Q2 2022 WELL Health Technologies Corp Earnings Call
Welcome to the Well Health Technologies Corp fiscal second quarter 2022 financial results conference call. My name is Debbie and I'll be your operator for today's call.
At this time all participants are in listen-only mode. We will conduct a question and answer session later in the call, which will be restricted to analysts only. Please note this conference is being recorded. I now turn the call over to Pardit Sanga, Vice President Investor Relations. Mr. Sanga, you may begin.
Thank you, operator, and welcome everyone to Well Health's 2022 fiscal second quarter financial results conference call for three months ended June 30, 2022.
Joining me on the call today are Hamid Shabazzi, Chairman and CEO , and Eva Fong, the company's CFO .
I trust that everyone has received a copy of our financial results press release that was issued earlier today.
Portions of today's call, other than historical performance, include statements of forward-looking information within the meaning of applicable securities laws. These statements are made under the safe harbor provisions of those laws. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable management, are inherently subject to significant business, economic, and competitive uncertainties and contingencies. These forward-looking statements involve known and unknown risks, uncertainties, assumptions, and other factors.
many of which are outside of wealth control, that may cause the actual results, performance, or achievements of wealth to differ materially from the anticipated results, performance, or achievements implied by such forward-looking statements.
These factors are further outlined in today's press release and in our management discussion and analysis.
We provide forelooking information 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 obligations or undertaking to release publicly any updates or revisions to any forelooking statements to reflect any change in our expectations or any change in advanced conditions, assumptions, or circumstances on which any such statement is based except if it is required by law.
We may use terms such as adjusted gross profit, adjusted gross margin, adjusted EVA dust, shareable EVA dust, adjusted net income, and free cash flow on this conference call, which draw a non-GAAP and non-IFRS measures.
For more information on how we define these terms, please refer to the definitions set out in today's press release and in our major discussion analysis.
The company believes adjusted E-BRIH 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. Adjusted E-BRIH should not be construed as an alternative to net income or loss determined in foreign Student
And with that, let me turn the call over to Mr. Hamid Shabazzi, Chairman and CEO . Hamid?aksz
Thank you, Pardee, and good day everyone. We hope you're all keeping safe and healthy. We truly appreciate everyone for joining us today.
The second quarter of our 2022 fiscal year was an exceptional quarter, where we achieved record quarterly revenue, record adjusted EBITDA, record cash flow, and record patient visits in the quarter.
We're very pleased with our Q2 results as we were able to demonstrate strong top-line organic growth while maintaining robust operating margins.
Some highlights for the quarter include the following.
We achieved 127% year-over-year revenue growth in the second quarter compared to the second quarter in the previous year.
The company's growth was driven by acquisitions made over the past year as well as solid year-over-year organic growth of approximately 21%.
It's important to note that our organic growth rate has been accelerating materially for the past couple quarters, with last quarter's figure at 15%.
organic growth.
The company continues to witness healthy growth across all its business segments, including both online and in-person care channels, with minimal impacts due to recession, inflation, supply chain or other macroeconomic effects currently felt by other companies in this industry and around the globe.
We'll also achieve record patient visits in the quarter with over 1.16 million combined omnichannel diagnostic and asynchronous patient interactions.
Demonstrating our continued leadership position is the preeminent end-to-end healthcare company in Canada, while our U.S. businesses continue to exhibit industry-leading growth metrics.
Our virtual services revenues were extremely strong, increasing 281% in Q2 2022 compared to the previous year, driven by the exceptional growth in our U.S.-based businesses of Circle Medical and WISP.
For the month of June , the combined annual revenue run rate of Circle Medical in WISP exceeded $115 million in Canadian dollars.
and has continued to improve after the end of the quarter.
Our outlook for the second half of the year remains very positive. Hence, I can be very confident we increase our guidance for the annual revenue to exceed $550 million in 2022, compared to our previous guidance of annual revenue exceeding $525 million million.
It's important to note that this is the third consecutive quarter where WELL has raised revenue guidance.
I'm also pleased to report that we've not only been growing revenue, but also our cash flow and profitability metrics.
In Q2, we'll achieve record-free cash flow attributable to shareholders of $15.4 million.
Q2 was truly a tremendous quarter for the company.
Before we get into further details on the quarterly results, I'd like to provide some background on the company for the benefit of you investors and listeners on this call.
WELL provides care and support for the care providers themselves, the physicians, the healthcare practitioners, all those that serve in our various different patient services and businesses that serve patients.
We are a physician support company that supports more than 2,300 physicians and other healthcare providers, as well as own virtual and physical clinics.
Approximately 93% of Wells revenue comes from patient services delivered by our own care providers.
Care providers join us because we allow them to focus on the care and not having to run a business.
We operate these patient services businesses using our extensive operating experience and our own digital platforms that provide significant opportunities to improve patient access and convenience while adding efficiencies and improving operating performance.
The balance of our revenue is approximately 7%.
is essentially the aliquot offering of our software and services capabilities, also to physicians and healthcare practitioners.
This offering allows care providers to select technologies from Wells Platform that they'd like to use in their own business as they continue to run and or manage such businesses on an arms-length basis.
We are a unique company that has powerful technology that is industry leading and allows wealth to create powerful and relevant links with healthcare practitioners all over the country.
This connectivity allows us to become their prime option when they no longer want to run their own business and instead want to lean on a professional operator.
Given recent times where there are challenges with inflation, shortages of healthcare workers and other issues, we are always seeing significant growth and interest from care providers that want to join its network.
Initially, when I started well, my goal was to help doctors and their clinics achieve digital transformation and modernize their practices.
That's why we started developing and assembling our practitioner enablement platform.
