Q4 2021 WELL Health Technologies Corp Earnings Call
We'll come to well Health Technologies Corp, fiscal fourth quarter and full year 2021 financial results Conference call. My name is Sylvia and I will be your operator for today's call. At this time note that 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. Please note that this call is being recorded and I would like to turn the conference over to party Zynga Vice President Investor Relations. Please go ahead Sir.
Thank you operator, and welcome everyone to all health 2021 fiscal fourth quarter and annual financial results Conference call. Joining me on the call today are how much of bozzi, chairman and CEO and Eva <unk> the company's CFO .
Trust that everyone has received a copy of our financial results press release that was issued earlier today.
Portions of today's call other than historical performance include statements forward looking information within the meaning of applicable securities law.
These statements are made under 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 the wells control that may cause the actual performance results and achievements to differ materially from the anticipated results.
So far Mr. Chairman applied by such forward looking statements.
These factors are further outlined in today's press release and in our management discussion and analysis. We provide further 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 changes in our expectations or any change.
And in events conditions assumptions circumstances.
Such statements are based except is required by law.
We may use terms such as adjusted gross profit adjusted gross margin adjusted EBITDA showed EBITDA and adjusted net income on this conference call, which are all non-GAAP and non <unk> measures for more information of Halloween to find these transfer. Please refer to the definitions set out in todays press release and in our management discussion and analysis.
The company believes that adjusted EBITDA is a meaningful financial metric as it measures cash generated from operations, which the company can use to fund working capital requirement service feature interest and principal debt repayment and fund future growth initiatives.
Adjusted EBITDA should not be construed as alternative to net income loss.
Determined in accordance I forest and.
And with that let me turn the call over to Mr. How much about the chairman and CEO Amit.
Thank you Marty Good day, everybody, we hope, you're all keeping safe and healthy and we truly appreciate everyone for joining us today.
We're very pleased with our fourth quarter and full year results for 2021 last year was a transformational year for well, we completed two substantial acquisition CRH medical and might help as well several important tuck in acquisitions.
Which catapulted the company to over $460 million in annualized revenue.
On a run rate basis, and adjusted EBITDA run rate of over $100 million.
We've added significant scale to our business and increased our leadership position as the prominent end to end health care health system here in Canada, and now well is a profitable business that is generating significant free cash flow to fund its organic and inorganic growth.
Before we dive deep into our results I will give a brief introduction to well for the benefit of the new investors and listeners on this call.
Well as a practitioner focused digital health care company. Our overarching objective is to positively impact health outcomes by leveraging technology to empower health care practitioners and their patients globally.
At its core wells in innovative practitioner enabled platform that includes comprehensive end to end practice management tool inclusive of virtual care and digital engagement patient engagement capabilities as well as electronic medical records or EMR revenue cycle management or RCM.
E referral digital apps and data protection services, well use this platform to powered health care practitioners, both inside and outside of wealth own omnichannel patient services offerings.
Well true North is empowering health care practitioners with the latest tools and technologies and everything that we do comes down to this compelling concept.
It does this in two ways by providing these two solutions one one for practitioners, who practice and provide care at one of wells owned and operated facilities, we provide a fully managed solution.
Health care practitioners focus on providing care, while well handled everything else.
<unk> is for practitioners, who practice at non well owned operating facilities, we provide an ala carte offering a software tools solutions and services.
Typically on a SaaS basis, well strategy of empowering and modernizing health care practitioners is working practitioners that use wells tools have consistently demonstrated that they have more time to focus on patients and less time to focus on the burden of <unk>.
Back office and administration.
Canada will fully managed solution is supported by an extensive end to end health care system of outpatient clinics involving primary care Allied health specialized care and diagnostics, which we believe to be candidates, most consequential health care network spanning across provincial boundaries.
As such well owns and operates Canada's largest network of outpatient medical clinics, serving primary specialized health care services and as a provider of a leading multinational multi disciplinary telehealth offering.
Layered on top of that we are a top three telehealth and EMR business and the number one provider of digital apps and practitioner enablement towards in Canada.
Comparatively in the United States, our focus is to support practitioners in a few key specialty verticals such as surfing the Gi market of Gastroenterologists, providing women's health services and a growing primary care business with a focus on telehealth delivery of longitudinal care with an emphasis on mental health.
Operationally well has organized all of its businesses into two key lines of business.
The first being Omnichannel patient services, and the second being virtual services.
Omnichannel patient services includes all patient services businesses that have any material exposure to in person operations.
This includes our clinic network My health and CRH think of this as our bricks and clicks deficient.
Our second largest business virtual services, which is comprised of businesses that are almost entirely digital in nature inclusive of SaaS and services revenues from the company's practice share Naples platform or patient services businesses again that had very little to no exposure to in person care think of this is art.
Alex Division.
These two lines of businesses are both profitable and growing omnichannel patient services generates most of our revenue and EBITDA. However, it has a slower growth business.
<unk> channel patient services accounted for 73% of our total revenue in Q4 2021.
Conversely, virtual services line of business.
Which has again has very little exposure to bricks and mortar.
Price of highly scalable digital businesses, which today generate less revenue and EBITDA, but are growing at a much faster rate.
Our organic growth remained strong in Q4.
Over 10% for the entire business this was driven.
This strong growth was driven.
Sure.
Business with over 50% organic growth, which we believe is <unk>.
Stable and will lead our overall organic growth story in 2022 and beyond.
With that I would now like to turn the call over to our CFO <unk>, who will review the financials for the fourth quarter and full year 2021.
I'll then come back and provide further commentary on some of our business units and our future outlook Eva.
Thank you Amit I am pleased to report that we had very strong quarterly and annual results for the fourth quarter and year ended December 31 2021.
Our 2021 annual results were as follows well generated record revenue of $302 3 million joined the year ended December 31, 2021 compared to <unk> 50.
