WELL Health Reports Record Revenue and Adjusted EBITDA Results for Q3-2022 and Raises Guidance for Fourth Straight Quarter

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Nov 10, 2022, 07:00 ET

WELL achieved record quarterly revenues of $145.8 million in Q3-2022 representing a 47% year-over-year (YoY) increase compared to Q3-2021, driven by robust organic growth.
WELL achieved record Adjusted EBITDA⁽²⁾ of $27.5 million in Q3-2022, an increase of 23% YoY compared to Adjusted EBITDA⁽²⁾ of $22.3 million for Q3-2021.
WELL's Virtual Services unit grew by 75% organically YoY and now is the largest of the three main lines of business at 36% of total revenue.
WELL is increasing its guidance for 2022 annual revenue to exceed $565 million from the previous guidance for annual revenue to exceed $550 million. WELL also expects to generate over $100 million of Adjusted EBITDA⁽²⁾ in 2022. Furthermore, the Company expects its exit run-rate revenue to approach $700 million by the end of 2023.

VANCOUVER, BC, Nov. 10, 2022 /PRNewswire/ - WELL Health Technologies Corp. (TSX: WELL) (OTCQX: WHTCF) (the "Company" or "WELL"), a digital healthcare company focused on positively impacting health outcomes by leveraging technology to empower healthcare practitioners and their patients globally, is pleased to announce its results for the fiscal third quarter ended September 30, 2022.

Hamed Shahbazi, Chairman and CEO of WELL commented, "We had a great quarter achieving 'best ever' results on both revenue and Adjusted EBITDA⁽²⁾ line without even being in our seasonally strongest quarter. These exemplary results were once again driven by strong operating performances across all our lines of business including on and offline channels reflecting robust operating margins and organic growth of over 18% YoY. Organic growth in our Virtual Services was especially strong at 75%, making Virtual Services now our single largest line of business by revenue, larger now than our CRH or our Canadian Clinics businesses which both continue to grow and perform nicely. WELL also achieved record patient engagement in the quarter with over 1.25 million combined omni-channel, diagnostic and asynchronous patient interactions – representing an annual run-rate of approximately 5.0 million patient interactions system wide. WELL's US-based virtual patient services businesses, Circle Medical and Wisp, achieved profitable results and continued growth in revenues with a combined annual revenue run-rate exceeding US$100 million in Q3, which was one quarter earlier than our prior forecast. We have worked hard to align ourselves closely to the success of care providers and doing everything we can to further their success. That is what makes the success of these record results so special. We don't prosper or succeed unless our care provider partners do. Our outlook for the fourth quarter remains very positive, hence we are able to confidently increase our annual guidance for annual revenue to exceed $565 million in 2022."

Third Quarter 2022 Financial Highlights:

WELL achieved record quarterly revenue of $145.8 million in Q3-2022, compared to revenue of $99.3 million generated during Q3-2021, an increase of 47% driven by acquisitions during the past year and organic growth.
Omni-channel Patient Services revenue increased 15% to $93.6 million in Q3-2022, compared to $81.3 million in Q3-2021.
Virtual Services revenues increased 191% to $52.2 million in Q3-2022, compared to Virtual Services revenue of $18.0 million in Q3-2021.
WELL achieved record Adjusted Gross Profit⁽¹⁾of $78.2 million in Q3-2022, compared to Adjusted Gross Profit⁽¹⁾ of $50.0 million in Q3-2021, representing an increase of 56%.
WELL achieved Adjusted Gross Margin⁽¹⁾ percentage of 53.6% during Q3-2022 compared to Adjusted Gross Margin⁽¹⁾ percentage of 50.3% in Q3-2021.
Adjusted EBITDA⁽²⁾ was a record $27.5 million for Q3-2022, compared to Adjusted EBITDA⁽²⁾ of $22.3 million in Q3-2021. Adjusted EBITDA⁽²⁾ was positively impacted in the quarter by an increase in revenue for the higher margin virtual services businesses, in addition to healthy EBITDA margins in the Company's Omni-channel Patient Services.
Adjusted Net Income⁽³⁾ was $14.8 million, or $0.07 per share in Q3-2022, compared to Adjusted Net Income⁽³⁾ of $9.8 million, or $0.05 per share in Q3-2021.

