WELL Health Technologies Q1 2026 Earnings Call Transcript

Quartr
Provided by Quartr
May 7, 2026

Key Takeaways

  • Positive Sentiment: Q1 results were strong with revenue of CAD 368.3M (+25% YoY), Adjusted EBITDA of CAD 43.1M (+56%), and adjusted net income of CAD 15.5M (doubled YoY), signaling robust core performance.
  • Positive Sentiment: Canadian clinics momentum — the network grew to 253 clinics with 1.3M Canadian patient visits (+31% YoY), is on track to exceed CAD 500M in clinics revenue in 2026, and is targeting ~CAD 800M revenue and >CAD 100M Adjusted EBITDA run-rate within the next 12 months, supported by a CAD 400M senior credit facility and a ~CAD 260M pipeline under LOI.
  • Positive Sentiment: Regulatory and procurement tailwinds — federal Bill S‑5 and Ontario’s province‑wide EMR initiative favor interoperable, sovereign Canadian platforms, positioning WELL’s integrated stack (WELLSTAR, HEALWELL AI, CYBERWELL plus clinics) to compete for large public procurements.
  • Neutral Sentiment: WHIP, AI and investment phase — WELL is building the WELL Health Intelligence Platform (WHIP) and consolidating CYBERWELL/WELL Research to drive AI‑led efficiency and a back‑half 2026 cost‑optimization program, but Q1 capex rose 88% and adjusted free cash flow fell to CAD 1.6M due to these investments.
  • Neutral Sentiment: U.S. strategic review and Circle Medical updates — WELL is pursuing strategic alternatives for U.S. assets (WISP, Circle Medical, CRH); Circle recognized ~CAD 12.8M of deferred revenue in Q1, expects minimal remaining deferrals in Q2, and reports a deal‑in‑principle with U.S. regulators, but final outcomes and timing remain uncertain.
AI Generated. May Contain Errors.
Earnings Conference Call
WELL Health Technologies Q1 2026
00:00 / 00:00

There are 8 speakers on the call.

Speaker 6

Good afternoon, ladies and gentlemen, and welcome to the WELL Health Technologies Corp First Quarter 2026 conference call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you need assistance, please press star 0 for the operator. This call is being recorded on Thursday, May 7, 2026. I would now like to turn the conference over to Pardeep Sangha. Please go ahead.

Speaker 7

Thank you, operator, and welcome everyone to WELL Health fiscal 1st quarter financial results conference call for the period ended March 31, 2026. Joining me on the call today are Hamed Shahbazi, 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, including future-oriented financial information and financial outlook information. These forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors, many of which are outside of WELL's control, that may cause the actual results, performance or achievements of WELL to differ materially from the anticipated results, performance or achievements implied by such forward-looking statements.

Speaker 7

These factors are further outlined in today's press release and in our management discussion and analysis. We provide 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 change in our expectations or any change in events, conditions, assumptions or circumstances on which any such statement is based, except as required by law. We may use terms such as Adjusted gross profit, adjusted gross margin, Adjusted EBITDA, adjusted EBITDA margin, share EBITDA, Adjusted net income and adjusted free cash flow on this conference call, all of which are non-GAAP, non-IFRS measures.

Speaker 7

For more information on how we define these terms, please refer to the definition set out in today's 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 that the company can use to fund working capital requirements, service feature interest and principal debt repayments, and fund future growth initiatives. Adjusted EBITDA should not be construed as an alternative to net income or loss determined in accordance with IFRS. With that, let me turn the call over now to Mr. Hamed Shahbazi, Chairman and CEO of WELL Health Technologies.

Speaker 3

Thank you, Pardeep, and good day, everyone. We appreciate everyone for joining us today. Q1 was a strong start to 2026 across almost every dimension of our business. Revenue was CAD 368.3 million, up 25% year-over-year. Adjusted EBITDA was CAD 43.1 million, up 56%. Adjusted net income was CAD 15.5 million, doubling last year. In Canadian clinics, the part of WELL we've been telling you most about lately, grew adjusted EBITDA 28% and is now on track to materially exceed half a billion dollars in revenue this year. Beyond the headline numbers, here's what I'd like you to take away from today's call. WELL is no longer just Canada's largest outpatient platform. We are becoming the operating system for the modernization of the Canadian healthcare ecosystem.

Speaker 3

As we'll talk about today, the policy environment, the procurement environment and the AI environment are all converging in our favor at the same time. Q1 is the first quarter where you can see all of these three tailwinds beginning to show up in the financials together, and we believe that the compounding effect is just the beginning. For perspective on the trajectory, our Q1 2025 revenue was CAD 294 million, and Q1 2026 revenue was CAD 368 million. That means we added CAD 74 million of incremental quarterly revenue in 12 months, more revenue in a single year of growth than this entire company generated in all of 2020. Which is true even if you pull out all the deferred revenues recognized in the quarter.

