WELL Health Achieves Record Revenue in Q1-2021 with 150% YoY Growth; led by Software and Services Revenue Increasing 345% YoY

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  • WELL reported record quarterly revenues of C$25.6 million in Q1-2021 reflecting a 150% year-over-year increase. WELL's growth was led by its Software and Services revenues which increased by 345% in Q1-2021 compared to the prior year.

  • WELL achieved its second quarter in a row of positive Adjusted EBITDA(2) as a result of strong contribution from its Canadian operations which achieved Adjusted EBITDA(2) of C$1.1 million.

  • During the first quarter WELL announced the acquisition of CRH Medical or "CRH" which subsequently closed in the second quarter. The acquisition which had a transaction value of approximately US$372.9 million, was funded by a C$302.5 million subscription receipts offering at C$9.80/share of WELL and a senior secured credit arrangement administered by JP Morgan and a syndicate of lenders, for an aggregate amount of up to US$300 million which will support the growth of the business.

  • CRH is on track to meet and exceed its business plan goal of generating over US$150 million in revenues, US$60 million in EBITDA and US$40 million in free cashflow before leverage and tax costs in 2021. As a result, WELL's combined pro forma revenue is now approaching C$300 million with over C$80 million in EBITDA(2) on a run-rate basis.

VANCOUVER, BC, May 11, 2021 /CNW/ - WELL Health Technologies Corp. (TSX: WELL) (the "Company" or "WELL"), a company focused on consolidating and modernizing clinical and digital assets within the primary healthcare sector, announced today its fiscal first quarter financial results for the three months ended March 31, 2021.

TSX: WELL (CNW Group/WELL Health Technologies Corp.)
TSX: WELL (CNW Group/WELL Health Technologies Corp.)

Hamed Shahbazi, Chairman and CEO of WELL commented, "We are very pleased with our results from Q1-2021, in which quarterly revenue increased by 150% compared to the same period last year and we surpassed C$100 million annualized revenue run-rate. During Q1 we also announced the acquisition of CRH and subsequently closed the transaction in Q2, which puts us on track for an annualized revenue run-rate approaching $300 million. CRH accelerates our revenue growth and significantly boosts our free cash flow, which will be used to make additional cash flow generating acquisitions. I am also pleased to report that CRH, now operating as a stand-alone WELL business unit, is on track to meet its business plan goals to generate over US$150M in revenues and over US$40M in free cashflow before leverage and tax costs."

Mr. Shahbazi added, "In addition to CRH Medical, we have been actively making acquisitions across our other business units. The WELL EMR Group has continued its aggressive expansion with the acquisition of OpenHealth, the migration of all the ClearMedica patients, and the acquisition of IntraHealth. IntraHealth is a transformational acquisition for the WELL EMR Group as it transitions the business unit to being a provider of multiple EMR product offerings in global markets. At the start of the year, we also completed the acquisition of Adracare, whose practice management software supports some of the largest physiotherapy and medicinal cannabis companies in Canada. On the clinical side of our business, we acquired ExecHealth, representing our entry into the Province of Ontario and expansion of our executive health business. Most recently we announced the acquisition of Doctors Services Group, which is the first proposed acquisition for our Billing and Back-office business unit."

First Quarter 2021 Financial Highlights:

  • WELL achieved record quarterly revenue of $25.6 million during Q1-2021, compared to revenue of $10.2 million generated during Q1-2020, an increase of 150% driven by acquisitions during the past year and our organic growth program which included strong contributions from various business units including growth from our telehealth program.

  • WELL achieved Software and Services revenues of $7.6 million in Q1-2021, representing 345% YoY growth as compared to Software and Services revenue of $1.7 million in Q1-2020.

  • WELL achieved record Adjusted Gross Profit(1) of $10.0 million in Q1-2021, representing 155% YoY growth as compared to Adjusted Gross Profit(1) of $3.9 million in Q1-2020. WELL achieved record Adjusted Gross Margin(1) percentage of 39.3% during Q1-2021 compared to Adjusted Gross Margin(1) percentage of 38.5% in Q1-2020.

  • Adjusted EBITDA(2) was $0.5 million for Q1-2021, compared to Adjusted EBITDA(2) loss of $0.2 million for Q1-2020. Adjusted EBITDA(2) was positively impacted by WELL's Canadian operations which achieved Adjusted EBITDA of $1.1 million.