Eva Fong, CFO of WELL commented, "I am also pleased to report that WELL is a profitable business that generated $11.4 million free cash flow during the quarter attributable to shareholders⁽⁴⁾ in Q3 which can be used to fund the Company's future organic and in-organic growth. As we turn our attention to the next fiscal year, we can't help but be filled with optimism as our talented team is executing and delivering on our mission of supporting providers with best-in-class technology and operating solutions. For this reason, the Company is pleased to announce it expects to approach $700 million in exit run-rate revenue by the end of 2023."

Third Quarter 2022 Patient Visit Metrics:

Total omni channel patient visits in Q3-2022 was 892,966, a 53% increase as compared to Q3-2021. In addition, MyHealth conducted 169,294 diagnostic visits in Q3-2022, while Wisp completed 186,952 asynchronous patient consultations. Combining WELL's omni-channel patient visits, MyHealth's diagnostic visits and Wisp's asynchronous patient consultations, WELL achieved a total of 1,249,212 patient interactions in Q3-2022, representing an annual run-rate of 5.0 million patient interactions.

Third Quarter 2022 Business Highlights:

On August 1, 2022, the Company completed the acquisition of INLIV Inc. ("INLIV") INLIV is a healthcare provider located in Calgary, Alberta, specializing in consumer preventative health, corporate and executive health, primary care, cosmetics, fitness, and integrated health services. For the 12 months ended April 30, 2022, INLIV had revenues of approximately $7.3 million with double digit Adjusted EBITDA⁽¹⁾ margins. INLIV has over 1,000 customers and 85%+ of its revenues are attributable to recurring membership fees.
On August 5, 2022, the Company announced the addition of Sybil Lau to WELL's Board of Directors. Sybil has 25 years of experience in both public and private investments. She is also on the Board of Directors of the Dalio Family Office in Singapore and a Chinese hedge fund.
On September 1, 2022, CRH completed the sale of its 55% stake in West Florida Anesthesia Associates ("WFAA") to United Digestive for US$12.4 million and recorded a gain in the amount of $5.2 million net of transaction costs. The transaction includes a 5-year multi-million dollar Management Services Agreement, meaning CRH will continue to provide services to these ASCs for the next 5 years.
On September 26, 2022, CRH completed the acquisition of Grand Canyon Anesthesia ("GCA"), a well-established group headquartered in Phoenix, Arizona and consisting of over 100 anesthesia providers supporting the delivery of anesthesia for more than 50,000 surgical cases annually. This acquisition marks CRH's entry into its 18th state of service, further supporting its disciplined growth and diligent focus on the provision of services while staying in the ambulatory surgical setting. GCA was purchased for a net of US$6.5 million after adjusting for working capital and is expected to generate more than US$16.0 million in annual revenue and US$2.0 million in shareholder EBITDA.

Events Subsequent to September 30, 2022:

On November 1, 2022, the Company completed the acquisition of CloudMD's Cloud Practice entity which includes Juno EMR or "Electronic Medical Record" and ClinicAid billing Software applications as well as three primary care clinics located in the province of British Columbia for total consideration of approximately $5.7 million subject to post-closing adjustments and holdbacks.

Outlook:

WELL's outlook for 2022 remains strong and resilient. As a result of Company's strong organic growth profile, the Company is increasing its guidance for 2022 annual revenue to exceed $565 million, compared to the previous guidance for annual revenue exceeding $550 million. WELL expects to achieve Adjusted EBITDA⁽²⁾ exceeding $100 million in 2022, representing Adjusted EBITDA margin of approximately 18%. Furthermore, the Company is pleased to announce it expects to approach $700 million in exit run-rate revenue by the end of 2023.

