealth shareholders was $16.1 million for Q1 2022 compared to adjusted EBITDA attributable to well shareholders of $0.5 million in Q1 of last year. Adjusted net income was $8.6 million or $0.04 per share in Q1 2022 compared to adjusted net loss of $2.4 million or $0.01 loss per share in Q1 of last year. Free cash flow attributable to well shareholders as defined by shareholder-adjusted EBITDA, minus cash taxes, minus cash interest costs, and minus capex, was $11.8 million in Q1 2022. In terms of our segmented reporting, omnichannel patient services accounted for 70% of total revenue in the quarter, while virtual services was 30% of total revenue in Q1 2022. Omnichannel patient services revenue increased 657%, to $88.4 million in Q1 2022 compared to $11.7 million in Q1 of last year. Omnichannel patient services includes Primary Care, CLH, and My Health. Primary Care revenues increased 38% to $16.1 million in Q1 2022 compared to $11.7 million in Q1 2021. First quarter is generally a seasonally strong quarter for our primary care business due to higher patient volumes in the winter months. Also, Q1 tends to have higher complex care billings in British Columbia, which are typically done earlier in the year. In Q1 of 2022, CLH achieved revenue of approximately $48.2 million compared to zero in Q1 2021, as we had not yet acquired CLH in the first quarter of last year. On a sequential quarter-over-quarter basis, CLH's revenue increased 2% from $47.1 million in Q4 2021. The first quarter is CLH's seasonally weakest quarter because many patients with commercial insurance plans tend to have endoscopic procedures in the second half of the year when the deductibles have generally been met. This year, the seasonal decline in CLH's business was less impactful as compared to prior years due to seasonality effects being somewhat tempered by post-COVID pants-up demand. The seasonality effects were also offset by the contribution from the acquisitions of Utah Anesthesia, Jasper Anesthesia Care Associate, Greater Connecticut Anesthesia Associate, and increased ownership position of Western Carolina Anesthesia Associate. CLH's core business is performing as expected with strong caseload and stable per unit economics. CLH completed over 117,600 anesthesia cases and sold over 2,100 oregan units in the first quarter. In Q1 2022, my health achieved revenue of $24.2 million compared to zero in Q1 2021, as we had not yet acquired my health in Q1 of last year. On a sequential quarter-over-quarter basis, My Health revenue grew 4% compared to $23.2 million in Q4 2021, which is generally in line with our expectations given seasonality factors. Virtual services revenues increased 174% to $38.1 million in Q1 2022 compared to virtual services revenue of $13.9 million in Q1 2021 and increased 22% quarter over quarter when compared to virtual services revenue of $31.3 million in Q4 2021. We'll end Q1 2022 with a solid balance sheet. As at March 31, 2022, we'll have cash and cash equivalents of $36 million. During the quarter, we made loan repayments of $29.8 million. We felt that it was a prudent measure to bring down our total amount of debt. as of March 31, 2022, the total drawn amount under both the CLH and My Health credit facilities is approximately $260.5 million in Canadian dollars. I'm pleased to report that the company is compliant with all components related to its credit facilities. In terms of our share capitalization, as of May 11, 2022, well ahead $235,167,058 fully diluted securities issued and outstanding. Wall has also substantially increased its revenue and EBITDA on a per share basis, indicating that the company's capital allocation and organic growth program is delivering real value to shareholders. For instance, Wall's revenue per share went from 15.7 cents per share in Q1 2021 to 60 cents per share in Q1 2022 on an undiluted basis. Meanwhile, adjusted EBITDA attributable to wealth shareholders per share increased from 0.3 cents per share in Q1 2021 to 7.7 cents per share in Q1 2022. This reflects an over 2,600% increase in this all-important metric. Our M&A program has slowed down compared to last year as we follow a disciplined capital allocation strategy. We have done two tuck-in deals in Q1 2022 as follows. Effective January 1, 2022, CLH increased its ownership of Western Carolina Anesthesia Associates from 15% to 51%. And as a result, we now include WCAA in our consolidated revenue. On March 7, 2022, CLH entered into an asset contribution and exchange agreement to acquire 100% interest in Greater Connecticut Anesthesia Associates, a gastroenterology anesthesia services provider in Connecticut that is expected to generate more than US $3 million in shareholder EBITDA. That is my financial update, and I turn the call back over to Haman.
