WELL Health Reports Record Revenue for Q1-2023 and Increases Annual Revenue Guidance

News provided by

May 12, 2023, 07:00 ET

WELL achieved record quarterly revenues of $169.4 million in Q1-2023, an increase of 34% as compared to Q1-2022 driven by accelerating organic growth of 21%.
WELL achieved Adjusted EBITDA⁽¹⁾ of $26.7 million in Q1-2023, an increase of 14% as compared to Q1-2022.
WELL achieved a total of 1.4 million patient interactions⁽³⁾ in Q1-2023 representing an annualized run-rate of approximately 5.6 million.
WELL increases its 2023 annual guidance for revenue to be between $690 million and $710 million, and reaffirms its guidance for 2023 Adjusted EBITDA increasing by more than 10% over 2022 levels.

VANCOUVER, BC, May 12, 2023 /PRNewswire/ - WELL Health Technologies Corp. (TSX: WELL) (OTCQX: WHTCF) (the "Company" or "WELL"), a digital healthcare company focused on positively impacting health outcomes by leveraging technology to empower healthcare practitioners and their patients globally, is pleased to announce its interim consolidated financial results for the quarter ended March 31, 2023.

Hamed Shahbazi, Founder and CEO of WELL commented, "Q1-2023 was an exceptional quarter that exceeded all expectations and demonstrated the strength, depth and quality of our technology enabled care delivery platforms. WELL achieved 34% Year-over-Year revenue growth, largely driven by our organic growth which accelerated to 21% in the first quarter, the highest level of organic growth we've had in several quarters. This quarter also marks our 17^th consecutive quarter of record revenue. Our profitability and cashflow profile continue to be robust, as we achieved $10.8 million in Adjusted Free Cash Flow⁽¹⁾ to shareholders in Q1-2023, notwithstanding elevated interest fees. Given the strength of our outlook, we are pleased to increase revenue guidance again as we have for each of the past five quarters."

Mr. Shahbazi further added, "At the heart of our culture, is our purpose to passionate care and support healthcare providers. WELL exited Q1 2023 with over 3,000 providers and clinicians delivering care in our physical and virtual clinics and more than 28,000 providers supported by our SaaS and Technology Services. We are determined to faithfully support and 'tech enable' healthcare professionals with the very best technology available which now includes significant investments in Artificial Intelligence, or AI, based products and services that enhance provider productivity and effectiveness."

Eva Fong, WELL's Chief Financial Officer, added, "WELL has continued to demonstrate continuous growth, can drive significant cashflow to shareholders and lower its leverage levels effectively. I am pleased to announce that we have reduced our leverage ratio⁽⁴⁾ of net debt to shareholder Adjusted EBITDA from 3.5x at the end of Q1-2022 to 2.6x as of the end of Q1-2023. With our leadership position in the digital healthcare industry and continued cash flow generation, we are well positioned for continued success in 2023 and beyond."

First Quarter 2023 Financial Highlights:

WELL achieved record quarterly revenue of $169.4 million in Q1-2023, an increase of 34% as compared to revenue of $126.5 million generated in Q1-2022. This growth was mainly driven by organic growth of 21% but also included inorganic growth during the past year.
Canadian Patient Services revenue was $50.9 million in Q1-2023, an increase of 23% as compared to $41.3 million in Q1-2022.
US Patient Services revenue was $99.2 million in Q1-2023, an increase of 38% as compared to $72.1 million in Q1-2022.
SaaS and Technology Services revenue was $19.3 million in Q1-2023, an increase of 47% as compared to $13.1 million in Q1-2022.
Adjusted Gross Profit⁽¹⁾was $86.2 million in Q1-2023, an increase of 24% as compared to Adjusted Gross Profit⁽¹⁾ of $69.4 million in Q1-2022.
Adjusted Gross Margin⁽¹⁾ percentage was 50.9% during Q1-2023 compared to Adjusted Gross Margin⁽¹⁾ percentage of 54.8% in Q1-2022.
Adjusted EBITDA⁽¹⁾ was $26.7 million in Q1-2023, an increase of 14% as compared to Adjusted EBITDA⁽¹⁾ of $23.5 million in Q1-2022 which was supported by more than $1.7 million in pandemic related government incentives.
Adjusted EBITDA to WELL shareholders was $20.6 million in Q1-2023, an increase of 28% as compared to Adjusted EBITDA to WELL shareholders of $16.1 million in Q1-2022.
Adjusted Net Income⁽¹⁾ was $14.1 million, or $0.06 per share in Q1-2023, as compared to Adjusted Net Income⁽¹⁾ of $8.9 million, or $0.04 per share in Q1-2022.