First quarter 2021 Business Highlights:

  • On February 17, 2021, the Company announced the completion and upsizing of an equity offering to C$302.5 million of subscription receipts at C$9.80 per share. The equity offering included Hong Kong businessman and investor, Mr. Li Ka-shing, WELL's CEO, board and senior management team as well as a number of significant institutional investors.

  • On January 1, 2021, WELL completed its acquisition of Adracare, an omni-channel practice management platform serving over 6,800 allied health practitioners in five countries.

  • On January 1, 2021, the Company completed its acquisition of Open Health Software Solutions, an OSCAR service provider to medical clinics primarily located in Ontario. In addition, WELL also announced it successfully migrated all clinics from ClearMedica onto WELL's OSCAR Pro platform under a customer purchase agreement.

Acquisition of CRH Medical:

On April 22, 2021, the Company completed its acquisition of CRH Medical, a company that was previously listed on the NYSE and TSX stock exchanges. CRH Medical provides products and services for the treatment of gastrointestinal diseases including anesthesia services at ambulatory surgical centers and it distributes the O'Regan System product to thousands of gastroenterologists across the states. CRH Medical operates as WELL's seventh business unit and has already completed its first acquisition, an 85% majority ownership stake in New England Anesthesia Associates LLC, effective May 1, 2021.

WELL acquired all the issued and outstanding shares of CRH Medical at a price of US$4.00 per share in cash, representing equity consideration of approximately US$286.6 million and a transaction value of approximately US$372.9 million inclusive of CRH Medical's drawn credit facility. The CRH Medical acquisition was funded by a subscription receipts equity offering of C$302.5 million with additional proceeds from an amended senior secured credit arrangement administered by JP Morgan Chase Bank, N.A., and a syndicate of lenders, including Canadian Imperial Bank of Commerce and HSBC Canada Bank, for an aggregate amount up to US$300 million.

With the acquisition of CRH Medical, the Company's financial and operating profile makes it a clear leader in the Canadian healthcare market and a strong emerging player in the U.S. healthcare market. CRH Medical represents a monumental acquisition for the Company for the following reasons: (i) it significantly boosts WELL's free cash flow, which will be used to make additional cash flow generating acquisitions; (ii) it accelerates WELL's revenue and EBITDA growth profile; (iii) it represents a significant tech enablement and digitization opportunity for WELL to provide digital tools, tech-enablement and data protection; and (iv) it provides WELL with deep access to US healthcare with a rapidly growing asset.

Other Events Subsequent to March 31, 2021:

  • On May 5, 2021, the Company announced the launch of Health Records on iPhone, empowering patients to safely view and store their available medical records in the Apple Health app on their iPhone. WELL's telehealth platform Tia Health will be the first telehealth service in Canada to support Health Records on iPhone while the Company's OSCAR Pro is the first Canadian Electronic Medical Record (EMR) provider to support Health Records on iPhone.

  • On May 1, 2021, the Company completed its acquisition of all the issued and outstanding shares of ExecHealth for approximately $12.6 million. ExecHealth is an omni-channel healthcare provider located in Ottawa, Ontario specializing in corporate and executive health, primary care and integrated health services.

  • On April 30, 2021, the Company announced an expansion of its Billing and Backoffice business unit with a 51% majority stake acquisition of Doctors Services Group for approximately $1.4 million. Doctors Services Group provides uninsured services billing programs and offers physicians a suite of additional tools and services that transforms practice productivity and enhances patient care.

  • On April 25, 2021, the Company entered into an amended senior secured credit arrangement administered by JP Morgan and a syndicate of lenders, for an aggregate amount of up to US$300 million, including revolving credit facilities of US$175 million and access to a US$125 million accordion feature.

  • On April 1, 2021, WELL completed its acquisition of IntraHealth for total consideration of approximately $19.3 million. IntraHealth is an enterprise class EMR provider that supports a myriad of healthcare settings including health authorities, hospitals, public health outpatient centres, community health, home care, ambulatory care and diverse health care professionals.

Outlook:

WELL's goals for 2021 are to: (i) achieve organic growth across all of its operating business units; (ii) follow a disciplined acquisition and capital allocation strategy; (iii) grow its EBITDA(2) throughout the year; (iv) increase operating cash flows through acquisition, optimizing costs and digitizing clinical assets; and (v) increase market share of its digital health related products and virtual care programs.