$2 2 million generated during the year ended December 31, 2020, an increase of 502%. This increase in revenue is mainly due to the companys acquisitions over the past year and organic growth.
Well achieved versus virtual services revenues of $75 6 million for the year ended December 31, 2021, representing an increase of 460% as compared to 15 $5 5 million in the prior year.
In 2021, well generated record adjusted gross profit of $154 million for the year ended December 31, 2021, which reflected up 6600, 24% year over year increase from the prior year.
This was mainly a result of increase in revenue in the period and higher adjusted gross margin percentage.
Adjusted gross margin percentage increased to 51% in 2021 compared to 42% in 2020, which is mainly due to the addition of higher margin CRH My health and virtual services revenue over the past year.
Adjusted EBITDA for the year ended December 31st 2021 was $60 4 million compared to adjusted EBITDA of <unk> 2 million for the year ended December 31 2020.
Adjusted net income was 16 million or <unk> <unk> per share for the year ended December 31, 2021, compared to adjusted net loss of $1 3 million or a loss of <unk> <unk> per share in the prior year.
You may notice that we started including a new metric on our financial public release and adjusted net income we decided to do this in order to provide another tool by which to measure well and our performance. The general definition of adjusted net income for well is net income after exclusion of stock based comp amortization of acquired intangible.
Both Tom based earn out changes in fair value of investments and revenue precluded from recognition under Ifr 615.
Our fourth quarter results were as follows.
<unk> achieved record quarterly revenue of $115 7 million during Q4 2021 compared to revenue of $17 2 million generated during Q4 2020, an increase of 573% driven primarily by the acquisitions of <unk> and myself.
Well virtual services revenues increased to $31 3 million in Q4 2021.
Assenting of 354% year over year growth as compared to $6 9 million in Q4 2020.
Well achieved record adjusted gross profit of $63 5 million in Q4 2021, representing.
693% year over year growth as compared to adjusted gross profit of $8 million in Q4 2020.
Well achieved record adjusted gross margin percentage of 54, 9% during Q4 2021 compared to adjusted gross margin percentage of 46, 5% in Q4 2020, the increase in adjusted gross margin was due to the addition of higher margin CRH.
<unk> and <unk> services revenue in the quarter.
Adjusted EBITDA was $25 7 million for Q4 2021 compared to adjusted EBITDA.
8 million for Q4 2020.
Adjusted EBITDA was positively impacted primarily by the addition of CRH and my health during the quarter.
Our adjusted EBITDA margin for Q4, 2021 was a healthy 22, 2%.
Adjusted net income for Q4, 2021 was $5 3 million or adjusted EPS of <unk> <unk> per share for the three months ended December 31, 2021 compared to adjusted net income of $2 4 million or <unk> <unk> per share in Q4 of the prior year.
Net income for Q4 2021 was 707000 as a result of the fund the Finalization of our purchase price allocation for CRH.
We took an evidence based approach to assessing the economic useful life of the assets acquired and found that the useful life is longer than what had previously been utilized as part of our calculations and amortization.
We extended the useful lives of certain contracts, which resulted in a favorable adjustment to MFA station expense in the fourth quarter.
Well end up Q4, and fiscal 2021 with a very strong balance sheet as of December 31, 2021, while had cash and cash equivalents of $62 million.
As of December 31, 2021, the total drawn amount under both the <unk> and my health credit facilities is approximately $279 million in Canadian dollars.
As of today, well continue to have room available on Undrawn credit facilities. In addition to over $200 million.
At debated accordion features to his credit lines, which could be available provide the covenants are able to be met I'm also pleased to report that the company is compliance with all covenants related to its credit facilities.
Our head count has increased substantially over the past year with the acquisitions of CRH and my health as of December 31st 2021, our total head count across the organization, which includes all non clinical employees consultants and health care providers was 2819.
This figure is comprised of over 1500 comes from non clinical employees and consultants and approximately 1300 of healthcare providers and clinical staff.
In terms of our share counts capitalization as of March 30, <unk> 2022, well had 221 million 459023 fully diluted securities issued and outstanding.
<unk> share count increase in 2021, because of all financings and acquisitions, we substantially increased the company's revenue and EBITDA on a per share basis, indicating that the company's capitalized capital capital allocation in organic growth program is delivering real value to shareholders.
Whilst revenue per share went from 37 five per share in Q4 2020 to $1 58 per share in Q4 2021 on an undiluted basis.
Meanwhile, adjusted EBITDA per share increase from zero cents per share in Q4, 2020 to 30 <unk> per share in Q4 2021. This reflects an over 2000 percentage increased in this all important metric.
Yes.
Our M&A program continues to successfully execute and follows a disciplined capital allocation strategy.
During the fourth quarter, we completed the following transactions.
On October 1st the company completed its acquisition of with a leading national provider of healthcare and pharmacy solutions specializing in women's health, we acquired a majority stake position of approximately 53% in <unk> for a total transaction value of approximately U S $41 3 million.
On October <unk> on November one the company completed the acquisition of wet AMD and enterprise class EMR provider with a focus on cardiology. In addition to other D C specialties.
On a same day well acquired Uptown Health Center, which is comprised of two medical Clinton County next and one Allied health clinic in the greater Toronto area.
On December 1st 2021, the company completed the acquisition of cognizant MD Who's Ocean platform is a category leader in digital patient engagement technology and <unk> software in Canada.
Oceans platform supports over 8000 physicians and approximately 35000 referrals and consult ascent electronically through the press one monthly.
In addition.
Each business unit has been an active acquirer in Q4.
It's completed 200% acquisitions of Jasper anesthesia cash associate and Bdnf Jews, Indiana based group and Utah anesthesia and user base group.
Combined these two acquisitions are expected to generate approximately U S $3 5 million in annual EBITDA.
In addition, <unk> completed one majority stake acquisition in October 2021, 51% of Pinellas County anesthesia Associates based in Florida.