First Quarter 2023 Patient Visit Metrics:

WELL achieved a total of 1.4 million patient interactions⁽³⁾ in Q1-2023, representing approximately 5.6 million patient interactions on an annualized run-rate. WELL achieved a total of 975,500 patient visits in Q1-2023, an increase of 25% as compared to 778,910 patient visits in Q1-2022. Canadian Patient Services visits increased 14% while US Patient Services visits increased 40%, on a year-over-year basis. Growth in patient visits over the past year was primary driven by organic growth but included some acquisition related activity as well.

First Quarter 2023 Business Highlights:

On March 1, 2023, the Company completed the acquisition of 51% interest in Affiliated Tampa Anesthesia Associates, LLC ("ATAA") for cash consideration of $6.1 million plus transaction costs. ATAA services two ASCs and is staffed by thirty-four credentialled practitioners.

On March 2, 2023, the Company's venture capital arm, WELL Ventures, led an investment round alongside its partner Horizon Ventures and a syndicate of leading venture capital firms, in doctorly GmbH ("doctorly"), a medical practice management software provider based in Germany. As part of the investment and strategic alliance agreements, the Ocean platform, created by WELL's wholly owned subsidiary OceanMD, will be used as the exclusive booking and practice engagement platform for doctorly.

Events Subsequent to March 31, 2023:

On April 26, 2023, WELL Ventures announced the launch of its AI Investment program, focused on artificial intelligence and its applications in helping support healthcare providers with next generation tools. The WELL AI Investment Program will provide investees with capital as well as extensive support from WELL's ecosystem to help develop, test, refine, secure, de-risk and integrate the most promising such technologies into the Canadian healthcare ecosystem at scale. WELL's goal is to make a minimum of ten AI related investments of at least $250,000 each.

On May 10, 2023, the Company launched WELL AI Voice, a transformational ambient scribe product that leverages generative AI to dramatically reduce a provider's administrative burden by privately and securely capturing a patient encounter conversation and automatically generating a succinct and medically relevant chart note for the patient interaction.

Outlook:

WELL is expecting its strong performance in the first quarter to continue across all its business units and for the entire Company as a whole. WELL's objective is to invest in and achieve significant growth while effectively managing its costs and delivering cashflow to shareholders. Management is pleased to provide the following guidance for 2023:

Annual revenue between $690 million and $710 million, representing 21% to 25% annual growth as compared to 2022. Annual revenue guidance only includes announced acquisitions.
Annual Adjusted EBITDA is expected to increase by more than 10% over 2022 levels allowing the company to invest in growth and continue to acquire market share.

WELL expects to continue to grow its Canadian Patient Services business both organically and inorganically and increase its market leadership as the country's first pan-Canadian clinical network with a highly integrated network of tech-enabled outpatient healthcare clinics across the country. Meanwhile, growth in the Company's US Patient Services business is expected to be primarily driven by organic growth while executing on highly disciplined capital allocation opportunities.

As a company with deep tech experience and capabilities, WELL has also made investments in AI technologies a key priority within the Company and expects to develop compelling new products and enhancements to roll out to WELL's vast provider network.

WELL's strong organic growth and robust cash flow profile allows the Company to continue to successfully execute on its acquisition plans. Management expects additional cash flows generated by the Company will be re-invested in the business and allocated in a disciplined manner.

WELL is a purpose-driven business that aims to transform the world for the better, as such the Company has embarked on an ongoing ESG (Environmental, Social and Governance) program. The Company is on track to publishing its annual ESG report in mid-2023 highlighting WELL's ESG strategy, reporting initiatives and targeted actions. For more information on WELL's ESG program, please visit: https://well.company/esg-report

Conference Call:

WELL will hold a conference call to discuss its 2023 First Quarter financial results on Friday, May 12, 2023, 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), 1-888-664-6383 (Toll-Free) or +1-416-764-8650 (International).

The conference call will also be simultaneously webcast and can be accessed at the following audience URL: https://well.company/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 quarter ended March 31, 2023.

		Quarter ended
	March 31, 2023	December 31, 2022	March 31, 2022 Restated
	$'000	$'000	$'000
Revenue	169,425	156,513	126,508
Cost of sales (excluding depreciation and amortization)	(83,256)	(76,276)	(57,120)
Adjusted Gross Profit⁽¹⁾	86,169	80,237	69,388
Adjusted Gross Margin⁽¹⁾	50.9 %	51.3 %	54.8 %
Adjusted EBITDA⁽¹⁾	26,683	27,174	23,493
Net income (loss)	(10,627)	22,084	(2,776)
Adjusted Net Income ⁽¹⁾	14,125	12,493	8,930
Earnings (loss) per share, basic and diluted (in $)	(0.06)	0.09	(0.04)
Adjusted Net Income per share, basic and diluted (in $) ⁽¹⁾	0.06	0.05	0.04