WELL's performance continues to be very positive across all its business units and for the entire Company as a whole. The cashflows generated by the Company will continue to be re-invested in the business and allocated in a disciplined manner, which may come in the form of further acquisitions, debt repayments, share repurchases, and/or to accelerate organic growth.

Despite the current geo-political, inflationary, and turbulent economic environment, the Company does not see any material influences or challenges that would impair its ability to deliver strong results for the remainder of 2022 and in 2023. Many of the key variables inherent in the execution of WELL's business are firmly in its own grasp and not dependent on outside factors.

Conference Call:

WELL will hold a conference call to discuss its 2022 Third Quarter financial results on Thursday, November 10, 2022, at 1:00 pm ET (10:00 am PT). Please use the following dial-in numbers: +1-416-764-8650 (Toronto local and International), 778-383-7413 (Vancouver local), 1-888-664-6383 (Toll-Free), with Conference ID: 0127 7025.

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

Selected Unaudited Financial Highlights:

Please see SEDAR for complete copies of the Company's consolidated financial statements and MD&A for the three and nine months ended September 30, 2022.

		Restated	Restated		Restated
	Three months ended September 30, 2022	Three months ended June 30, 2022	Three months ended September 30, 2021	Nine months ended September 30, 2022	Nine months ended September 30, 2021
	$ '000	$ '000	$ '000	$ '000	$ '000
Revenue	145,789	140,326	99,291	412,623	186,644
Cost of sales (excluding depreciation and amortization)	(67,597)	(64,852)	(49,322)	(189,569)	(96,432)
Adjusted gross profit⁽¹⁾	78,192	75,474	49,969	223,054	90,212
Adjusted gross margin⁽¹⁾	53.6 %	53.8 %	50.3 %	54.1 %	48.3 %
Adjusted EBITDA⁽²⁾	27,458	26,434	22,275	77,385	34,684
Net income (loss)	611	(1,244)	(7,801)	(3,409)	(26,841)
Adjusted net income ⁽³⁾	14,753	17,528	9,849	41,211	6,254
Net loss per share, basic and diluted (in $)	(0.02)	(0.03)	(0.06)	(0.09)	(0.19)
Adjusted Net (loss)/income per share, basic and diluted (in $)⁽³⁾	0.07	0.08	0.05	0.19	0.03

Weighted average number of common shares outstanding, basic and diluted	226,783,493	216,181,083	203,959,885	217,721,268	185,103,512
Weighted average number of common shares outstanding, diluted	187,778,646	187,778,646	126,181,778	175,519,058	126,181,778

Reconciliation of net loss to Adjusted EBITDA⁽²⁾
Net income (loss) for the period	611	(1,244)	(7,801)	(3,409)	(26,841)
Depreciation and amortization	13,918	13,810	13,632	41,103	25,023
Income tax expense (recovery)	2,979	(2,398)	2,924	2,534	4,452
Interest income	(200)	(109)	(71)	(411)	(485)
Interest expense	7,122	5,254	3,141	17,530	4,950
Rent expense on finance leases	(2,339)	(2,227)	(1,909)	(6,718)	(3,575)
Stock-based compensation	5,883	8,527	9,447	19,549	16,749
Foreign exchange (gain) loss	1,088	(439)	(387)	608	4,466
Time-based earn-out expense	2,669	4,515	1,393	9,705	3,280
Change in fair value of investments	-	-	-	(602)	-
Gain on disposal of subsidiaries	(5,240)	-	-	(5,240)	-
Share of net loss of associates	195	90	97	433	153
Transaction, restructuring, & integration costs expensed	772	655	1,809	2,303	6,512
Adjusted EBITDA⁽²⁾	27,458	26,434	22,275	77,385	34,684

Attributable to WELL shareholders	20,240	19,187	16,449	55,523	24,157
Attributable to Non-controlling interests	7,218	7,247	5,826	21,862	10,527