We believe care providers needed assistance in improving their delivery of care in the digital age.
Since then, what we've learned and how we've evolved as a company is that our value proposition goes much farther than just digital delivery.
Doctors and other healthcare providers need our assistance to not only...
deliver digitally but actually just deliver.
They need help in all aspects of their business, front office, back office, management and operating facilities, negotiation with landlord, etc.
So.
A way to really think about Well is not just as a company that provides digital care and competency, but also as an operating platform that helps support care providers and allows them the opportunity to focus on the care they are providing and deliver outstanding patient outcomes.
One of the reasons why the company has been able to grow and develop so quickly is because the DNA of our business is technology driven. We seek advanced yet practical tech-enabled solutions that allow us to ensure the best experience and efficiency possible for our patients and providers.
Providers that use Well's tools have consistently demonstrated that they have more time to focus on patients and spend less time on burdens of back office and administration.
This not only increases their billable hours, but also reduces their administrative burdens and also helps improve patient outcomes.
Our practitioner video platform includes a broad array of capabilities, including but not limited to electronic medical records.
You have more for short, virtual care, digital patient engagement tools that allow patients to seamlessly connect.
revenue cycle management, e-referral, digital apps, and digital protection services such as cybersecurity and so forth.
Over the past four years, we have grown both organically and inorganically into a category leader.
To our knowledge, we are category leaders in the following areas.
For example, we are the largest owner-operator of outpatient medical clinics in Canada. We are one of the top three providers of telehealth services in Canada. Depending on the metric that you use, we may be number one, number two, or number three.
We're one of the top three practice management service providers in Canada.
We are one of the leading providers of digital patient engagement services, which includes all aspects of connecting patients and doctors digitally.
We're the only direct-to-consumer telemedicine offering that allows you to pick your own provider through our key health service offering which allows you to...
to pick a practitioner based on a description provided. This has been extremely helpful for our patients.
and driven strong loyalty to the platform.
We are the largest provider of revenue cycle and outsource billing services for doctors in Canada.
We are the largest provider of e-referral software services in Canada.
We are the leading provider of sedation services for colonoscopies in the United States.
We operate Canada's only app marketplace for integrated EMR apps called Apps.Help.
To our knowledge, we deliver more omni-channel patient visits than any other entity in Canada, except for the government.
I'd also like to comment on our recent ESG activities.
On June 17, 2022, the company announced the release of our inaugural Environmental, Social, and Governance, or ESG, report highlighting the company's ESG practices and performance.
The report covers the year ended December 31, 2021, and details WELL's ongoing commitment to empowering practitioners and positively impacting health outcomes while highlighting the company's commitment to improve and enhance its practices around environmentalism, social awareness, and governance.
In this inaugural ESG report, we highlight four main priorities for the company. Mainly, one, discipline governance and risk framework, maintaining strong oversight and discipline, including management of risk and compliance across our business activities.
two, providing practitioner support and digital enablement.
Our offering provides all the benefits of a truly managed hybrid environment inclusive of bricks and mortar and virtual delivery capabilities including online and offline medical assistance support, billing and back office management, referral work.
workflow support. It ensures healthcare providers can optimize their schedules so they can spend more time with their patients and less time doing admin work.
Wells digital offerings reduce wait times, travel times, which reduce greenhouse gases, and other traditional socioeconomic barriers that are often associated with accessing in-person care.
Three, safeguarding patient data.
Safeguarding the privacy and security of our patients' data while empowering them to proactively leverage their health information is a core element to achieving our mission to positively impact health outcomes.
I'm pleased to say that Well had zero reportable data breaches in 2021.
Four, ensuring well is a healthy place to work. Well provides continued support for a range of wellbeing initiatives available to all team members and business units to help team members stay physically and mentally healthy in a psychologically safe environment.
Diversity is highlighted in the ESG report as an invaluable strength as well.
the ESG report as an invaluable strength as well. Well,
currently has 70% of senior executive team members representing a visible minority.
Furthermore, we made a commitment to achieving at least 33% female representation on our board of directors by the end of 2022, a goal that we achieved.
on August 5th, 2022, when the company announced the addition of Cybil Lau.
to our board of directors.
Sybil, let me tell you a little bit more about Sybil. Sybil is on the board of directors of the Dalio Family Fund, a family office in Singapore and is a board director for a Chinese hedge fund.
We are honored to welcome Sibyl to our board. Her knowledge and experience in advising on capital allocation and new market development will be an invaluable asset to the well team and shareholders.
Of particular note is Sybil's passion for preventative health, which was a big reason why I thought she was a fantastic fit for Well's Future Vision.
We will be working closely with Sibyl to evaluate if there are growth opportunities for wealth in Asian markets such as Singapore or Indonesia.
Well is a well diversified, fast growing digital health and tech enabled healthcare company delivering on a strong ESC program and building societal value.
Well, it's a purpose-driven business that aims to transform the world for the better.
With that, I would like to now turn the call over to our CFO , Eva Fong, who will review the financials for the second quarter. I will then come back and provide further commentary on some of our business units and our future outlook. Eva. Hello.
Thank you, Hamid. I'm pleased to report that we have very strong results for the three months ended June 30, 2022.
Our second quarter results were as follow.
WELL achieves record quarterly revenue of $140.3 million in Q2 2022 compared to revenue of $61.8 million generated during Q2 2021, an increase of 127% driven by acquisitions during the past year and organic growth.
WELL achieves record adjusted gross profits of $75.5 million in Q2 2022 compared to adjusted gross profits of $30.2 million in Q2 2021, representing an increase of 150%.