Subsequent to the end of quarter on March seven 2022, the company entered into an asset contribution and exchange agreement to acquire 100% interest in greater Connecticut anesthesia Associates, I guess, Joe and rheology.
<unk> anesthesia services provider in Connecticut that is expected to generate more than USD 3 million in shareholder EBITDA.
This is my financial update and I'll turn the call back over to Hana.
Thank you Eva I will now review our overall patient visits for the quarter I am pleased to report that <unk> achieved a total of 972740 patient interactions in Q4 2021, representing an annual run rate of 389 million patient interactions.
Total omnichannel patient visits in Q4, 2021 were 700359, representing a year over year increase of 123% from 314009 in Q4 2020.
On a quarter over quarter basis total omnichannel patient visits increased 20% compared to 582958 total omnichannel patient visits in Q3 2021.
During the fourth quarter in person patient visits at our clinics and businesses accounted for 45% of the total visits while telehealth patient visits which include both telephone visits and virtual care patient visits represented 55% of total visits.
In person patient visits at our clinics and businesses accounted for 314144 patient visits in Q4 2021, representing a year over year increase of 146% compared to 127789 in person patient visits in Q4 of 2020.
Telehealth patient visits which include both telephone visits and virtual care patient visits accounted for 386215 patient visits in Q4 2021, representing a 107% increase from 186220 telehealth visits last year in Q4 2020.
In addition to these patient visits my help conducted 146160 in person diagnostic visit while with completed 126265 asynchronous patient consultations.
And now for an update on some of our key assets I'll start with circle medical and with our two U S based virtual services businesses.
Silicon Valley based circle medical is one of the first truly digital first primary care platforms in the U S and continues to experience unprecedented and exceptional growth for.
For the current month of March we are expecting circle medical the annualized revenue run rate to exceed $40 billion U S, representing a 490% year over year growth rate compared to March of 2021.
Comparatively when we announced the deal in September of 2020 Circle was at just 5 billion U S. An annualized revenue run rate. So we've seen some pretty phenomenal growth as circle medical since our majority ownership in the company.
Circle medical full stack primary care business continued to grow as a focus it's aggressive customer acquisition plan, coupled with deepening engagement between patients and their primary care provider.
Yes.
Circle Medical has seen its number of health care providers increased 262 year over year with approximately 134 providers currently active on the platform.
Management is executing.
With an online telehealth platform that focus on womens sexual health and reproductive health has experienced considerable growth as well since well announce the completion of its acquisition in October 2021.
In August 2021, when we first announced it with transaction its annualized revenue run rate with just $30 million.
For the current month of March we're expecting with the annualized revenue run rate to also exceed $40 million U S.
With this looking to maintained its rapid growth trajectory in 2022 in part fueled by the expansion of its services as it adds new products and services onto the platform.
Management is also executing.
This plan.
The combined annualized revenue run rate of circle medical waste is now better than $80 billion U S. Based on where we are seeing March volumes.
We're expecting the combined revenue run rate to exceed $100 billion US Later this year keep in mind that we had recently provided visibility on the combined total exceeding 70 billion U S. Based on our January results and our business update just a few weeks ago, so adding another $10 million in annualized revenue run rate in the last couple of months it's truly.
With how quickly these assets are growing.
Given these results we believe the circle with are not being properly valued and priced into the wealth story currently we.
We believe circle, and which will continue to grow.
Quickly well into 2022 and be important assets in the U S digital health care marketplace.
While well it does have a call option to acquire the balance of both circle medical shares and with shares. We also had the opportunity to partner partner with management and seek strategic alternatives for both firms separately or perhaps on a combined basis.
Strategic alternatives could include launching an IPO or bringing in the growth investor interest of equity of these assets on a standalone or combined basis.
We have already consulted with a number of tier one investment banks and helium dates and there is a near universal view that well has a significantly valuable business here, especially given the organic growth and capital efficiency of these businesses there.
They are finding key nishu specialty areas in the U S health care market, where they can leverage their digital platforms to serve patients and acquire market share rapidly.
And now for the virtual services update.
During Q4, we completed the acquisition cognizant empty, whose ocean platform includes a full suite of virtual patient engagement tools, including online appointment booking secure messaging appointment reminders and digital forms as well as in clinic checking kiosks tablets oceans interoperability is highly strategic for government initiatives.
Evidenced by their platform powering E referrals for the provinces Ontario's E services program.
Oceans platform supports 8000 physicians and approximately 35000 referrals and consoles are sent electronically through the platform every month.
Well is already benefiting from the suite of ocean products across its substantial clinical and specialty businesses.
Furthermore, ocean and well are in the process of building integrations into other EMR assets, including intra health and aware MD <unk>, creating a sizable addressable market of new physicians for Ocean sweeter.
<unk>.
In February wells wholly owned subsidiary Advacare, but all provincial requirement as part of the validation process to be a verified vendor for virtual care in Ontario.
This year's long process required agri care to demonstrate that solution met Ontario health standards with respect to privacy security technology and functionality as a result, <unk> listed on Ontario Health site is one of a few fully validated vendors for virtual care in Ontario. This means coalitions and large health care organization.
Sure I can confidently use advocates virtual care software to conduct effective virtual appointments via video and secure messaging and compliance with provincial standards.
Operationally given the strength of the provider tools, we have in the company. We are in the process of forming a new provider focused business unit, which combines the divisions after well Jamar group Dr. Kerr, our billing unit and digital apps businesses.
This new consolidated group with focus on bringing together the companys tools and effectively bundling them to help simplify and support health care practitioners lives.
Group would include companies and brands such as cognizant MD were empty intra health Oscar Pro Dr Care Doctor services group, and others and will cover tools and technologies, including but not limited to practice management productivity applications back office billing and revenue cycle management and more.
Keep in mind that more than one in every five doctors in Canada are currently being served by wells provider tools and services team.
