Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- WELL Health Technologies Corp (WHTCF, Financial) achieved record quarterly performances for revenue, adjusted EBITDA, free cash flow, patient visits, and organic growth.
- The company surpassed $1 billion in annualized revenue run rate, one quarter ahead of its previously stated plan.
- WELL Health Technologies Corp (WHTCF) reported a 35% revenue growth in its Canadian patient services business and 23% overall organic growth.
- The company delivered $32.7 million in adjusted EBITDA, reflecting a 16% year-over-year growth and 6% sequential quarter-over-quarter growth.
- WELL Health Technologies Corp (WHTCF) increased its annual revenue guidance to between $985 million to $995 million, reflecting recent clinic acquisitions and healthy organic growth.
Negative Points
- The company reported an IFRS net loss of $75.8 million in Q3 2024, primarily due to unrealized losses on its investment in HEALWELL AI.
- WELL Health Technologies Corp (WHTCF) maintained its annual adjusted EBITDA guidance due to the negative impact of hurricanes on its PR business.
- The company's leverage ratio, including convertible notes, ended up at 3.26% for the quarter.
- There was a buildup in accounts receivable balance due to delays in cash collections on anesthesia claims, resulting from a cybersecurity incident at its billing partner.
- The company expects a temporary negative impact on its P&L in 2025 due to the transformation and digitization work on the Jack Nathan Health clinics.
Q & A Highlights
Q: Can you comment on the M&A pipeline, specifically the distribution of the 17 LOIs mentioned? Are they mostly in the absorption model, primary care clinic acquisition, or diagnostics?
A: The pipeline is quite balanced, with most LOIs in the Canadian business, particularly Canadian clinics. There are also a couple in the Canadian technology side with WPS and a few in the CRH area. The majority are in Canadian clinics, with a mix of acquisitions and absorptions.
Q: Circle Medical showed accelerating growth at 61% year-over-year. What is driving this strength, and what can you say about the expected cooling off?
A: Circle Medical's growth is driven by its tech advantage and business model, focusing on acquiring patients for specific needs and converting them to long-term patients. The expected cooling off in Q4 is due to retooling some software and workflows to support compliance requirements.
Q: Regarding the M&A pipeline for 2025, you mentioned 30 additional clinics. Is this more acquisitions versus absorptions?
A: Moving forward, the approach is more balanced between acquisitions and absorptions. While absorptions are great, they require more time. The focus is on acquiring clinics with sustained profitability and improving them further, with an emphasis on unlevered ROIC.
Q: On the diagnostics and specialty health side, what opportunities are you seeing, and where are the valuation multiples now?
A: After acquiring MyHealth, the pace of M&A slowed due to high valuations. However, as interest rates decline, there are opportunities to acquire high-quality radiology and cardiology assets at more favorable multiples. Expect increased activity in this area over the next few quarters.
Q: Can you provide more details on the strategic review process for Circle and Wisp?
A: For Wisp, progress is being made with multiple parties engaged, and an update is expected by year-end or early next year. Circle Medical's process is still early, with an update expected in Q1 2025. Both businesses are high-growth and have shown strong financial performance.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