Well-achieved adjusted gross margin percentage of 53.8% during Q2 2022 compared to adjusted gross margin percentage of 48.9% in Q2 2021. The increase in adjusted gross margin percentage is driven by the addition of higher margin CLH and My Health acquisitions as well as an
Ejazah Ibedah was $26.4 million for Q2 2022 compared to Ejazah Ibedah of $11.9 million
Jyotika Ibadad was positively impacted in the quarter by healthy Ibadad margins in the companies, omni-channel patient services, and virtual services businesses.
Adjust the EBITDA attributable to wealth shareholders was $19.2 million for Q2 2022 compared to Adjust the EBITDA attributable to wealth shareholders of $7.2 million in Q2 of last year.
Adjusted net income was $17.2 million or $0.08 per share in Q2 2022 compared to adjusted net loss of $1.2 million or $0.01 loss per share in Q2 of last year.
Free cash flow attributable to wealth shareholders was $15.4 million in Q2 2022 as defined by shareholder adjusted EBITDA minus cash taxes, minus cash interest costs, and minus capital expenditure.
In terms of our submantep reporting, omni-channel patient services revenue increased 88% to 92.8 million in Q2 2022 compared to 49.3 million in
Omni-channel patient services includes
Primary care revenues increased 28% to $16.1 million in Q2 2022 compared to
Second quarter is generally a stronger quarter that comes before the seasonally weaker third quarter during the summer months.
In Q2 of 2022, CLH revenue increased 38.5% to $50.9 million compared to $36.7 million in Q2 of last year, as we had just acquired ECLH in the second quarter of last year, resulting in only partial revenues recognized in Q2 of last year.
On a sequential quarter-over-quarter basis, CLH revenue increased 6% from $48.2 million in Q1 2022.
The first two quarters is CLH seasonally weakest quarters because many patients with commercial insurance plans tend to have endoscopic procedures in the second half of the year when their deductibles have generally been met.
CLH school business is performing as expected with strong caseload and
CLH completed a record number of anesthesia cases of 125,160 cases and sold over 2,266 vacant units in the second quarter this year.
In Q2 2022, My Health achieved revenue of $25.8 million compared to zero in Q2 last year as we had not yet acquired My Health in Q2 last year.
On a sequential quarter-over-quarter basis, my health revenue grew 70% compared to $24.2 million in Q1 2022.
Virtual services revenues increased 281% to $47.5 million in Q2 2022 compared to $12.5 million in Q2 2021.
On a sequential quarter-over-quarter basis, virtual services revenue increased by 25% when compared to $38.1 million in Q1 2022.
Virtual services revenue growth was driven by the exceptional growth in the US-based businesses of Circle Medical and WIPs.
We'll end Q2 2022 with a solid balance sheet.
As of June 30, 2022, WAL had cash and cash equivalent of $57.1 million.
As of June 30, 2022, the total drawn amount under both the CLH and My Health credit facilities is approximately $265 million in Canadian dollars. I'm pleased to report that the company is compliant with all covenants related to its credit facilities.
On June 29, 2022, Well-amended is My Health's 200 million senior secured credit facilities led by Royal Bank of Canada and supported by a syndicate of lenders to encompass the Canadian Clinics Business Unit and extended it to July 2026, providing the company with additional assets to credit to help roll Well's fleet of outpatient clinic locations.
The facilities associated with this credit agreement are currently priced at an interest rate which is equivalent to Silver slash CEDOR plus 1.25% to 3.25%.
depending on the depth to adjust the EBITDA ratio of the consolidated results for the Canadian Clinics business unit, which is a very low rate.
In terms of our shared capitalization, as of August 10, 2022, WOW had 245,425,157 fully diluted securities issued and outstanding.
WAL also has substantially increased its revenue and EBITDA on a per share basis, indicating that the company's capital allocation and organic growth program is delivering real value to shareholders.
For instance, wealth revenue per share went from 33 cents per share in Q2 2021 to 65 cents per share in Q2 this year on an undiluted basis.
Meanwhile, adjusted EBITDA attributable to wealth shareholders per share increased from 4 cents per share in Q2 2021 to 9 cents per share in Q2 2022. This reflects a 130% increase in this all-important metric.
In the first half of the year in 2022, our M&A program slowed down considerably as compared to last year due to the volatility in the capital market, which caused public and private valuations to drop.
Now that some of those valuations have settled, we are finding outstanding opportunities to ramp up our M&A program again, but mainly to focus on smaller clinical assets and other areas where we currently have scope.
For example, during Q2 we enter into an asset purchase agreement to acquire the assets of InLift Inc., a healthcare provider located in Calgary, Alberta, Canada, specializing in consumer preventative health, corporate and executive health, primary care, cosmetics, fitness and integrated health services.
I'm pleased to report that we closed this transaction on August 1, 2022.
Well-paid total consideration of as possibly $1.6 million in cash to InLift sole shareholder Corel Holdings Ltd. As part of this transaction, Corel Holdings is required to purchase wealth shares in the open markets within 18 business days after closing following certain criteria.
Lastly, I would like to quickly touch on our continued efforts to cost-optimize our operations.
We have been working with the various business units and functional group leaders with the objective to find opportunities to improve our IBITDA profitability and free cash flow generation in order to offset the effects of inflation and rate heights on the company's positive cash flow.
I'm pleased to note that we're making excellent progress with this initiative and believe we will be successful in enhancing our profitability over the next few months.
That is my financial update and I turn the call back over to Hamid.
Thank you Eva. Before I dig into the patient visits metrics, I wanted to provide a bit more color on our organic growth. In our view, Wells' consolidated organic growth is really a key metric that investors should pay attention to. Much is being talked about in respect to Wells being a consolidator. However, the results over the last few quarters and the strong acceleration we've experienced.
demonstrate that our organic growth is just as important a growth driver for the story.