We believe the opportunity to provide integrated offerings will allow <unk> to leverage its unique platform features and grow its market share.
Please keep in mind that well only provides is Ala Carte server software solutions in Canada, and the U S. All of the company's Tech is used for in house purposes to support our patient services businesses.
And now for a quick update on CRH, sorry, just core business is performing as expected with strong caseload and stable per unit economics.
In Q4, 2021, CRA to achieve revenue of approximately $47 1 million.
Ian.
<unk> completed over 120000 anesthesia cases in the fourth quarter and sold over 2237 or Reagan units also in the fourth quarter.
The CRH acquisition is continuing to generate value for well, we are making progress towards unlocking new revenue streams in CRH is valuable Gi channel and we are making progress with digitization well.
Well it continues to demonstrate network effects from this acquisition.
In the past quarter for example in the past quarter, well has opened a new hemorrhoid treatment center in Toronto and completed the acquisition of another Hemorrhoid treatment center in Surrey BC.
Both clinics are majority owned by well at 51% partnerships and in January 2022, we opened the first new Hemorrhoid banding clinic in the United States located in Chicago.
Yes.
First of many planned by CRH and its parent well to drive patient access to CRH is <unk>.
Industry, leading Oh, Reagan patented and outcome leading device.
<unk> well plan to open at least seven more hemorrhoid banding clinics in the U S. This year and several additional de Novo hemorrhoid treatment clinics in BC and Ontario as well.
The total hemorrhoid spending market in the U S is several billion dollars and growing.
As you May recall CRH owns the regen Med Tech device, a patented FDA approved device for bending hemorrhoids. However, historically CRH had never provided patient services with its own intellectual property. It had always sold its IP to clinicians who are generated hundreds of millions of dollars with technology.
Alright, just prior business plans did not consider patient services due to a lack of experience in providing clinical patient services.
Well on the other hand, well has extensive experience in providing critical services as Canada's largest owner operator of outpatient clinics.
So the combination of CRH is IP with a rig and device and wells critical experience provides low with a phenomenal opportunity to realize revenue synergies and increased market share in the North American Gi space.
In addition to the banding clinics, while has been working with CRH on a number of initiatives, including.
Working closely with our source 44 business unit to provide cyber security tools CGI practices, we've secured our first major pilot customer and getting ready to pursue expanded sales campaigns with more CRH clinics.
CRH also changed its revenue cycle management service provider to change healthcare, who is providing significantly more digital resources and data driven business intelligence insights as well as helping improve CRH has access to information.
We also launched a new digital Gi and O'bregon banding focused app for Apple iOS, and Android users, which acts as a digital resource that will help further accelerate our efforts to drive organic growth across our device sales segment as well as allow us to provide our Gi partners and well itself now that we are in the clinical business.
With our vending operations with opportunities to grow patient services revenues.
This is something that we talked about when we announced the deal and we are proud that we were able to deliver on it in less than a year from the point of acquisition.
This is further demonstration that well is delivering on its stated goals and objectives as articulated at the time of the announcement.
And this is something that we're proud of as a management team.
Our two new business tumor sites that have been rolled out our one triple W. Dot hemorrhoid answers dot com.
Youll have this site is to educate patients to the point, where they want to act and find the accretion to treat them.
And the second is triple W. Dot will reconsider some dot com. This is our rebranded or Reagan site. The main goal here is to differentiate or Reagan bending from other forms of hemorrhoid treatment as well as connecting patients to train physicians.
And now for a quick update on my health.
During Q3 2021, well completed its acquisition of my health, a leading provider primary care specialty care and accredited diagnostic health services that owns and operates 49 locations across Ontario as of December 31, 2021.
Health offers primary care consultations, both in person and through telehealth as well as diagnostic services related to cardiology womens health bone and muscle muscle health and cancer diagnostics.
My health represents a major acquisition for the company as it boosts wells free cash flow it accelerates well as revenue and EBITDA growth profile and it establishes a strong presence of diagnostic and specialty services in Ontario for the company.
With this foundational acquisition will became the largest owner operator of outpatient medical clinics in Canada.
In Q4, 2021, my health achieved revenue of $23 2 million representing quarter over quarter growth of 21% compared to Q3 2021.
As a result of Q4 being the first full quarter of revenue recognition for my health.
And these results were generally in line with our expectations given seasonality factors.
And now I'd like to speak a bit about our outlook for the rest of this year and for 2022.
Our outlook for 2022 remains strong and resilient.
The capital we generate we'll continue to be reinvested in the business and allocate it in a disciplined manner, which may come in the form of further acquisitions share repurchases or to accelerate organic growth.
We believe our organic growth coupled with our continued focus on tuck in acquisitions has the potential to allow the company to exceed half a billion dollars in annual revenue in 2022.
We're looking forward to delivering continued strong results in the next few quarters with sustained organic growth as we look to achieve growth and profitability.
The company's goals for 2022 are as follows one build out and refine its practitioner enable that platform to achieve organic growth across its operating business units three followed a disciplined acquisition and capital allocation strategy and for well expects to be profitable for the full year of 2022 on an adjusted.
<unk> net income basis.
Our view remains very positive across all our business units and for the entire company.
In Canada wells quickly expanding on what it is built.
The most consequential network of nongovernmental health care assets in the country with significant operations in interoperability between the outpatient clinics.
Electronic medical record systems diagnostics and telehealth businesses means.
Meanwhile, well strategy in the U S is 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.
Although we expect continued revenue growth in Q1 2022, the company expects in line with seasonality factors its adjusted EBITDA to experience a slight seasonal quarter over quarter decline in Q1, and then rise sequentially throughout the year as expected.
The decrease in adjusted EBITDA in Q1 is primarily due to seasonality in CRH is business going from Q4 being the most profitable quarter to Q1.
CRH is seasonally weakest quarter.
In terms of both revenue and EBITDA.