spk07: Thank you, Eva. I will now review our overall patient visits in the quarter. I'm pleased to report that Well achieved a total of 1,064,987 patient interactions in Q1 2022, representing an annual run rate of 4.26 million patient interactions. Total omnichannel patient visits in Q1 2022 were 772,093, representing a year-over-year increase of 62% from 477,325 in Q1 2021. On a quarter-over-quarter basis, total omnichannel patient visits increased 10% compared to 700,359 total omnichannel patient visits in Q4 2021. During the first quarter of 2022, in-person patient visits at our clinics and businesses accounted for 37% of the total visits, while telehealth patient visits, which include both telephone visits and virtual care patient visits represented 63% of total visits. In-person patient visits at our clinics and businesses accounted for 285,260 patient visits in Q1 2022, representing a year-over-year increase of 100% compared to 142,944 in-person patient visits in Q1 2021. Telehealth patient visits, which included both telephone visits and virtual care patient visits, accounted for 483,833 patient visits in Q1 2022, representing a 46% increase from 334,381 telehealth visits last year in Q1 2021. In addition to these patient visits, My Health conducted 149,906 in-person diagnostic visits, while WISP completed 142,988 asynchronous patient consultations. We're pleased to report that all of our business units are executing very well. Otherwise, it would not be possible to beat and raise as we have been doing for a number of quarters in a row now. I'd like to speak a bit about our outlook for the rest of this year and for 2022. Well's outlook for 2022 remains strong and resilient. The company's performance is very positive across all its business units and for the entire company as a whole. The cash flows generated by the company will continue to be reinvested in the business and allocated in a disciplined manner, which may come in the form of further acquisitions and to accelerate organic growth, and if the situation calls for it, to continue to look at share buybacks as well. As a result of well-strung organic growth profile, the company is increasing its guidance for 2022 annual revenue to exceed $525 million from the previous guidance of over $500 million in annual revenue. Furthermore, Well expects to generate adjusted EBITDA approaching $100 million in 2022. Well remains on track to achieve its goals for 2022 to one, build out and refine its practitioner enablement platform and deploy services both internally to Welsh healthcare practitioners as well as offer services to practitioners outside the company. Two, achieve organic growth across all its operating units. Three, follow a disciplined capital allocation strategy, continue to grow and activate our business. And four, well expects to be profitable for the full year of 2022 on an adjusted net income basis. As a rule of thumb, the company aims to have the sum of its adjusted EBITDA margin percentage plus its organic growth percentage to exceed 30 in 2022. This is sometimes referred to as the rule of 30. For instance, in Q1, we exceeded the rule of 30 with organic growth rate of approximately 15% and adjusted EBITDA margin of 18%. The sum of these two percentages is 33%. It will be a key goal for us to continue to generally be in line with rule of 30 for the entire year and beyond. Despite the current geopolitical inflationary and turbulent economic environment, the company does not see any material influences or challenges that would impair its ability to deliver on its strong outlook in 2022. Many of the key variables inherent in the execution of Well's business are firmly in its own grasp and not dependent on outside factors. I'll speak to some commentary on some of our various business units now. In Canada, Well is quickly expanding on what it has built. the most consequential network of non-governmental healthcare assets across the country, with significant operations and interoperability between its outpatient clinics, EMR, diagnostic, and telehealth businesses. Primary clinic business is proving to be resilient thus far. However, we're expecting a slight slowdown as we enter the summer months, where there tends to be fewer patient visits in the warmer months, and physicians generally take vacation time in the summer. And any patient volumes are expected to increase again in the fall and winter months in the latter part of the year. Keep in mind, this is all included as part of our guidance, and this is entirely within the seasonal context of the business. We are witnessing My Health volumes increasing in Q2, which tends to be the seasonally strongest quarter for the company. As I mentioned on our previous quarterly call, we have started the creation of a new provider-focused business unit. which combines the divisions of the Well EMR Group, DoctorCare, and Digital Apps Businesses. This new consolidated group would focus on bringing together the company's tools and effectively bundling them to help simplify and support healthcare practitioners. The group would include companies and brands such as Cognizant MD, AwareMD, IntraHealth, OscarPro, DoctorCare, and Doctor Services Group. More than one out of five doctors in Canada is being served by Well's providers. We believe the opportunity to provide integrated offerings will allow Well to leverage its unique platform features to continue to grow its market share. The Ocean platform by Cognizant MD is something that I'd like to speak a little bit about. We acquired Cognizant back in Q4 or 2021, and we are seeing it continue to flourish and become the dominant player in digital patient engagement in Canada. Here's just some of their accomplishments only since the start of the year, this year, 2022, just a few months ago. Since January 1st, 2022, over 800 new physicians have started using the Ocean tools for patient care and referrals. More than 1,200 physicians have added online patient booking on Ocean, which equates to roughly 1.4 million more Canadians having access to online bookings. 