Weighted average number of common shares outstanding, basic and diluted	232,171,126	229,505,226	210,014,960

Reconciliation of net income (loss) to Adjusted EBITDA:
Net income (loss) for the period	(10,627)	22,084	(2,776)
Depreciation and amortization	14,522	14,100	13,375
Income tax expense (recovery)	192	(3,684)	1,953
Interest income	(188)	(238)	(102)
Interest expense	7,774	7,761	5,154
Rent expense on finance leases	(2,490)	(2,458)	(2,152)
Stock-based compensation	6,599	4,934	5,139
Foreign exchange (gain) loss	(284)	61	(41)
Time-based earnout expense	10,854	(25,472)	2,521
Change in fair value of investments	-	-	(602)
Gain on disposal of subsidiaries	-	34	-
Share of net loss (income) of associates	97	(37)	148
Loss on transition of billings service provider ⁽²⁾	-	8,495	-
Transaction, restructuring and integration costs expensed	234	192	876
Other items	-	1,402	-
Adjusted EBITDA⁽¹⁾	26,683	27,174	23,493
Attributable to WELL shareholders	20,632	21,090	16,096
Attributable to Non-controlling interests	6,051	6,084	7,397
Adjusted EBITDA⁽¹⁾

WELL Corporate	(4,525)	(4,086)	(4,114)
Canada and others	12,238	9,094	5,598
US operations	18,970	22,166	22,009
Adjusted EBITDA⁽¹⁾ attributable to WELL shareholders
WELL Corporate	(4,525)	(4,086)	(4,114)
Canada and others	11,773	8,916	5,409
US operations Adjusted EBITDA⁽¹⁾ attributable to Non-controlling interests	13,384	16,260	14,801
Canada and others	465	178	189
US operations	5,586	5,906	7,208
Reconciliation of net income (loss) to Adjusted Net Income:
Net income (loss) for the period	(10,627)	22,084	(2,776)
Amortization of intangible assets	11,030	11,001	10,357
Time-based earnout expense	10,854	(25,472)	2,521
Stock-based compensation	6,599	4,934	5,139
Change in fair value of investments	-	-	(602)
Other items	-	1,402	-
Non-controlling interest included in net income (loss)	(3,731)	(1,456)	(5,709)
Adjusted Net Income ⁽¹⁾	14,125	12,493	8,930
Adjusted Net Income per share ⁽¹⁾	0.06	0.05	0.04

Footnotes:

⁽¹⁾This is a non-GAAP financial measure and ratio.
In addition to results reported in accordance with IFRS, the Company uses certain non-GAAP financial measures as supplemental indicators of its financial and operating performance. These non-GAAP financial measures include Adjusted Net Income, Adjusted Net Income Per Share, Adjusted EBITDA, Adjusted Gross Profit, Adjusted Gross Margin, and Adjusted Free Cash Flow. The Company believes these supplementary financial measures reflect the Company's ongoing business in a manner that allows for meaningful period-to-period comparisons and analysis of trends in its business.

Adjusted Net Income and Adjusted Net Income per Share
The Company defines Adjusted Net Income as net income (loss), after excluding the effects of stock-based compensation expense, amortization of acquired intangible assets, time-based earnout expense, change in fair value of investments, non-controlling interests, and revenue precluded from recognition under IFRS 15 that relates to certain patient services revenue that the Company believes should be recognized as revenue based on its contractual relationships. Adjusted Net Income Per Share is Adjusted Net Income divided by weighted average number of shares outstanding. The Company believes that these non-GAAP financial measures provide useful information to analyze our results, enhance a reader's understanding of past financial performance and allow for greater understanding with respect to key metrics used by management in decision making. More specifically, the Company believes Adjusted Net Income is a financial metric that tracks the earning power of the business that is available to WELL shareholders.

EBITDA and Adjusted EBITDA
EBITDA and Adjusted EBITDA are non-GAAP measures. EBITDA represents net income (loss) before interest, taxes, depreciation and amortization. The Company defines Adjusted EBITDA as EBITDA (i) less net rent expense on premise leases considered to be finance leases under IFRS and before (ii) transaction, restructuring, and integration costs, time-based earn-out expense, change in fair value of investments, share of income (loss) of associates, foreign exchange gain/loss, and stock-based compensation expense, (iii) revenue precluded from recognition under IFRS 15 that relates to certain patient services revenue that the Company believes should be recognized as revenue based on its contractual relationships, and (iv) gains/losses that are not reflective of ongoing operating performance. The Company considers Adjusted EBITDA to be a financial metric that measures cash that the Company can use to fund working capital requirements, service future interest and principal debt repayments and fund future growth initiatives. EBITDA and Adjusted EBITDA should not be considered alternatives to net income (loss), cash flow from operating activities or other measures of financial performance in accordance with IFRS.