Speaker 3

That trajectory gives us confidence, not because of what we're seeing, but because it demonstrates that the compounding nature of our model is intact. We believe the conditions for that compounding are stronger today than at any point in time in our history. Our Adjusted gross profit in the first quarter was CAD 163.2 million, an increase of 39% year-over-year compared to Q1 2025. This improvement in gross profit is largely due to an increase of 440 basis points in our adjusted gross margin percentage to 44.3%, driven by the inclusion of higher margin HEALWELL revenue and an increase in WELLSTAR revenue. During the quarter, we recorded CAD 12.8 million of previously deferred revenue related to Circle Medical.

Speaker 3

We expect Q2, the next quarter, to be the final quarter that is impacted by Circle Medical deferrals, positioning the business for improved comparability going forward. With those headline financials in mind, let me now turn to the operational metrics behind those results. As at the end of Q1 2026, WELL had over 4,700 billable and non-billable providers delivering care across our network of physical and virtual clinics. Of that number, we now work with over 1,400 physicians in Canada, which is approximately 1.2%-1.3% of all physicians practicing in the country. Beyond our own clinics, over 44,000 healthcare providers across Canada, the majority of whom are physicians, benefit from WELLSTAR's SaaS and technology capabilities. We estimate that over 40% of all physicians in Canada engage with our WELLSTAR platform in some capacity.

Speaker 3

Patient visits were particularly strong in Canada, reaching 1.3 million in Q1 2026, an increase of over 31% year-over-year, with organic growth 13%, including both clinic absorptions and same-clinic expansion. System-wide, inclusive of U.S. and Canada, total patient visits increased 17% year-over-year to 1.9 million patient visits in the quarter. Organic growth system-wide was 6%. The slower organic growth rate was attributable to Circle Medical, where patient visits declined year-over-year due to the company's significant focus on compliance. We expect this headwind to improve later on this year. Strong financial operational results are the output of something more important than the real-world patient impact that our platform is delivering. I'd like to now share a few metrics that illustrate what these results, what is driving these results.

Speaker 3

WELL is making a real-world impact on healthcare every day as our platform is delivering value in both providers and patients. Our technology stack, led by the WELLSTAR platform, is focused on reducing the administrative burden that leads to physician administrative burnout. In Q1 2026, we automatically transcribed and mobilized data for 195,000 fax images using AI technology in our WELL-owned clinic network, significantly reducing errors and saving administrative time in the clinics. Doctors across our network are saving up to 10 hours per week using our AI transcription capabilities. That time goes directly back into patient care. At HEALWELL AI, we're enhancing patient outcomes through early disease detection and care path optimization, having already performed over 59,000 patient records screened for diseases in Q1 2026.

Speaker 3

Our billing solutions group at WELLSTAR has now surpassed CAD 1 billion in annualized run rate in terms of physician pay in Q1. Assisting physicians with billings frees them up to focus on more care, this matters. Our patients are responding. WELL Research achieved an NPS or a net promoter score of approximately 80 in 2025, well above the industry benchmark. On the referral side, we're currently processing over 160,000 e-referrals per month, reducing paperwork and shortening wait times across the ecosystem. These are not theoretical efficiencies. They are measured, repeatable improvements at scale across our entire clinic network. They are why our providers are seeking more patients. Our margins are expanding, physicians increasingly want to join our network rather than practice independently.

Speaker 3

For listeners who are newer to the WELL Health story, I just want to spend a few minutes or a few moments, I should say, on what underpins these results. WELL Health is Canada's largest outpatient healthcare platform, powered by software and AI. We have successfully built a comprehensive platform that integrates clinics that deliver care, software that runs the platform, and AI that makes it smarter and faster. The WELL ecosystem consists of over 250 clinics across the country, including primary care, diagnostics, specialty care, and executive health clinics, which is home to over 4,700 practitioners, with tens of thousands of practitioners more who separately purchase and implement our digital products and services. Approximately 70% of the Canadian population now lives within 20 kilometers of a WELL location.

Speaker 3

Our clinics deliver the care, WELLSTAR powers the digital workflows behind that care. HEALWELL AI applies AI at enterprise scale. CYBERWELL protects the data. No other company in Canada brings all of these capabilities together. If healthcare is going to become smarter, more connected, and more preventative, it needs a new kind of operating system. We are building it. We believe the timing for that operating system has never been more aligned with where Canadian healthcare is heading. This leads us to the policy and regulatory backdrop, which is creating meaningful structural tailwinds for companies like WELL. At the federal level, Bill S-5, the Connected Care for Canadians Act, introduces a meaningful shift by mandating interoperability across health IT systems and explicitly restricting data blocking practices. From an investor perspective, this effectively sets a new baseline for how healthcare technology must function in Canada. The implications are important.

Speaker 3

First, federal funding and procurement are likely to concentrate around platforms that are compliant with these interoperability standards. Second, scale becomes increasingly valuable, particularly for platforms that can integrate clinics, EMRs, and AI into a unified workflow. Third, it creates incremental pressure on legacy vendors that rely on closed ecosystems or point solutions which may struggle to adapt. Fourth, a point sometimes underappreciated, mandatory data exchange materially expands the cybersecurity surface area and related risk for every provider in the country. When data must flow between systems, every endpoint becomes a potential vulnerability. We see this as a meaningful opportunity for our CYBERWELL business to help keep Canadian healthcare data safe, which is exactly why we are advancing CYBERWELL with third-party capital partners later this year. In parallel, at the provincial level, procurement behavior is evolving with a clear bias towards Canadian-owned sovereign platforms.