Adjusted EBITDA⁽²⁾
Canada and others	5,254	3,957	3,483	10,695	1,843
US operations	22,204	22,477	18,792	66,690	32,841
Adjusted EBITDA⁽²⁾ attributable to WELL shareholders
Canada and others	5,008	3,796	3,277	10,099	1,208
US operations	15,232	15,391	13,172	45,424	22,949
Adjusted EBITDA⁽²⁾ attributable to Non-controlling interests
Canada and others	246	161	206	596	635
US operations	6,972	7,086	5,620	21,266	9,892

Reconciliation of net loss to Adjusted Net Income ⁽³⁾
Net income (loss) for the period	611	(1,244)	(7,801)	(3,409)	(26,841)
Amortization of intangible assets	10,620	10,841	11,116	31,818	20,773
Time-based earn-out expense	2,669	4,515	1,393	9,705	3,280
Stock-based compensation	5,883	8,527	9,447	19,549	16,749
Change in fair value of investments	-	-	-	(602)	-
Non-controlling interest included in net income	(5,030)	(5,111)	(4,306)	(15,850)	(7,707)

Adjusted Net Income⁽³⁾	14,753	17,528	9,849	41,211	6,254

Adjusted Net Income per share⁽³⁾	0.07	0.08	0.05	0.19	0.03

Notes:

(1)	Non-GAAP financial measure and ratio. Adjusted gross profit and adjusted gross margin do not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other issuers. The Company defines adjusted gross profit as revenue less cost of sales (excluding depreciation and amortization) and adjusted gross margin as adjusted gross profit as a percentage of revenue. Adjusted gross profit and adjusted gross margin should not be construed as an alternative for revenue or net loss determined in accordance with IFRS. The Company does not present gross profit in the financial statements as it is a non-GAAP financial measure. The Company believes that adjusted gross profit and adjusted gross margin are meaningful metrics that are often used by readers to measure the Company's efficiency of selling its products and services.

(2)	Non-GAAP financial measure. Earnings before interest, taxes, depreciation, and amortization ("EBITDA") and Adjusted EBITDA should not be construed as alternatives to net income/loss determined in accordance with IFRS. EBITDA and Adjusted EBITDA do not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other issuers. The Company defines Adjusted EBITDA as EBITDA (i) less net rent expense on premise leases considered to be finance leases under IFRS and (ii) before transaction, restructuring, and integration costs, time-based earn-out expense, change in fair value of investments, gain on disposal of assets, share of loss of associates, foreign exchange gain/loss, and stock-based compensation expense, and (iii) Revenue precluded from recognition under IFRS 15 that relates to certain patient services revenue that the Company believes should be recognized as revenue based on its contractual relationships. The Company considers Adjusted EBITDA a financial metric that measures cash that the Company can use to fund working capital requirements, service future interest and principal debt repayments and fund future growth initiatives.

(3)	Non-GAAP financial measure and ratio. The Company defines Adjusted Net Income as net income, after excluding the effects of stock-based compensation expense, amortization of acquired intangibles, time-based earnout expense, change in fair value of investments, non-controlling interests, and revenue precluded from recognition under IFRS 15 that relates to certain patient services revenue that the Company believes should be recognized as revenue based on its contractual relationships. Adjusted Net Income Per Share is Adjusted Net Income dividend by weighted average number of shares outstanding. The Company believes that these non-GAAP financial measure and ratio provide useful information to analyze our results, enhance a reader's understanding of past financial performance and allow for greater understanding with respect to key metrics used my management in decision making. More specifically, WELL believes Adjusted Net Income is a financial metric that tracks the earning power of the business that is available to WELL shareholders. Adjusted Net income and Adjusted Net income Per Share are not recognized measure and ratio for financial statement presentation under IFRS and do not have a standardized meaning. As such, these measures may not be comparable to similar measures or ratios presented by other companies. Adjusted Net Income and Adjusted Net Income Per Share should be considered a supplement to, and not as a substitute for, or superior to, the corresponding measures calculated in accordance with IFRS.