1,100 plus physicians have added patient messaging on Ocean, making it easier for patients to connect with their healthcare provider. And over 43,000 e-referrals have been sent on Ocean monthly with real-time updates for patients. This is improving transparency and reducing wait times for patient care. Overall, close to 10,000 physicians now use Ocean's tools for patient care and referrals in Canada. and the company has made approximately 640,000 referrals overall. Please keep in mind that there are only about 80,000 physicians in the entire country for all subspecialties. These figures are accelerating as we believe Ocean is quickly becoming the de facto e-referral tool for the country as it currently is in Ontario. We note that many provinces are currently prioritizing e-referral projects and planning Due to the important nature of this function for public health and safety, an Oceans platform is extremely favorably positioned to win in this arena. Meanwhile, in the United States, Well's strategy to focus on key specialty areas such as gastroenterology, women's health, and primary care with a focus on specialty niches such as mental health continues to gain momentum. Well's patient services business in the U.S. includes CRH. We're very pleased with CRH's results in Q1 and thus far in Q2. Here are a few more details. We are expecting Q2 to be seasonally better than Q1, and we're expecting an even stronger back half of the year when volumes for endoscopic procedures increase, as noted by Eva earlier. We experienced an acceleration in organic growth, which increased to 10% in same-store sales on a year-over-year basis. We believe this elevated growth was as a result of pent-up demand due to COVID disruptions, previous COVID disruptions, and our team's excellent execution in being able to support that elevated demand. We believe the elevated demand and growth may last for at least another one to two years, and perhaps even longer, depending on the market. Also, we've had a good start to our hemorrhoid banding clinic program. We're still expecting a minimum of seven to eight clinics by the end of the year, and still believe banding is a 50 to 100 million dollars and more potentially revenue business just in the United States over the long term with strong and resilient margins. This is an area of keen focus as we believe the intellectual property of our patented and FDA approved banding device positions us to be the market leader in clinical services for hemorrhoids and lower digestive related matters. We believe the key here is education given that the extremely high levels of clinical success patients are having with banding is not well understood enough. Most patients and many prep physicians are not aware of how successful these tools are and how strong patient outcomes have been. As such, we're experimenting with a number of different ideas to educate the market about banding. We've launched a number of digital tools, online education initiatives, and are telling the story in a more forceful and effective way than ever before. The key here is that we believe we can grow the market and take a share out of the multibillion-dollar U.S. hemorrhoid care and treatment market. The two virtual services businesses in the U.S. operated by, well, include Circle Medical and WISP. Based on March 22 results, the combined businesses generated positive adjusted EBITDA with the revenue run rate exceeding $100 million in Canadian dollars. It is expected that the combined businesses will exceed 130 million in Canadian dollars on a run rate basis later this year. Circle Medical's year-over-year growth in Q1 2022 was driven by patient visits increasing by 343% on a year-over-year basis. The number of practitioners working with Circle Medical Q1 increased by 206% over the same period. Similarly, WISP's growth in Q1 2022 was driven by an 83% year-over-year increase in asynchronous patient consultations, driving significant incremental e-pharmacy revenue. Overall, we're pleased to note that Well's pure virtual health businesses are profitable. If you combine our TIA Health Canadian business with our Circle and Wis businesses, they're growing extremely quickly, and they are profitable on a combined basis. I don't believe any other virtual care provider in the world operating at scale can currently say that. And now an update on our ESG program. In 2021, WELL developed and launched our ESG program that is an integral part of our growth strategy and reflects our ongoing commitment to delivering on our mission, vision, and purpose. In 2022, WELL will embark on an ESG strategy implementation, including publishing our inaugural ESG report and establishment of our ESG committee comprised of key management to oversee the delivery of our ESG commitments. Our emerging ESG strategy established a number of ESG priorities which support our overall growth strategy. One, safeguarding patient data by elevating the privacy and security posture of patient data through our risk management processes. Two, digital practitioner enablement by supporting practitioners to provide timely, accessible, and high-quality patient care while reducing environmental impacts