Q4 tends to be a strong quarter for CRH gives it the way deductibles work for elective procedures, such as colonoscopy, where we provide station services.
For this reason Q1 also tends to be.
Lighter quarter for us seasonally.
In addition, we plan on continuing to increase spending in the coming quarters at circle medical with to maintain healthy organic growth in those two businesses circle and west are having a positive effect on our top line revenue growth, but we do not expect them to be generating material positive EBITDA.
For the next couple of quarters.
As a general rule of thumb company needs to have some of its adjusted EBITDA margin percentage plus its organic growth percentage to exceed 30. In 2022. This is sometimes referred to as the move of 30.
As you can see given that our organic growth rate for Q4 for all of our assets with just over 10% and we achieve better than.
As a result, we achieved better than Google <unk> 30 for the quarter under review since our adjusted EBITDA was over 20% for our total revenues it.
It will be a key goal for us to continue to generally be in line.
With rule of 30 for the entire year.
We have discussed a number of key areas of the business on today's call, but it's important to note that in everything that we do it well there is one common big prevailing idea and that is that we provide health care practitioners with tools and technologies to help them be more successful.
And again, we do this in two ways.
By offering our tools services and technologies on an Ala carte basis.
Often through SaaS offerings in Canada. So the practitioners can use these tools in their outpatient services businesses, but increasingly what reflects the bulk of our revenue is by offering health care practitioners with a fully managed environment, where they can show up.
Focus on the care, they're providing and lean on well to do everything else.
We are finding that health care practitioners increasingly do not want to run their own patient services business and want to join a competent health system, where clinic group like ours focus on to care for their patients and not the administrative and business concerns and benefit from all the technology and modernization that wealth platform provides for it.
We take our responsibilities and supporting health care practitioners seriously and are always honing, our skills and improving and modernizing our operations to provide the best support possible. So the care providers can provide the care that result in the best health outcomes possible.
Despite the current geopolitical inflationary and turbulent economic environment.
The company does not see any material influences, where challenges that would impair its ability to deliver on a strong outlook in 2020 too many.
Many of the key variables inherent in the execution of wells business are firmly in its own grasp and not dependent on outside factors. The company is well positioned to deliver strong results, which include above average organic growth rates across the organization well.
Well diversified fast growing digital health and tech enabled healthcare company delivering on a strong ESG program and building societal value.
Finally, I would like to recognize and acknowledge the challenging times that Ukraine is facing and in response I would like to announce that we have exceeded our goal of donating $100000 towards relief efforts to support Ukraine, including donations from well corporate and the employees as well.
Donations will be made to UNICEF candidate that will contribute towards supporting Ukrainian children, who have been harmed or may be in danger.
I am extremely proud of our team's efforts and commitment to helping in this humanitarian emergency and once again.
Like to state that well stands with Ukraine, and our hearts are with all those impacted by this tragic war.
In closing I want to thank you all for joining us on this call and thank our shareholders and investors for their continued support the capital markets have been very supportive of our vision and it provides us with the funding and patients needed.
Two our goals.
I would also like to thank wells senior management team and all of our employees and contractors for their tremendous effort and execution in particular I'd like to thank our team of health care practitioners and other frontline workers, who continue to keep all of our clinics open and provide unbelievable patient care.
<unk> everyday why we are here.
And we are here to support them that is our ambition.
And with that we will now be open to answer questions. Operator could you. Please convey the questions.
Thank you, Sir ladies and gentlemen, if you would like to ask a question. Please slowly press star followed by one on your Touchtone phone you will then hear a sweet home prompts acknowledging your request and it should you wish to remove yourself from the question queue. Please press star followed by two.
Speaker phone, we do ask that you. Please lift the handset before pressing any keys. Please go ahead and press Star one now if you have a question.
And your first question will be from Christian escrow at eight capital. Please go ahead.
Hi, congrats on the strong quarter.
I wanted to ask a first question I'm, sorry, where you left off on the rule of 30, they're achieving that that mix of organic growth in adjusted EBITDA and this will help to guide the financial profile.
Do you see 2022 landing as more of a $15 15 year with investment in the U S business or do you see it being somewhere in between that in the 10 to 20. We saw this year like what are your early thoughts heading into the year.
Thanks for the question Christian Yes, I think I think.
It's a good bet to think that our organic growth percentage will continue to be robust.
And given that circle, and which don't contribute as much.
Adjusted EBITDA.
Yes that will likely cut a little bit into the operating margins and so on.
Yes, I think I think in terms of whether or not it gets to $50 <unk> I don't I don't know if I would if I would go with that precision, but I do believe that this is this is why you have 30 makes just a ton of sense for us as being able to express. The fact that the company is not trying to over optimize for profitability or growth and really believes that.
Our solid balance between both makes a ton of sense.
Got it now where it's been circle medical seen Mike.
Two very strong growth engines in the business you mentioned, some new products and services. There do you want to touch on some of the areas of investment that youre thinking about in the U S, whether that's customer acquisition or marketing or otherwise.
Sure I mean, I think whats really remarkable about these assets is just how efficiently they are acquiring customers and and able to do so without.
Significant losses or any losses for that matter. They are both businesses are currently trending at breakeven. We are we are forecasting a small loss for both businesses right now but.
As we had in the past and they continue to surprise us with breakeven performance. Because we are we are making significant investments I think I think they both have different strengths and this is why the idea of combining them is compelling.
One is obviously.
Got the asynchronous.
Platform that allows physicians to scale and they drive significant high margin product sales.
Support women's health and the other has a significant number of physicians providing synchronous.
Consultations into being able to really scale, the customer acquisition and their physician recruitment, which is extremely difficult to do it in a place where we're most companies have fallen down.
And so.
I think I think.
That's why we believe that these are sort of mispriced as part of the wealth story and.
Part of management's goal here and we want to be held accountable to that is is to demonstrate that we can we can get value for these assets.