As we've highlighted before, our virtual services segment has really been the main driver of our organic growth, which makes sense given that it's a more scalable growth structure in nature.
But it's important to note that we've had outstanding organic growth performances from other patient services businesses too. For example, our primary care line of business grew organically at a whopping 21% on a year-over-year basis.
This line of business includes our primary care medical clinics.
allied health and executive health businesses.
Even if you take out Allied Health and Exec Health, which are faster growing businesses for us, our primary care medical clinics grew roughly at 15% year over year. We're very pleased with this performance. It is exceptional from an industry benchmarking perspective.
In fact, we don't know anyone in the country that is growing faster or more profitably in the primary care market than well today.
What is exciting about this line of business is that we see significant runway to grow given the reduction of asset prices we're seeing out there.
We believe the reason for this growth is that we are driving real value to care providers.
They want to join our competent platform and focus on providing care. Stop trying to run a business.
Also, we are major consumers of our own digital software and transformation, and that is helping drive efficiencies.
I'd also like to highlight our virtual patient services businesses, which are essentially our telehealth businesses.
They grew by more than 100% as a basket year over year. This was led by Circle Medica, our growth leader, but we had healthy double digit year over year growth from WISP and TIAA Health as well.
Also within our practitioner tools group, we had fantastic growth from cybersecurity where we saw over 100% year over year growth. Ocean at roughly 65-75% growth and doctor care billing at 23% growth.
which has been extremely steady.
And we'll now review our overall patient visits in the quarter.
I'm pleased to report that WELL achieved a total of 1.167 million patient interactions in Q2 2022.
representing an annual run rate of 4.67 million patient infractions.
Total omni-channel patient visits in Q2 were 835,000, representing a year-over-year increase of 49% from approximately 559,000 in Q2 2021.
On a quarter-over-quarter basis, total omni-channel patient visits increased 7% compared to 782,000 total omni-channel patient visits in Q1 2022.
During the first quarter of 2022, inpatient, in-person patient visits at our clinics and businesses accounted for 37% of total visits, while telehealth patient visits, which included both telephone visits and virtual care patient visits, represented 63% of total visits.
In-person patient visits at our clinics and businesses accounted for 312,000 patient visits in Q2 2022, representing a year-over-year increase of 29% compared to 241,000 in-person patient visits in Q2 2021.
Telehealth patients visits, which includes both telephone and virtual care patient visits, accounted for 522,000 patient visits in Q2, representing a 65% increase.
from 317,000 in the previous year.
In addition to these patient visits, My Health conducted 179,880 in-person diagnostic visits while My Health completed roughly 152,000 asynchronous patient consultations.
I'd now like to speak a bit about our outlook for the rest of the year.
and for the quarters beyond that.
We are pleased to report that all of our business units are executing very well. Otherwise, it would not be possible to continually beat and raise the number of cases we have been doing for the past several quarters.
Well's outlook for 2022 remains strong and resilient. The company's performance is very positive across all its business units and for the entire company.
the cash flows generated by the company will continue to be reinvested in the business and allocated in a disciplined manner, which may come in the form of further acquisitions, share repurchases, or to accelerate organic growth.
As a result of World's strong organic growth profile, the company is increasing its guidance for 2022 annual revenue to exceed $550 million from the previous guidance of exceeding $525 million.
Furthermore, WELL expects to generate a just city but to have approximately 100 million for 2022.
compared to the previous guidance of approaching 100 million.
As you can see, we are increasing our revenue guidance at a higher rate than our adjusted EBITDA guidance. There are a few reasons for that.
One, our Circle Medical and WISP businesses have significantly contributed to our increase in revenue guidance.
These businesses are experiencing tremendous growth and are profitable, but are not yet large contributors to EBITDA.
In addition, we want to continue to reinvest in our business units to drive organic growth. In the current environment, we are witnessing many clinics, healthcare providers, and digital health companies that do not have the ability to continue to invest in growth, which provides us with a competitive advantage.
Furthermore, we're seeing
some inflationary cost pressures and wage increases. These cost increases are prevalent in all industries today. However, we continue to implement cost savings initiatives and integration across our acquisitions and business units and doing everything we can to take advantage of our shared services infrastructure to offset some of these cost increases.
As a general rule of thumb, the company aims to have the sum of its adjusted EBITDA margin percentage plus its organic growth percentage to exceed 30.
in 2022.
This is sometimes referred to as the Rule of 30.
For instance, in Q2, we exceeded the rule of 30 with an organic growth rate of approximately 21% and an adjusted EBITDA operating margin of 19%. The sum of these two percentages is 40.
It will be a key goal for us to continue to generally be in line with our Rule of 30 for the entire year and beyond.
WAL remains on track to achieve its goals for 2022.
and
in a number of pillars. One, build out and refine its practitioner enablement platform and deploy services both internally to well healthcare practitioners, as well as to offer services to practitioners outside of the company. Two, achieve organic growth.
across all of its operating units. Three, follow a disciplined capital allocation strategy designed to continue to activate organic growth, as well as acquisitions that are accreted to wealth business.
And four, WELL expects to be profitable for the full year of 2022 on an adjusted debt income basis.
Despite the current geopolitical, inflationary, and turbulent economic environment, the company doesn't see any material influences or challenges that would impair its ability to deliver on a strong outlook for the balance of the year. Many of the key variables inherent in the execution of wealth business are firmly in its own grasp and are not dependent on outside factors.
I'll now provide some commentary on the various business units, starting first with the new Canadian Clinics business unit.