through our use of digital solutions. Three, a healthy place to work by upholding a culture of respect, prioritizing health and well-being, and taking targeted actions to support diversity, equity, and inclusion within the workplace environment. And four, disciplined governance and risk framework that provides strong and effective corporate governance, oversight, and transparency across our business activities. What is a well-diversified fast-growing digital health and tech-enabled healthcare companies delivering on a strong ESG mandate and building societal value, well as a purpose-driven business that aims to transform the world for the better. And as such, the company has embarked on an ongoing ESG program. This is not a box-checking exercise for us. We mean business with our ESG program. The company plans on publishing a report in the coming weeks highlighting the strategy, reporting initiatives, and its targeted actions and demonstrating accountability to these commitments. In closing, I want to thank all of you for joining us on this call today and thank our shareholders and investors for their continued support. Capital markets have been very supportive of our vision and have provided us with the funding and patience needed to pursue our goals. I would also like to thank Well's senior management team and all of our employees and contractors for their tremendous efforts. In particular, I would like to thank our team of healthcare practitioners and our frontline workers who continue to keep our clinics open and provide unbeatable care. They remind us every day why we are here and why we are here is to support them. Thank you. And with that, we'll open the call to questions. Operators, please help us with the questions.
spk01: Thank you, sir. Ladies and gentlemen, we will now begin the question and answer session. If you would like to ask a question, please press the star followed by the number one on your telephone keypad. If you would like to withdraw your question, please press the star followed by the number two. Please stand by for your first question. Your first question comes from Christian Skrow of Eight Capital. Please go ahead.
spk08: Hi, good afternoon, and thanks for taking my question. The first one here is a two-parter on the guidance. The first quick question is, does the revenue guidance for the year include any future unannounced M&A? And then maybe the second part of the question is, just from when you issued it to now, which business units have outperformed or contributed most to the increase?
spk10: Thanks, Christian.
spk07: Yes. Well, I'll start with the question around contribution. I would say that our digital, our U.S. business, while we're seeing very good performance from all of our business units, our U.S. businesses, I think, are definitely leading in terms of driving that revenue enhancement, particularly the U.S. digital businesses, which, as you know, has had very strong organic growth. But as I noted here, CRH has also seen some very strong organic growth as well. And I would say we have minimal M&A included in that revenue guidance.
spk08: That's helpful. The second question I'd ask today is on the M&A strategy and the offensive posture you've spoken about. You touched on it a little bit, but maybe what acquisition targets you think might fit best? And then as a follow-on there, we've seen public sector multiples come down, but have you seen multiples come down at all in the private sector?
spk07: Yeah, so listen, I think in terms of the types of assets, you know, they're not going to be out of scope to our current business. As I mentioned before, we like our, you know, we really like our business in terms of the current scope and we're just getting deeper and we're using the tuck-ins to complete white space regionally in subspecialty areas or to, you know, gain additional traction in areas that we think are important. We continue to really believe primary care is a great place. We want to have more exposure to primary care. While the per unit economics are a bit lower in primary care, we believe those per unit economics are likely on the way up as a result of the scarcity factor that the world's currently seeing in primary care, especially here in North America. Also, you start your journey in healthcare with your primary care provider. And so they end up controlling and driving a lot of economic output. And I think a big part of unlocking the value of the opportunity that Well has is not only being able to start that journey, but also fulfilling different elements of that journey. And so, you know, primary care is interesting to us as our specialty care areas, as say in the My Health business or the CRH business. But I think what you're going to be seeing is for us to really focus on, you know, opportunities where we are buying at a much, much more creative level, given what we're seeing in some of these multiples, which is I think key to your second question. We are seeing multiples decline. And this is one of the reasons why I wanted to maintain an offensive posture. With the environment out there, given just how bearish and how elevated risks are, a company like Well would have needed to be very defensive in this arena. Just even in a matter of weeks and months, the situation has deteriorated quite a bit. The financing that we announced yesterday really positioned us to not only have that improved resilience, but to also now be on an offensive posture. And I think that, as I mentioned, we will see very strong results as part of how we allocate this capital, which will obviously be cautious and methodical as always.