WELL's positive outlook for Q2 is primarily driven by the acquisition of CRH Medical, which puts the Company on an annualized revenue run-rate approaching $300 million, and WELL's active pipeline of acquisition opportunities that span across its seven business units. WELL currently has LOI's (letters of intent) with clinical, EMR, digital applications, billing and cybersecurity related opportunities. WELL operates as a decentralized organization with each business unit having a fair amount of operating autonomy, hence WELL looks to attract acquisitions with strong operators to run these businesses and generate profits to support new growth opportunities.

Conference Call:

WELL will hold a conference call to discuss its 2021 First Quarter financial results on Tuesday, May 11, 2021 at 1:00 pm ET (10:00 am PT). Please use the following dial-in numbers: 416-764-8650 (Toronto local), 778-383-7413 (Vancouver local) or 1-888-664-6383 (Toll-Free), with Conference ID: 5652 9388.

The conference call will also be simultaneously webcast and can be accessed at the following audience URL: https://www.well.company/for-investors/events/

Selected Unaudited Financial Highlights:

Please see SEDAR for complete copies of the Company's condensed interim consolidated financial statements and interim MD&A for the three-months ended March 31, 2021.


Three months
ended March
31, 2021

Three months
ended
December
31, 2020

Three
months
ended March
31, 2020


$ '000

$ '000

$ '000

Revenue

25,560

17,189

10,227

Cost of sales (excluding depreciation and amortization)

-15,521

-9,188

-6,285

Adjusted Gross Profit(1)

10,039

8,001

3,942

Adjusted Gross Margin(1)

39.3%

46.5%

38.5%

Adjusted EBITDA(2)

527

765

-246

Net profit (loss)

-7,085

5,772

-2,014

Total comprehensive income (loss) for the period

-7,131

5,640

-2,014

Net income (loss) per share - for the period, basic and diluted (in $)

-0.04

0.04

-0.02





Weighted average number of common shares outstanding, basic

163,123,252

151,058,782

118,143,317

Weighted average number of common shares outstanding, diluted

163,123,252

157,385,159

118,143,317





Reconciliation of net profit (loss) to Adjusted EBITDA(2)




Net profit (loss) for the period

-7,085

5,772

-2,014

Depreciation and amortization

1,442

1,867

728

Income tax expense (recovery)

367

-4,508

56

Interest income

-320

-218

-89

Interest expense

458

335

452

Rent expense on finance leases

-810

-657

-488

Stock-based compensation

2,993

1,987

632

Foreign exchange loss

11

196

-

Change in fair value of investments

-

-6,905

-

Time-based earn-out expense

891

628

334

Share of loss of associates

64

341

-

Transaction, restructuring, & integration costs expensed

2,516

1,927

143

Adjusted EBITDA(2)

527

765

-246





Adjusted EBITDA(2)




Canada and others

1,111

428

-246

US operations

-584

337

-

Adjusted EBITDA(2)




Attributable to WELL shareholders

463

426

-250

Attibutable to Non-controlling interests

64

339

4

Adjusted EBITDA(2)attributable to WELL shareholders




Canada and others

870

191

-250

US operations

-407

235

-

Adjusted EBITDA(2)attributable to Non-controlling interests




Canada and others

241

237

4

US operations

-177

102

-

Notes:

(1)

Non-GAAP measure. Adjusted gross profit and adjusted gross margin do not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other issuers. The Company defines adjusted gross profit as revenue less cost of sales (excluding depreciation and amortization) and adjusted gross margin as adjusted gross profit as a percentage of revenue. Adjusted gross profit and adjusted gross margin should not be construed as an alternative for revenue or net loss determined in accordance with IFRS. The Company believes that adjusted gross profit and adjusted gross margin are meaningful metrics in assessing the Company's financial performance and operational efficiency.