Last month, WELL announced the formation of a new legal entity called WELL Health Canada Clinics Inc.
to house our Canadian owned and operated fleet of omni-channel outpatient clinics, leveraging wealth, highly integrated hybrid brick and mortar and virtual services capability.
This new business unit includes the company's primary care, Allied Health, and My Health specialized and diagnostic services, but does not include WELL's TIA Health.com service, which is part of WELL's Virtual Services division.
This consolidation of our Canadian clinics business provides well with the proper foundation to become a national health system leader providing the very best.
and highly integrated bricks and clicks care.
While the Canadian Clinic Business Unit is already the largest and most consequential network of non-governmental owned clinical healthcare assets across the country.
What is unique about our clinical business is that it not only lives in harmony with our public health reimbursement system, but actually supports it.
WEL has demonstrated that with strong management and tech-driven efficiencies, outpatient clinics that generally rely on provincial reimbursement can be sustainable and healthy businesses.
This is enormously important to consider at a time where there's a crisis in our healthcare system.
It is just becoming too difficult for physicians to run their own businesses and provide care at the same time.
Wahl's objective is to continue to grow its Canadian Clinics business unit, both organically and inorganically.
and continue to demonstrate market leadership.
as the country's first pan-Canadian clinical network, with a highly integrated network of tech-enabled outpatient clinics across the country.
In the second quarter, WELL added a primary care clinic in Vancouver to our network at a new Greenfield Hemware Treatment Center in Hamilton, Ontario.
The company's combined investment to add these two clinics to the network was less than $100,000.
The combined annual revenues of these two clinics are expected to exceed $2 million in the first year under Well and Deprofitable.
These two additions exemplify how well it can continue to grow its network with minimal capital costs.
We're also pleased to welcome InLIVE to our Canadian Clinics business unit. InLIVE is expected to generate more than $7 million per year in revenues, with 85% of such revenues reflecting recurring membership revenue.
As Eva previously mentioned, we acquired and lived for approximately $1.6 million, demonstrating the efficiency of our capital allocation M&A program in the current environment where we see a number of clinical assets available at reduced valuation levels.
As noted earlier, WELL secured an amendment to its credit agreement with RBC and the syndicate of lenders to extend the term of our credit agreement out to 2026.
and grow the scope of our credit agreement to support our entire Canadian clinics business.
which gives
are my health and primary care businesses' lots of headroom to grow.
We have a compelling clinical pipeline and are focused on increasing our total clinics under majority ownership by the end of the year.
Now a quick update on CRH.
As you're likely aware, CRH Medical is well as largest business unit and wholly owned subsidiary. It continues to perform very well. However, due to the growth we've seen elsewhere in the company, the percentage of revenue attributable to CRH is now down to approximately 37%.
for the quarter.
CRH, whose business is predominantly in the US, also had a record quarter for cases and revenue. There are now more than 1,100 CRH credentialed healthcare practitioners providing services as part of CRH fully managed services in 93 medical facilities in the United States.
We're very pleased with CRH's results in Q2 and thus far in Q3. We're expecting Q3 to be seasonally better than Q2 as volumes for endoscopic procedures generally increase in the second half of the year.
CRH has also been sitting from post-COVID pent-up demand, and our excellent teams of execution has been able to support that elevated demand.
Zurich also continues to execute on unlocking the value of its opaque and banding device.
intellectual property by creating a clinical offering that leverages its technology. The first hemorrhoid banding location is operating very well in Chicago, and we have now signed two additional leases to open more locations. We anticipate having approximately eight such locations throughout the United States by the end of the year.
And now a quick update on our Virtual Services segment. Our Virtual Services segment includes –
the newly formed provider Solutions business unit, the cybersecurity business unit, and the company's two US-based virtual patient services businesses, Circle, Medical, and WISP.
The company's new provider solutions business unit announced in the second quarter now combines the previous Well EMR group, building and revenue cycle management group, and several digital application businesses into one single practitioner enablement platform.
This consolidation is designed to simplify the relationship healthcare providers have with Well and better promote the breadth and depth of Well's practitioner platform.
Well's new provider solutions business unit encompasses companies and brands including Aware MD, Intrahealth, Oscar Pro, Doctor Care, and Ocean. It is comprised of tools and technologies including electronic medical records, practice management, productivity applications, billing and back office and revenue cycle management, and of course Well's Appstop health ecosystem.
with close to one out of –
For Canadian doctors currently being served by Wells practitioner-focused businesses, the new Provider Solutions business unit will further support the onboarding of Wells technology solutions, positively impacting improved health outcomes by better equipping and empowering practitioners and their patients.
This integrated offering will not only support in simplifying the relationship we have with a growing network of over 21,000 doctors.
but it will also allow wealth to continue to grow with market share through a unique and unified platform offering. A key area of focus here will be to increasingly bundle our solutions and make it easier for practitioners to consume our offerings.
Provider Solutions Business Unit is a unique entity unlike any other technology offering in Canada.
Key metrics for the group include over 3,000 EMR clinics on the network.
3,300 EMR clinics on the network, dozens of apps offered by dozens of app publishers driving value for our practitioners by creating enormous data and tech extensibility, over 1,000 clinics and 3,200 physicians supported by Wells Building and Back Office Solutions.
and over 129,000 referrals provided by the Ocean platform, in Q2 alone.
Well, US-based patient services businesses, which includes Circle Medical and WISC, continue to demonstrate robust growth in Q2.
Based on June results, the combined business has exceeded $115 million Canadian in annualized revenue run rate and continue to be on track to achieve our previously stated goal of $130 billion.
Canadian annualized revenue run rate by the end of the year.