And so we're spending a lot of time energy and thought on how we how we achieve that.
Okay, Great I'll ask just one more question before passing the line.
Dig a little further into circle medical.
Now from the 5 million you mentioned, you're going to have back or loss to 40 now that's been a big growth engine.
Is there a simple way you define the success there is that.
More practitioners coming online Ah patients joining that are above market sort of pace or is there anything else. That's really helped to push the circle growth this past stretch.
Yeah, I mean listen I think I think it's really if you characterize circles businesses and most digital health businesses that have practitioners and patients is two sided networks.
What's difficult with these two sided networks is scaling both the patient acquisition and the physician recruitment.
And you.
You can't scale, one too quickly otherwise you you take an unnecessary costs or.
You could even fall down in terms of being able to provide a.
An acceptable level of service and there's a third dimension there too with all the support services required to support all those practitioners. So so I mean for example circles Montreal office, which is a pretty substantial now full and it's chock full of people, providing virtual MLA services to all of those practitioners. So so I think I think.
Management has just been a great job.
Acquiring the talent.
And delivering on those.
Those scaling vectors and behaviors.
And this is why.
When something works.
You continue to refine and drive that growth and I think that's really what we're seeing there.
That's helpful context, thanks for taking my questions I'll pass the line.
Thanks Christian.
Next question will be from Adam.
At Scotia Bank. Please go ahead.
Hi, Amit and thanks for taking my question and congrats on the quarter I wanted to start a ticket it similar to the last line of thought on the U S. Telehealth business, you kind of mentioned the capital efficient model and how they are at breakeven from a unit economic perspective can you kind.
Shed some light on I guess that infers that every dollar gained a revenue is greater than the dollar spent on that customer acquisition can you kind of walk us through how that's been trending and.
Any color there would certainly be helpful.
Yes for sure listen we.
Ill just reframe your question is.
As a characterization of.
CAC and LTV right customer acquisition costs and lifetime value.
And I will say that debt.
Circle, particularly is trending incredibly well on their CAC and LTV metrics.
And and.
This is something that that really gives us great confidence in making the kinds of statements that we talked about here and again that that.
I think is really is really key we won't go into specifics on what we're seeing is for obvious reasons competitive reasons and whatnot, but.
I think I think that's been one of the real.
The drivers of that story.
Risk.
It has done well with CAC and LTV as well, but I would say what what's what's strong about the west story is that you have a significant portion of the revenue that subscription based.
So once.
<unk>.
People sign onto the product often times theyre doing it with automated delivery and so and they are subscribing to.
We shipped that product on an ongoing basis, which really helps in terms of of <unk>.
Supporting revenue and driving.
Value.
So I mean.
Both are driving pretty good gross margins the product gross margins on the west side tend to be a little higher than the patient services gross margins at the circle side I would say that the asynchronous.
Service delivery capabilities with our more scalable just because.
You are delivering services in an asynchronous basis, and so you have a fewer number of physicians that are that are that are needed to support that volume but.
But I would also say that the long term.
LTV associated with the synchronous.
Model like like like circles wood will be more compelling.
Again, they both have their strengths and weaknesses and this is why I think.
There is some some we're thrilled to have both we're thrilled to have.
Powerful asynchronous product delivery capabilities that fulfill competently and.
And a thriving two sided.
Synchronous.
Program like circles.
No that's really good color thanks for that.
Maybe shifting gears to the other parts of the virtual services segment.
Obviously, we talked in depth about circle in the west but.
Canada, you talked about the patient enablement or the physician enablement platform and the services that you're going to offer.
<unk> in that area and clinicians right.
From an organic basis are you kind of able to shed some color on <unk>.
Sure.
Cyber security and how those business have been trending and what youre sort of seeing in the Canadian market on that front.
Yes happy to.
On the EMR basis, we're seeing.
Very robust and sticky revenue, but slower growth. So we're in single digit growth there.
And that makes a lot of sense, because obviously the market has become quite saturated.
And.
We continue to see good solid.
Performance, there and and just the switching costs for EMR, So high which which are wonderful thing, but they can be a double double edged sword, because it's harder to take market share from others as well and the percentage of paper now in the country is very very low so that kind of characterizes EMR cyber security, we're seeing good strong double digit growth.
Yeah.
Secure has been very solid and its and its ability to execute on on acquiring customers and providing.
Vulnerability assessment and other services and they're growing their product portfolio and <unk> 44.
As a as a plurality of other services from from from software to provisioning of hardware and they've been great with our enterprise customers and whatnot.
<unk> is really where we're seeing the more significant growth I mean ocean is I think we provided some visibility on an ocean growing at over 50% per year.
Quite confident that they'll continue to do that and perhaps even grow faster I mean this is a.
This is a real Pearl I think in our practice, enabling platform and I think it's.
It looks to be the referral winter for the country.
Are very confident that we're going to win other provinces that that more and more practitioners will need to use ocean and that will be a fantastic wedge for other products and services that we bring so I think so.
Hugely consequential acquisition that we made and I think you are going to be hearing a lot more about ocean with time.
Great. Thanks for that color again, and congrats on the quarter.
Thank you.
Next question will be from Chile.
Please go ahead.
Good morning, Matt and team congrats on the quarter itself.
Again, good David.
Quick question is in terms of the capital allocation, you mentioned that <unk> bucket, so acquisition share buyback and organic growth can you give us more color on the split between these two buckets as you head into J J T.
Sure.
We are we're really stepped down our M&A activity.
And we are very happy with that we made a lot of acquisitions and we are really focused on achieving network effects, what we found as well as that.
Capital allocation for us not just about deploying capital and going shopping and buying companies. It's also about applying capital thoughtfully to our own business.
In areas, where we think we can upgrade clinical opportunities expand existing programs and.
So we have a diverse and I think very active capital allocation program, but I know, it's more spread out I would say.