Adjusted Gross Profit and Adjusted Gross Margin
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 income (loss) determined in accordance with IFRS. The Company does not present gross profit in its consolidated financial statements as it is a non-GAAP financial measure. The Company believes that adjusted gross profit and adjusted gross margin are meaningful metrics that are often used by readers to measure the Company's efficiency of selling its products and services.

Adjusted Free Cash Flow
The Company defines Adjusted Free Cash Flow Attributable to Shareholders as Adjusted EBITDA Attributable to Shareholders, less cash interest, less cash taxes and less capital expenditures.

Adjusted Net income, Adjusted Net Income per Share, Adjusted EBITDA, Adjusted Gross Profit, Adjusted Gross Margin and Adjusted Free Cash Flow are not recognized measures for financial statement presentation under IFRS and do not have standardized meanings. As such, these measures may not be comparable to similar measures presented by other companies and should be considered as supplements to, and not as substitutes for, or superior to, the corresponding measures calculated in accordance with IFRS.

⁽²⁾In the quarter ended December 31, 2021, the Company's wholly-owned subsidiary, CRH, entered into a relationship with a new billing service provider. Due to the one-time implementation and transition of billings from the previous billing service provider to the new billing service provider, CRH experienced significant delays in its cash collections, including delays in and non-payment of accounts receivable relating to those services billed and collected by the billing service providers. Subsequently, the predecessor billing service provider has also become inoperative. As a result of this transition, CRH incurred credit losses on accounts receivable billed under the predecessor billing provider and was precluded from recognizing certain patient services revenue under IFRS 15 due to the temporary decline in the pace of historical collection activity. The loss of $8,495 has been excluded from the calculation of Adjusted EBITDA for the year ended December 31, 2022 as the Company believes this is non-recurring and not reflective of ongoing operations.

⁽³⁾Patient Interactions are defined as Patient Visits plus Technology Interactions.

⁽⁴⁾ Leverage ratio is defined as Net Debt divided by trailing twelve months (TTM) Shareholder Adjusted EBITDA, where Net Debt is calculated as Total Debt less cash and excluding convertible debt.

WELL HEALTH TECHNOLOGIES CORP.

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

About WELL Health Technologies Corp.

WELL is a practitioner-focused digital healthcare company. WELL's overarching mission is to positively impact health outcomes by leveraging technology to empower healthcare practitioners and their patients globally. WELL exists to enable healthcare practitioners with best-in-class technology and services. WELL has built the most comprehensive end-to-end healthcare system across Canada including the nation's largest network of clinics supporting primary care, specialized care, and diagnostics services. In the United States, WELL provides omni-channel healthcare services and solutions targeting specialized markets such as the gastrointestinal market, women's health, primary care, and mental disorders. In addition to providing patient services, WELL develops, integrates, and sells its own suite of technology software and solutions to medical clinics and healthcare practitioners. WELL's practitioner enablement platform includes: Electronic Medical Records ("EMR"), telehealth platforms, practice management, billing, Revenue Cycle Management ("RCM"), digital health apps and data protection solutions. WELL is publicly traded on the Toronto Stock Exchange under the symbol "WELL" and on the OTC Exchange under the symbol "WHTCF". To learn more about the Company, please visit: www.well.company.

Forward-Looking Statements

This news release may contain "Forward-Looking Information" within the meaning of applicable Canadian securities laws, including, without limitation: its patient interaction run-rate and annual guidance; information regarding the Company's goals, strategies and growth plans; expectations regarding continued revenue and EBITDA growth; the expected benefits and synergies of completed acquisitions; capital allocation plans in the form of more acquisitions or share repurchases; the expected financial performance as well as information in the "Outlook" section herein. Forward-Looking Information 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. Forward-Looking Information 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 Information 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 the Forward-Looking Information and the Forward-Looking Information are not guarantees of future performance. WELL's comments expressed or implied by such Forward-Looking Information 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 information. Forward-Looking Information 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 any requisite future financing on suitable terms; any inability to realize the expected benefits and synergies of acquisitions; that market competition may affect the business, results and financial condition of WELL and other risk factors identified in documents filed by WELL under its profile at www.sedar.com, including its most recent Annual Information Form. Except as required by securities law, WELL does not assume any obligation to update or revise any forward-looking information, 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 estimated annual run-rate revenue and Adjusted EBIDTA, 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 an annual basis. 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.

Neither the TSX nor its Regulation Services Provider (as that term is defined in policies of the TSX) accepts responsibility for the adequacy or accuracy of this release.

SOURCE WELL Health Technologies Corp.