Circle Medical's year-over-year growth in Q2 was driven by patient visits increasing by almost 400%. The number of practitioners working with Circle Medical in Q2 increased by 169% over the same period.
Similarly, WISP growth in Q2 was driven by 60% year-over-year increase in asynchronous patient health operations.
In addition to posting solid top-line growth numbers, Circle Medical and WISC also both individually achieved positive adjusted EBITDA in Q2. As a result of the positive adjusted EBITDA contribution from Circle and WISC, the company's virtual services segment reported record positive adjusted EBITDA profitability.
Well, as wholly owned cybersecurity businesses, Sykera and Source44 achieved record revenue in Q2, an increase of 240% compared to the same period a year ago.
This growth is being driven by an increasingly growing customer base.
and an expansion of services offered to its customers. Both factors are driven by the increased need and complexity of cybersecurity in data-sensitive industries like healthcare.
Overall, we're very pleased with the results in Q2 and look forward to delivering strong results in the second half of the year. In closing, I want to thank all of you 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 have provided us with the funding needed to pursue our goals.
I would like to also thank WELL senior management team and all of our employees and contractors for the tremendous effort. In particular, I would also like to thank our team of healthcare practitioners.
and other frontline workers who continue to keep all our clinics open and provide unbelievable patient care. They remind us every day why we are here and we are here to support them.
Thank you. And with that, we will now be pleased to take questions. Operator.
Please assist.
Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by the one on your touchstone phone.
You will hear a three-tone prompt acknowledging your request and your questions will be pulled in the order they are received. Did you wish to decline from the polling process? Please press the star followed by the two.
One moment for your first question comes from Kristin Shirove with 8 Capital. Please go ahead.
Hi, good afternoon, Hamid, and congrats on the strong quarter. My first question here, I wanted to ask about the US telehealth segment, which has seen good momentum. I guess two questions. The first is, what would you say is driving that strong growth in visits at Circle and WISP over year? And then the second question is just based on what you're seeing this summer, any change in the level or type of investment in those platforms?
Thank you, Christian. I appreciate the question. I think the main reason why Circle and WISP are growing so well is because of the focus they have on the specialty niches that they serve. They selected those niches very carefully and they execute very well in terms of customer acquisition.
And then the second question, there was a bit of a delay. Could you...
Could you repeat that? Of course, the second question was more on the investment side of it.
If there's any change...
in the type of marketing or type of investments into Circle and Wesp as they become more mature businesses.
type of marketing or type of investments into Circle and Wisp as they become more mature in cases.
Yeah, I think that the only thing that I will mention is that, you know, Circle has been obviously a big success. They did start with the two clinics in the Bay Area, and as the patient roster has grown and our footprint has grown obviously across many states, we do see an opportunity now to provide more of that hybrid care in various different states. So we do believe that.
We will make some further investments in brick and mortar clinics across the country. We think that combination of bricks and clicks care is going to be very helpful. We will still be enormously weighted towards virtual, but there is a small amount of investment. Now, we don't plan to open clinics like One Medical that are extensive in cost. These would be more efficient small factor clinics. In fact, we're looking at also sharing.
space between CIRCLE and CRH given that they are both expanding their clinical footprints.
So we believe we'll be able to do that efficiently and not impact our results want to talk so far of the world governance here.
Okay perfect and I'll switch gears and ask one more question on the platform in Canada. You spoke earlier about you know building out the platform but it already seems like there's a long list of tools that you went through. So my question is you know how everything is integrated currently and are there any tools that you'd want to add to the platform or do you think, I mean you spoke about building it out but is it missing anything really or are there features that you think you could add or doctors are looking for? There's always...
you know, the back office and the way that physicians are supported in the consultation room. Integrating and implementing those types of applications, I think, will drive enormous value to our practitioners, and I think that's the kind of thing that I think we're referring to. Above and beyond that, you know, there's a significant roadmap in just improving the patient access tools, self-service automation.
cost and efficiency.
So hopeful, Khaled. Congrats again and I'll pass the line. Your next call comes from Rob Jha from Echelon. Please go ahead.
Thank you very much and let me echo the congratulations on yet another very good quarter.
Thank you very much and let me echo the congratulations on yet another very good quarter.
My question would also be on Circle. Can you talk to some of the growth dynamics there or growth considerations in terms of...
where you see customer acquisition costs trending, your ability to find positions and costs associated.
And perhaps on a broader basis, would you look at forming distribution partnerships with perhaps BRICs to facilitate a broader reach?
Yeah, thanks Bob. I think what's really neat about Circle is I think they've exhibited orders of magnitude better CAC than most other companies that we've seen. As you know, we have a significant inbound funnel of companies that we look at all the time. And I think management's been extremely efficient and very strong in terms of what they've done there.
But what's I think even more unique than just maintaining a good CAC is what they've done to LCV. And here lies the power of the platform because what we've seen is they've been able to convert that acquisition. So let's say you come into the platform because you are interested in depression or hormone therapy or one of the various niches that they served who want to be practitioners and they're interested, they maybe on aynamic mode they want to be competent others or so they might want to have in their college become you know a manager or there needs to be to like in a progressive, multi and cultural environment. You have the ability maybe to exclusive with CAC it is Louis as well the technology and strategy is a great tool but that's CAC? trucks and that and these are different
The objective is to give you competent care there, but then attract you to the platform as the primary care customer and provide you with longitudinal care. And that's the thing about Circle. It was never an episodical-focused treatment company, care company. It's always been about being your team-based family practice online and obviously in the barrier with the clinics as well.
So this is where I think the platform really excels is the fact that they've been able to convert so many of those, what looks like an episodical visit to being an ongoing longitudinal care customer. And that 50% number is one that we've seen lately and we'd like to be able to maintain that.