(2)

Non-GAAP measure. Earnings before interest, taxes, depreciation and amortization ("EBITDA") and Adjusted EBITDA should not be construed as alternatives to net income/loss determined in accordance with IFRS. EBITDA and Adjusted EBITDA do not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other issuers. The Company defines Adjusted EBITDA as EBITDA (i) less net rent expense on premise leases considered to be finance leases under IFRS and (ii) before transaction, restructuring, and integration costs, time-based earn-out expense, change in fair value of investments, share of loss of associates, exchange difference, and stock-based compensation expense. The Company believes that Adjusted EBITDA is a meaningful financial metric as it measures cash generated from operations which the Company can use to fund working capital requirements, service future interest and principal debt repayments and fund future growth initiatives.

WELL HEALTH TECHNOLOGIES CORP.

Per: "Hamed Shahbazi"
Hamed Shahbazi
Chief Executive Officer, Chairman and Director

About WELL Health Technologies Corp.

WELL is an omni-channel digital health company whose overarching objective is to empower doctors to provide the best and most advanced care possible while leveraging the latest trends in digital health. As such, WELL owns and operates primary and executive healthcare clinics in both Canada and the US, operates a global digital Electronic Medical Records (EMR) business serving thousands of healthcare clinics and health systems of all sizes and operates a multi-national portfolio of telehealth services which includes one of the largest telehealth service providers in Canada. WELL is also a provider of digital health, billing and cybersecurity related technology solutions. WELL's wholly owned subsidiary CRH Medical provides various products and services that have supported thousands of Gastroenterology physicians in the US. WELL is an acquisitive company that follows a disciplined and accretive capital allocation strategy. WELL is publicly traded on the Toronto Stock Exchange under the symbol "WELL". To access the Company's Canadian telehealth service, visit: tiahealth.com, and for corporate information, visit: www.well.company.

Forward-Looking Statements

This news release may contain "forward-looking statements" within the meaning of applicable Canadian securities laws, including, without limitation: all statements in the "Outlook" section of this news release, including the Company's goals for 2021; WELL's secured credit arrangement will be used to support the growth of its business; CRH Medical is anticipated to meet and exceed its goals of generating the stated revenues and EBITDA(2) and free cashflow before leverage and tax costs as set out herein; WELL's $100 million run-rate excluding CRH Medical and WELL's $300 million run-rate, with over $80 million in EBITDA(2) on a run-rate basis including CRH Medical; the intention for WELL to utilize increased cash flow on financing future acquisitions; and the belief that the acquisition of CRH Medical represents a significant tech enablement and digitization opportunity. 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 statements generally can be identified by the use of forward-looking words such as "may", "should", "will", "could", "intend", "estimate", "plan", "anticipate", "expect", "believe" or "continue", or the negative thereof or similar variations. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause future results, performance or achievements to be materially different from the estimated future results, performance or achievements expressed or implied by those forward-looking statements and the forward-looking statements are not guarantees of future performance. WELL's statements expressed or implied by these forward-looking statements are subject to a number of risks, uncertainties, and conditions, many of which are outside of WELL 's control, and undue reliance should not be placed on such statements. Forward-looking statements are qualified in their entirety by inherent risks and uncertainties, including: direct and indirect material adverse effects from the COVID-19 pandemic; adverse market conditions; risks inherent in the primary healthcare sector in general; regulatory and legislative changes; that future results may vary from historical results; inability to obtain future financing on suitable terms; and that market competition may affect the business, results and financial condition of WELL. Except as required by securities law, WELL does not assume any obligation to update or revise any forward-looking statements, whether as a result of new information, events or otherwise.

This news release contains future-oriented financial information and financial outlook information (collectively, "FOFI") about WELL and CRH Medical's expected increase in revenue, cash flow and EBITDA(2) on a 12 month run-rate basis following the acquisition of CRH Medical on both a stand-alone and pro forma basis, all of which are subject to the same assumptions, risk factors, limitations, and qualifications as set out in the above paragraph. The actual financial results of WELL may vary from the amounts set out herein and such variation may be material. WELL and its management believe that the FOFI has been prepared on a reasonable basis, reflecting management's best estimates and judgments. However, because this information is subjective and subject to numerous risks, it should not be relied on as necessarily indicative of future results. Except as required by applicable securities laws, WELL undertakes no obligation to update such FOFI. FOFI contained in this news release was made as of the date hereof and was provided for the purpose of providing further information about WELL's anticipated future business operations on a 12 month run-rate basis following the acquisition of CRH Medical. Readers are cautioned that the FOFI contained in this news release should not be used for purposes other than for which it is disclosed herein.

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