Across across external tuck.
Tuck ins and internal programs.
And.
I would say that again.
Less activity, but youre going to see us buy.
Or enter into a control ownership structure with the odd clinic.
Here and there I think probably our core plan here for the next couple of years sees us doing at least one clinical quarter.
In each of one of our.
Our main areas of business now that may happen in the basket. It may not happen every quarter, but that's generally how we're thinking about it which again is a major step down, but we're okay with that because.
First of all we see multiples trending down we think that these deals will become more accretive.
And.
We feel very strongly that while it would be nice to have more capital on the balance sheet, we can execute and grow with the capital that we have and that we generate.
Okay. Thank you for that and just switching gears a bit to the new microbiome focused consolidated scope that you mentioned on the call that have our doctor care and so on so it is going to be a new segment in your financial disclosure or just about the new way you bundle your product and perhaps if you can give us more color on.
How are you thinking about modeling this part out what kind of cross selling of promotion benefits.
Just kind of.
When you go chasing these bundles.
Yes, thanks for asking about that Gee I'm really excited about this.
These divisions and services already are in our virtual services group and we provide a clear delineation between virtual services and Omnichannel. So it's unlikely that there will be.
Further disclosure specifically in this area, but I think it's from a business perspective, it's really quite.
Exciting and.
Given the fact that we have not been aggressively bundling in the past.
And we do believe that.
A lot of health care practitioners.
Need need and will benefit from these integrated offerings in such a way where they don't have to deal with different entities and source and source and manage various different vendor relationships. We also believe that we will.
This will allow us to increase the connective tissue between these.
These products and we think that.
It will improve our overall retention rates.
Help us acquire new customers and really really better penetrate these accounts.
So it's something that we are working on.
Very purposely and.
Purposefully I should say and I think will provide key updates throughout the year and.
We're going to be thinking through.
Providing some some.
Feedback on attachment rates and bundling <unk> kpis with time.
And do you think that destination. It will help the petitions to also say if they are already at one of your product they were more I understand either offering and know that like this.
Despite the Lipton brand via on data warehousing umbrella and there'll be.
A more integrated stack right.
I do yes, I think thats really the key idea here think about this our doctor care team, which has a phenomenal salesforce.
They scratch and claw and fight to get in front of a doctor to talk about revenue cycle management to help alleviate that burdensome administrative tasks for them and the doctors.
Our.
Famously bad it billing and and the business attributes of the business and Doctor care really is a great painkiller there.
But but allowing those enterprise salespeople, who are very successful to be able to talk about more than just revenue cycle management when they get in front of a doctor I think is really.
Big Big deal for us to be able to say hey look we have.
Our spectrum of EMR tools, and digital patient engagement tools and virtual care capabilities and.
Waiting room automation and online patient booking in self service kiosks.
You start just to kind of become that trusted adviser to that health care practitioner.
It gives us a great roadmap of what we can do with them, but I will tell you. The other thing that it does which I think is sort of a very key network effect for US is we believe with time more and more of these health care practitioners will not want to run your business.
And we will want to join.
A fully managed health system like wells.
But what it what it does is it gets them acclimated to our tools and capability. So then it creates a lot.
Of efficiency in terms of how they enter our our system and this is really important because when we capture economic output with our practitioner enablement platform.
We would capture anywhere from 1% to 4% of the doctors economic output.
When we offer these tools on a SaaS basis, but when they join our health system.
We acquire any anywhere from 20% to 50% of their economic output when they come on board with us.
So much more material and so you can almost look at the platform services and the SaaS offerings. There is a bit of a gateway to greater bigger and better things for these practitioners as they get more and more acclimated to the well infrastructure and ecosystem.
Hope that's helpful for you.
Yes, that's a very good color. Thanks, and my last question is related to the labor inflation. So how would you characterize the labor environment over the past couple of months, especially on the tech side I know that you mentioned, some inflation before which almost all going to take companies are facing.
It is tough.
I'll say, what im sure Youre hearing everyone else.
Talk about it and say it is definitely tough and this is why I'm, especially proud of the results that we're posting here today and continue to experience. Our teams are are retaining their fighting.
And I think a big part of that is just being the type of company that people like to work at and are proud of.
So listen it's a complex environment.
I mean, we.
For example, we know we have significant open positions are available in our my health group.
We have lots of we'd love to find more skilled labor to run more diagnostics that we know we can grow revenues and we know that that that demand has not been the rate limiting factor has been.
The successful recruitment of these of these professionals and so we are ramping up and we're trying to do more.
There.
But yeah its tough its tough for developers, it's tougher finance people.
Theres poaching activity out there and so I think it's probably one of the most important factors in our success and our management team really being successful right. These days.
As of late I think we've seen things calm down a little bit.
I think.
I think I think the fervor that we saw late last year has sort of gone down but.
But continues to be a very key.
Area of focus for us.
Thank you for that I'll pass the line.
Thank you. Your next question will be from Rob Goff of Echelon. Please go ahead.
Thank you very much for taking my question. Your last question May in part answer My first question here.
And that would be turning once again to circle in width.
Would you say that there is a gating factor on the growth that youre seeing there.
On customer acquisition or be that on actual access to health care providers.
Yes, Rob Good question I'd say it's.
It is a bit different for circle and with I think I think with as much more scalable on the front end.
And I think.
Because because of just the way that the asynchronous model works compared to the synchronous model. So I think with.
Customer acquisition can be a lot more free flowing and and ambitious with without big ticket because fulfillment is easier.
And whereas circle again, you have to be very mindful of how you scale up this two sided model.
Thank you.
Both assets clearly outperforming.
You see opportunities to either take best of best practices from either into the Canadian marketplace or to expand those brands in the Canadian marketplace itself.
Yes, I mean.
It's a great point, we are trying to do that we think that there is some exemplary execution and ideas coming from these businesses and we we have talked about launching <unk> in Canada and that continues to be something that we're very interested in doing.