As far as distribution partnerships, I think there's a lot of opportunities there. A lot of people have approached us. I think the key though with the team is they're finding that right now they're just making exceptional gains and improvements every day and they're very focused on just executing their plan.
I do believe that they're quite passionate about getting some of these physical clinics in place as well and elevating their bricks and clicks cooperation. But I think, you know.
To your point, those distribution partnerships could become compelling over time. We've seen some of that in the news with other companies. But so far right now, if it ain't broke, don't fix it. Circle is just performing beautifully.
Thank you. And if I may, one other question, in terms of bringing on board primary caregivers organically, shall we say, could you talk to how significant that might be for you when you look into your pipeline, buying the ones and twos at a time?
Sure, sure. And you did bring that up with CIRCONI, and I forgot to mention something about that. So I'd say that's another key area where they've excelled. It's just how they've been able to organically onboard all of those physicians. I mean, the growth in physicians is notable given how hard it is to acquire physicians. And that has taken a very tech-centric approach. Lots of QA, and the team there is just really executed masterfully.
That's your question on primary care additions of physicians. You're absolutely right. This is really key. As we consolidate these clinics...
We're not just adding revenue and EBITDA and giving ourselves an opportunity to tech enable, modernize, and advance those assets. We are also then able to start to onboard more and more of those practitioners to drive our telemedicine businesses. And I think that's a very important kind of flywheel in the model. So I think we're right to focus on that and it continues to be one of the key aspects of our model.
have any of these issues had an impact on wells patient facing businesses? I guess maybe just to rephrase it a little bit, are there reasons why a segment like my health for instance could potentially have a stronger quarter than what was announced in a more normalized environment? SPEAKER 1 Adam, absolutely. Great question. Thank you.
Yes, as I mentioned in the script,
you know, we are seeing the effects of staffing shortages and just the entire macroeconomic environment. And so I think our results would have been better had we not been facing some of those headwinds. And this goes to show you how... Keep your eyes minUTE, check out more at dramatically Heads Up far cobl8ed.com
effective and resilient the platform has been to be able to turn in these types of performances. And of particular note is My Health, who is, I think, being impacted by such shortages more than other areas. And that is due to the more technical nature of their offering, given that they are a provider of specialized care and diagnostics. I mean, primary care is a bit different. And you need MOAs.
It's not easy to find them, but it's easier than finding someone who is uniquely qualified to operate a radiology, you know, a specialized radiology equipment. And, you know, you can't just, you know, find someone and train them up quickly. They have to have the proper certifications to be supported and be able to achieve reimbursement from the Ministry of Health. So, you know, we do think some of those shortages...
And that's why, again, I feel that these results and our ongoing confidence in our revenue and EBITDA underscore just how resilient this platform is because we are definitely seeing it out there.
Great, that's some big color. Maybe just another question on My Health. You know, we've talked, or you've talked a decent amount about, you know, the primary care runway here in terms of picking up clinics. Just hoping to get an update on, you know, maybe the acquisition pipeline at My Health and, you know, sort of plans for expansion and sort of the clinical footprint of that business.
Yeah, we're definitely active and we're talking to subjects and candidates all the time. We're not finding the same significant deterioration in asset prices that we saw in primary care.
So my guess is we're going to be a little less active in terms of deploying capital, but I think we're finding good opportunities and my guess is we will deploy capital. We want to deploy capital. This is an area that we think is a great area for growth. But one of the fantastic opportunities that we have as a capital allocation company is to have
is to have a bird's eye view of all the different areas where we can allocate capital. And right now the asset prices in primary care are much lower.
Having said that, the allocation of capital primary care doesn't preclude us from investing in specialized care, given that the asset prices are just so low, as evidenced by the two clinics that we've invested in for less than $100,000. So hopefully that gives you a bit of color, but yeah, we continue to be very interested in growing that business. I think asset prices have come down as well. We're just taking a bit longer to settle.
That's fantastic. Thanks again and congrats on the quarter.
That's fantastic. Thanks again, and congrats on the quarter. Thank you.
Your next question comes from Davin Kwan from TV Securities. Please go ahead.
Your next question comes from Devon Kwan from TV Securities. Please go ahead.
Hey, Howard. See you there. Bye, David.
Hi. Obviously, some great performances again this quarter. Just looking at the different business segments, I guess from a revenue perspective, it looks like most of the business did roughly in line with my forecast, but really it was the virtual services business that kind of really stuck out this quarter. I know you've obviously circled WISP as being kind of generating some pretty phenomenal growth there, and more recently you've been flagging Cognizant MD or Ocean. But I was wondering if there was really anything else kind of going on in the quarter. I was just wondering if maybe there's some lumpier revenues that came in.
substantial. You know, I think I would still, you know, turn to those virtual patient services businesses for the, you know, mind share of the growth.
So that's helpful. I'm just trying to get a sense of looking out beyond this quarter, the vast majority of the revenue is being kind of recurring or reoccurring. To what extent there might have been like I said some of these lumpier revenues just going into the seasonally softer Q3, right? Yeah. So we looked at looking at the revenue outlet for Q3 in particular.
So, yeah, and I guess the other question I've got is just on the primary clinic side, and maybe this is a question for Eva, the evident margins there jumped to roughly 20 percent I think this quarter, and that's roughly double where it has been. So, I was wondering what in particular may have been driving that.
Eva, would you like to grab that one?
Sure, yeah, I think we're seeing strong growth in our executive health clinic and also our Q-BAC Montreux clinics. So that contributes to a very strong EBITDA growth in this quarter. And of course, in addition, Q2, our primary clinic is also continuing to be staying strong and with growth in our primary clinic visit.