(4)	Non-GAAP financial measure and ratio. The Company defines Free Cash Flow Attributable to Shareholders as Adjusted EBITDA Attributable to Shareholders, less cash interest, less cash taxes and less capital expenditures.

WELL HEALTH TECHNOLOGIES CORP.

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

About WELL Health Technologies Corp.

WELL is a practitioner focused digital healthcare company whose overarching objective is to positively impact health outcomes to empower and support healthcare practitioners and their patients. WELL has built an innovative practitioner enablement platform that includes comprehensive end to end practice management tools inclusive of virtual care and digital patient engagement capabilities as well as Electronic Medical Records (EMR), Revenue Cycle Management (RCM) and data protection services. WELL uses this platform to power healthcare practitioners both inside and outside of WELL's own omni-channel patient services offerings. As such, WELL owns and operates Canada's largest network of outpatient medical clinics serving primary and specialized healthcare services and is the provider of a leading multi-national, multi-disciplinary telehealth offering. WELL is publicly traded on the Toronto Stock Exchange under the symbol "WELL" and on OTCQX under the symbol "WHTCF". To learn more about the Company, please visit: www.well.company.

Forward-Looking Information

This news release may contain "Forward-Looking Information" within the meaning of applicable Canadian securities laws, including, without limitation: information regarding the Company's goals, strategies and growth plans; expectations regarding continued revenue and EBITDA growth; the expected benefits and synergies of completed acquisitions; capital allocation plans in the form of more acquisitions or share repurchases; the expected financial performance as well as information in the "Outlook" section herein. Forward-Looking Information are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management, are inherently subject to significant business, economic and competitive uncertainties, and contingencies. Forward-Looking Information generally can be identified by the use of forward-looking words such as "may", "should", "will", "could", "intend", "estimate", "plan", "anticipate", "expect", "believe" or "continue", or the negative thereof or similar variations.

Forward-Looking Information involve known and unknown risks, uncertainties and other factors that may cause future results, performance, or achievements to be materially different from the estimated future results, performance or achievements expressed or implied by the Forward-Looking Information and the Forward-Looking Information are not guarantees of future performance. WELL's comments expressed or implied by such Forward-Looking Information are subject to a number of risks, uncertainties, and conditions, many of which are outside of WELL 's control, and undue reliance should not be placed on such information. Forward-Looking Information are qualified in their entirety by inherent risks and uncertainties, including: direct and indirect material adverse effects from the COVID-19 pandemic; adverse market conditions; risks inherent in the primary healthcare sector in general; regulatory and legislative changes; that future results may vary from historical results; inability to obtain any requisite future financing on suitable terms; any inability to realize the expected benefits and synergies of acquisitions; that market competition may affect the business, results and financial condition of WELL and other risk factors identified in documents filed by WELL under its profile at www.sedar.com, including its most recent Annual Information Form. Except as required by securities law, WELL does not assume any obligation to update or revise any forward-looking information, whether as a result of new information, events or otherwise.

Future-Oriented Financial Information

This news release contains future-oriented financial information and financial outlook information (collectively, "FOFI") about estimated annual run-rate revenue, Adjusted EBITDA^(2), and expected profitability for the full year of 2022, all of which are subject to the same assumptions, risk factors, limitations, and qualifications as set out in the above paragraph. The actual financial results of WELL may vary from the amounts set out herein and such variation may be material. WELL and its management believe that the FOFI has been prepared on a reasonable basis, reflecting management's best estimates and judgments. However, because this information is subjective and subject to numerous risks, it should not be relied on as necessarily indicative of future results. Except as required by applicable securities laws, WELL undertakes no obligation to update such FOFI. FOFI contained in this news release was made as of the date hereof and was provided for the purpose of providing further information about WELL's anticipated future business operations on an annual basis. Readers are cautioned that the FOFI contained in this news release should not be used for purposes other than for which it is disclosed herein.

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

SOURCE WELL Health Technologies Corp.