spk10: That's very helpful context. Thanks for taking my questions. I'll pass the line.
spk01: Your next question comes from David Kwan of TD Securities. Please go ahead.
spk06: Good morning. Good commentary there, Hamid and Eva, I appreciate that. I was curious as it relates to the primary care that you were just talking about. Obviously, there's been a lot of media reports just on the ongoing shortages of family doctors, especially out here. Are you finding more doctors looking to move their practices to one of your clinics so they can do less admin work and kind of focus more on patient care and as well maybe, you know, doctors that are looking to keep their own practices, but maybe leverage your suite of solutions to help, you know, increase the automation and kind of reduce the manual work, the charting, et cetera, et cetera. Yeah, absolutely, David.
spk07: That is, I think, a clear and unmistakable trend. And, you know, we don't acquire small clinics anymore. We absorb them. We recruit them. We go to single practitioner clinics or very small clinics, and we don't offer them capital to join us. We demonstrate the benefits in joining us, and they're joining us. And that's, I think, something that likely is not really priced into our story, just how powerful that idea is and the kind of flywheel that we're starting to see emerging from, you know, doctors being acclimated to our tools, trusting well because they use our tools, and then understanding that, hey, I don't have to run this business anymore. And I could probably make as much, if not more, because someone else can run it in a more efficient and practical way for me. And so I think this is a trend that I often talk about as a corporatization trend as opposed to a privatization trend. much has been made of talking about privatization in Canada, about the, about, you know, two tiers of medical availability. I think the more interesting trend is, is, is the fact that practitioners don't want to run these businesses anymore and are, and are, and are looking for, you know, corporate support. And, and I think well is absolutely the best position company to capitalize on that, on that, on that trend.
spk06: That's helpful. Thanks. Thanks, Ahmed. And one other question, just as it relates to CIRCLE, and obviously we've seen some pretty strong growth there. Your guidance suggests roughly 30% growth in the balance of the year. How should we think about that growth kind of beyond that, like looking at, say, 2023? Like, how long do you think we could see these, you know, very high growth rates and Would I assume that you guys would probably look to still run these businesses either on a break-even or a profitable basis?
spk07: Yeah, I mean, listen, I think what's really remarkable about their growth, about the growth of these assets is that it's all organic and it's so capital efficient, right? And I just don't know of anyone else that is really, running these businesses as efficiently as our operators currently are. I note that our operators of Circle believe that we're currently here in this month in May on likely a $50 million U.S. revenue run rate. So we're not far from exceeding $100 million ARR business, you know, on a run rate business and Wisp is, you know, closely behind. And I think, you know, our CACs, our LTVs are strong. I think that one of the really exciting things that we're seeing is a real emphasis on, you know, supporting the patient. What I love about what Circle's doing is that they're acquiring through niche vehicles, but they're converting into, you know, customer, you know, patients into being, you know, long-term primary care patients. And I think that's really the winner. I mean, there's a lot of people out there trying to acquire patients to provide a you know, medical consultation or maybe a mental health visit or to try and, you know, offer them some kind of interventional treatment. But the idea of being able to convert those patients into long-term primary care, longitudinal care patients, I think is really the key. And I think that if you don't do that, I think it's tough to win out there. And we've seen from other companies that have had tough and have delivered tough guidance lately that they're kind of at the whim of, of the acquisition costs out there. And I think the key is your LTV. The key is what are you really doing with those patients once you acquire them? And I think we've got really the best posture there. And so that's why I'm so hopeful about this business moving forward.
spk06: Thanks, Colin. I think I know which company you're talking about. I don't need to mention it, but I appreciate the caller, and good luck.
spk10: Thank you, David.
spk09: Your next question comes from Jerome Dubre of Desjardins.
spk01: Please go ahead.