And we don't want to rush it because managements executing on our growth plan and we wanted to make sure that that debt.
Canada is not a distraction, especially given the fact that it's not as big of a market.
The U S is a very big deep and lucrative market.
So so.
Definitely see opportunities there with west and I think with both Westin Circle I think what youre going to see is them going after just just them applying.
These these two platforms to more and more niche specialty areas and and being thoughtful about.
Which areas are smart to go in and which ones aren't.
And test marketing some.
I can also tell you on the west side of things, where we're particularly excited about the idea of instant gratification.
Developing partnerships that allow us to execute on delivering our product very very quickly. So if you need something today, we can get it to you today or tomorrow as opposed to fulfilling over several periods given.
Given the products and services that we provide in our womens reproductive and sexual health platform. There instant graph could be could be really a big deal for us. So.
Yeah.
Those are areas of focus and I and I'd say that just even in how we acquire customers.
<unk>.
We're learning about.
About some of those better tactics that I think the U S folks are.
Our executing on and that is filtering up to Canada as we as we execute on our own virtual care program with Tia health, which is doing very well.
<unk> to see nice nice organic growth year over year.
Thank you.
Thank you.
And last question will be from Nick Agostino of Laurentian Bank. Please go ahead.
Yes.
David.
Two quick questions for me.
On that first.
Looking at the.
You talked about on the organic growth side of things, we talk about the Digitization of the network and just wondering when you look at all of the acquisitions you guys have made over the years and these past few quarters and specifically again with the larger ones like my health in CRH and thinking about the opportunities.
Cross sell opportunities between billing cyber security scheduling et cetera have you guys put out.
Sure.
Given thought to the size of that cross sell dollar opportunity.
And if so maybe how far penetrated are you in capturing the organic dollar opportunity. That's in front of you guys.
Digitize all your acquisitions.
Yes, great Great question I think in many respects.
The key questions that we think about a lot as a management team listen this is everything to some degree.
We feel like we have a great opportunity here and we're really at the at the top of the first inning. When it comes to network effects I mean, we have been.
As I've talked about before in previous conference calls very intentional about this and I think we've achieved a lot already in terms of ensuring that products and services can communicate with one another and performing integrations, but.
It takes time to execute on this and I think.
There'll be different phases, where different network effects will be activated and I'll give you a great example of what I mean by phases right now I believe the quickest meaningful revenue from a synergies perspective comes from CRH in the form of the clinical business.
That's going to be just in 2022 in the U S. A seven figure revenue opportunity with the hemorrhoid banding.
And that is that is not capital allocation from a from a we're not buying anything there. We're just executing on our device we have major structural advantages and how profitable we can be and how we can offer those services.
Especially given the strength that we have across digital marketing.
So that's an immediate and significant.
Synergy for the company.
And otherwise I think what Youll see for example, with my health is as we populate more and more primary care capabilities around.
Around Ontario.
There'll be greater network effects in terms of unlocking the value of those patients.
As you May know most of our primary care population in terms of patient served in clinics as NBC and so we also have a great opportunity to activate a diagnostic business there that kind of thing isn't something that you sort of spring up over weeks and months, but over years it becomes enormously compelling.
And I do think.
Over time it.
Just just the and I think I've mentioned this in the past I see just the hemorrhoid banding business.
Being at $50 million to $100 million business overtime and I see.
Whether it be diagnostics or primary care I mean, I think over time. These can be also $50 million to $100 million businesses for us.
Okay I appreciate that color and then just my second question with regards to your capital allocation you mentioned earlier stepping down on the M&A activity.
In more recent calls I think you had an LOI pipeline of around 15 companies you've seen you guys transact on some of those companies and I'm. Just wondering is that is the pipeline activity that you had even a couple of months ago still active.
Or have things changed given what's happening in the multi in the public markets with multiples maybe your.
<unk>, where multiples are compressing as fast in the private side of things and Thats driving some of the decision making to step back.
On the M&A side I was just wondering if the pipeline opportunities are still active and if.
Evaluations, where you guys are seeing.
Private company valuations at the moment relative to public.
Yeah, I would say the pipeline is still very active we still have a very active.
Active and engaged program our Corp. Dev team is continues to meet.
A lot of different operators.
I'd say, we just have less urgency.
Before I think there was a lot of urgency to try and get these done so that we could.
Again, I think some of them were competitive some of them were associated with with making sure that we that we build enough of substrate in certain markets to be to be relevant.
And of course.
The market was just very different back then and I think now.
We.
We take our time, we do more it's more I think this is this more back to a regular sort of environment where.
There isn't a dogfight for assets and you can really studied them in a deeper way and.
We're also just focused on smaller deals right now.
Because we think that's most accretive and and.
You've probably heard me before our smallest beautiful not to say, we don't look at big deals at all we continue to look at the big deal that big strategic deal and and we will continue to evaluate those opportunities I just think we are.
A lot more choosy now.
And it looks like there was a time with Covid, where it was hard to go out and spend a lot of time with operators. So.
We're back to more of a normal course, I remember pre COVID-19 , whether it's well our other company a company that have been with us.
Great to its great to learn about these subjects and spend time with them and culturally understand their approach.
Two two operating into into how they treat their <unk>.
Colin the practitioners and so forth. So I think I think.
I think we're just going to make better and better decisions.
And and acquire better and better assets over time, so I like this environment, it's great for me.
Okay.
Thank you.
Thanks, Nick.
At this time I would like to turn the call back over to Mr. Trabelsi.
Thank you very much everybody for attending today's conference call. We really appreciate your continued engagement with the story all the all the all the support that we've received and we.
We'll continue to execute.
And look forward to seeing you for Q2, sorry, Q1, and as well our AGM later this year. Thank you.
Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending and at this time, we do ask that you. Please disconnect your lines.
Yes.
Okay.
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