Sure, yeah, I think we're seeing strong growth in our executive health clinic and also our Q-BAC Montreux clinics. So that contributes to a very strong EBITDA growth in this quarter. And of course in addition, Q2, our primary clinic is also continuing to be staying strong and with growth in our primary clinic visit. Anything to add, Hamid?
No, I think you nailed it. Probably some of the clinics that improved the most on a year-over-year basis were the Quebec clinics, but we continued to have good, strong growth in the balance of the network as well. And we continue to see really good performance from groups like our allied health business. I mean, that line of business again as a whole has been quite successful for us.
That's helpful, thanks. And your next question comes from Nick Acostino from Laurentian Bank Securities. Please go ahead.
Yes, good day everybody. Just a quick question, Hamed, just regards to the competitive environment.
Obviously, Amazon acquiring one medical, this is in addition to their pharmaceutical bolt-on many, many quarters ago. So just your thoughts on where you think Amazon headed that, where do you think they could encroach over time on your US business, whether you think that Amazon could maybe take their model up into Canada and maybe encroach on your business here.
And then similarly, we saw Telus Health acquiring LifeWorks. Just your thoughts on that as to whether if Telus Health ever gets around to a full-on integration, if you think that Telus Health could over time again encroach on what you try to do here in Canada. So just your overall thoughts on those activities and competitive landscapes.
Thanks for the questions, Nick. Yeah, I agree. There's lots of interesting transactions lately. You know, first comment on One Medical and Amazon. I think that demonstrated, that transaction really demonstrated the value that comes with tightly integrated experiences between on and offline and notwithstanding the fact that One Medical wasn't anywhere close to profitability. I think they...
They've had some pretty good NPS scores and people like the experience. And I think that's something that Amazon liked. And it was a big reason why they invested. And this is, I think, to us, it makes a ton of sense. And this is why you're going to see more and more of that on and offline coordination, building more of those experiences together, both in the US and Canada. That's a key goal for us.
The thing to also remember about One Medical as you think about that as a competitive threat to us is that that carries a monthly premium to, as a consumer or as a company, if you want to engage with One Medical. Whereas Circle Medical, there's no monthly premium. There's no monthly cost. There's a episodical cost that is mostly paid by your healthcare insurance provider. So...
The app does a great job of authenticating you as a member of one of the various different companies. They pretty much have agreements with all the key health insurance companies. And so the consumer, the patient only has to pay a small copay. And in some cases, for example, during COVID, there was no copay. And so the friction to use Circle is much lower than when medical. And so,
As we start getting into a recessionary time, one has to think which is the better model. I'm very comfortable with Circle Medical's platform and how incredibly efficient it is for the user to be able to access those services. I think it's important to note that most One Medical customers are probably also a member of a health insurance policy somewhere. So, you know...
If I had my druthers, I would probably assume that there's more likely for consumers to drop one medical and use Circle than the other way around, just because of cost friction associated with that. So I think that's a really important distinction that not a lot of people appreciate. And the other thing is, you know, Circle is profitable, right, and growing extremely quickly, much more quickly. Of course, we're working off a smaller base, but I think those are notable. So I think that's a really important distinction that not a lot of people appreciate. And the other thing is, you know, Circle is profitable, right, and growing extremely
We don't see that model coming into Canada anytime soon because we wouldn't even really be able to operate that business model in Canada due to the regulatory framework.
So they would dramatically have to change how they make money if they wanted to bring that network into Canada. On Telus and LifeWorks, listen, I think it was a really smart move just given from a capital allocation perspective, given where Telus stock is at, given where LifeWorks stock was at. I think it's a great asset. My hat is off to Telus on that. And Telus is just
I think executing very well in that employer-based market, feels to me like with this acquisition, they've got a commanding approach and business in that area. And we're, as you're probably aware, not competing in that area. That's more the dialogues and Cloud MDs that are competing in that area. But yeah, for me, I think that was... There are a lot of key logos and accounts there.
both in the United States and Canada, and I think it really strengthens that platform. Hopefully that's helpful to you.
I appreciate that color. And then just one quick one. I'm not sure if you highlighted it in those prepared remarks.
Just the updates on where you are on the apps take up, how many apps you have these days, how many publishers. If you have any stats on usages, that'd be appreciated as well.
Yeah, absolutely. Actually, we are seeing some nice growth with Apps.Health. I believe that in Q2 we saw 95% year-over-year growth. And listen, it's a smaller number, but it's just evidence that we have pockets of growth occurring in the platform. I think we have over 40 apps right now driven by 30 plus application partners.
But you know, the objectives, initially when we started this business, it was all about the number of apps. And while we continue to add more apps, I think we're realizing quickly that the 80-20 rule does exist. And so we're getting deeper into this business and building stronger relationships and really trying to figure out how to help our app partners win. And that's working as evidenced by the growth in app revenue. And I'm very confident in…
the new managers of our provider solutions group, you know, Paulo and Adam, who were the leaders of our doctor care acquisition. They've, as you're likely aware through our press release, they're now running this area and I think they've got a fantastic plan. And yeah, I'm very excited about growing this area of the business.
Thanks for that. Keep up the good work.
Keep up the good work. Thank you.
Looks like there's no other questions, or our operator is experiencing a glitch.
Operator, are you around?
Okay. Well, maybe we'll just take that as a cue to end the conference call, given that it's seven past the hour. Thank you very much to everybody for joining. Thanks to all the analysts for your questions and your thoughtful perspectives. We look forward to visiting with you next quarter, and we wish you the best in health. All the best. Thank you.