spk05: Hi, thank you for taking my question. First, a modeling question on your comment about the possible... minimal additional M&A, and definitely now more possible with the additional dry powder that you have. You cited areas of interest being physician acquisition, specialty clinics, and executive health opportunities. So we should probably model future opportunities in the omnichannel business segment, right? And then my second question is in terms of the reopening. You mentioned that there could be elevated demand for one to two years, definitely consistent with what we've seen from industry publications. I wonder what type of excess capacity you currently have within your assets that could make you capitalize on this opportunity. Thanks.
spk07: Yeah, thanks for the questions, Jerome. As far as modeling our M&A, I think you know we we have we have dramatically reduced our m a and and uh as eva discussed you know we only had a couple of small tuck-ins to speak of in this quarter and um and i think that kind of cadence is is reasonable um and maybe even lower um uh you know depending on how big the tuck-ins are but i think i think that um the in general and again it just depends on on on how strong and accretive these acquisition opportunities look like. I mean, we have a number of things lined up. They are spread across primary specialized care and virtual services. So it's tough, I think, to kind of dig into all the permutations of what it could look like. But I think if you were to look at, you know, recent M&A activity and model accordingly, that would be probably a reasonable approach. No doubt Pardeep can give you some additional perspective as he's working with analysts. On the elevated demand question, I think, listen, seeing 10% same-store sales growth in CRH has been very good, and I do think that, you know, the biggest difference I think that we're seeing right now is normally if you wanted to schedule a you know, a case, you know, a colonoscopy and accompanying anesthesia, you know, before you could do it within a few days. And now, you know, they're scheduling two, three months in advance. This has the effect of obviously, you know, making sure that we have, you know, strong timetables and cues in terms of patients and making sure that we're very methodical and efficient in terms of tackling, you know, the cases that are there. But it also minimizes, you know, your no-shows, right? Every business, every healthcare business does deal with no-shows. And if you know that you're not going to get another opportunity to have that consultation for months, the chances that you will not show up go down dramatically. That's I think there are a number – and listen, our team has really executed. There's a number of things we've done in terms of workflow. We're always optimizing our business. We're always doing everything we can to improve different aspects of it, and that's certainly one of the reasons why we did this acquisition because it's not just virtual – virtual care is not the only way healthcare – digitization and modernization shows up. All aspects of healthcare, all aspects of preparing practitioners, enabling them from a back office perspective and empowering them to produce results and to care for patients are taking up these tools. And I think that will continue to be something that we will work on in order to ensure that we see elevated performance from CRH and those practitioners.
spk10: Great, thank you.
spk09: Your next question comes from Justin Keywood of Stifel.
spk01: Please go ahead.
spk03: Hi, thanks for taking my call. I had a follow-up question on the WISP medical asset. Just given the Supreme Court case going on in the U.S., Roe v. Wade, and some potential ramifications for that in women's health, is that business preparing for any type of change in demand? I know they provide some contraception products and related services. How do you see that shaping up?
spk07: Justin, I think it's a very on-point question. The team actually at WISP is working on a number of different product opportunities, and I do believe that there are likely some benefits in terms of WISP being in a position to better support women in the United States as a result of some of these changes. And, you know, we have tremendous connectivity with, you know, with our patient base today. They trust us. And so, you know, we are focused on, you know, reproductive health. And I believe that there are a number of different products and services that we could be adding. And I know I don't want to take the wind out of the sales of any launches or say anything, but I will say that there is tremendous product development activity taking place, and I do expect that to be a catalyst.
spk03: Great. And of the expected run rate for the US virtual businesses, are you able to sparse out what the WISP business is run rating at?
spk07: I don't know if I have where we're at in May, but I believe we were over 40 million U.S. comfortably is likely where we're at right now.
spk10: Okay. Thank you for taking my questions.
spk01: There are no further questions. There are no further questions from the phone lines. I'll now turn the call back to Mr. Shabazi for closing comments.
spk07: Thank you all for your questions and everyone for your attendance today. And again, thank you for all your support as well. It's management team and all the practitioners and employees that are out there every day caring for patients. We appreciate your support and look forward to speaking with you next quarter.
spk09: Ladies and gentlemen, this does conclude your conference call for today. We would like to thank you for participating and ask you to please disconnect your line.
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