Speaker 3

This is particularly relevant in areas such as clinical data infrastructure, AI, and patient engagement layers. This shift is being driven by 3 converging priorities. 1, data sovereignty, ensuring sensitive health data remains within Canadian control. 2, regulatory alignment, simplifying compliance across jurisdictions. 3, economic policy, supporting domestic innovation and infrastructure. Taken together, these federal and provincial dynamics are not independent. The combined effect is a strong tailwind towards a comprehensive Canadian-based healthcare technology company like ours. WELL is purposely built and precisely built for this moment. WELL operates 1 of the largest outpatient clinic networks in the country, which anchors patient access and real-world data. Through HEALWELL AI, we have robust data science and interoperability capabilities and have added differentiated AI and clinical intelligence capabilities that sit on top of that data layer. With WELLSTAR, we provide a sovereign EMR platform with significant provider penetration across Canada.

Speaker 3

Together, this is a comprehensive end-to-end Canadian sovereign stack spanning care delivery, data, and intelligence directly aligned with both interoperability mandates and sovereignty-driven procurement. We do not believe any other Canadian healthcare company is similarly positioned. On March 19, 2026, Ontario's Health Minister announced the province's plan for a province-wide primary care medical record initiative to advance an integrated, interoperable electronic medical record system for primary care. This program is part of Ontario's Primary Care Action Plan, which is backed by more than CAD 3.4 billion in funding to connect approximately 2 million additional residents to primary care by 2029. Province has indicated that it will conduct an open competitive procurement process and is exploring a multi-vendor approach to ensure that the new system meets the diverse needs of clinicians and patients across Ontario.

Speaker 3

WELL strongly supports this initiative of a new province-wide primary care medical record system and confirms our intention to actively participate in the forthcoming procurement process led by Supply Ontario. Across the WELL family, we cover all three layers that the province of Ontario needs. First, WELL's clinic delivery network, consisting of 120 WELL-owned and operated clinics in Ontario. Second, WELL's EMR, Nexus AI, and OceanMD platforms. WELLSTAR currently powers and supports over 8,100 physicians and 1,600 clinics across Ontario through its suite of provincially certified EMR platforms. WELLSTAR, to our knowledge, is the only platform in Ontario today that combines a provincially certified EMR, fully integrated AI-first workflow automation, and full interoperability with digital health network programs. WELLSTAR's OSCAR Pro EMR is an OntarioMD-certified platform that is already interoperable with Ontario's Health Report Manager and Ontario Laboratories Information System.

Speaker 3

Third, HEALWELL AI's interoperability plus AI layer. HEALWELL AI, through its Orion Health subsidiary, already provides the province with its 811 service, providing advice to 15 million users, and HEALWELL AI's Ontario Patient Viewer, which is digital care record that consolidates patient data across care settings. HEALWELL AI's award-winning and clinically validated Darwin AI platform brings ambient documentation, intelligent summary, and decision support solutions that directly addresses Ontario's needs. The province of Ontario's announcement directly aligns with WELL's strengths and capabilities, including interoperability across the broader health system, enhanced cybersecurity for patient data, reduced administrative burden for clinicians, and the integration of modern tools such as electronic referrals and AI-enabled clinician automation. We believe WELL is uniquely positioned to be a primary partner to Ontario in delivering this vision.

Speaker 3

Before I get into the rest of today's presentation, I want to share something foundational about how we think about WELL and the strategic decisions you've been seeing us make. Everything we are doing strategically, from the strategic alternatives processes for our U.S. assets to the WELLSTAR spin-out, to bringing third-party capital partners into CYBERWELL, flows from a single underlying conviction: capital allocation discipline. As Canada's largest outpatient clinic operator, we have line of sight to a generational opportunity. We are approaching 1.5% of outpatient primary care today. Our long-term target is 10%, roughly a seven-fold increase in the share of Canadian care delivered through our network. That is the largest, highest conviction opportunity in front of us, we believe it requires focus.

Speaker 3

Spreading WELL's parent company capital across multiple businesses risks both underinvestment in this generational Canadian opportunity and undercapitalization of the other businesses we own. We've made a deliberate choice. WELL's parent capital is concentrated on Canadian clinics, including WELL Research, which you will hear about later on this call, which we believe is the pharma activation of our clinic network and one of the most promising byproducts of that network over time. Our other technology and adjacent businesses, Wellstar, Healwell, and Cyberwell, operate as what we call strategically controlled platforms. We retain strategic control. Minority financial partners provide growth capital and access to liquidity. Each platform funds its own growth on its own merits. What you are seeing is our planned activities, the U.S. Strategic Alternatives, the Wellstar spin-out, and Cyberwell's third-party capital partner process are not separate decisions. They are one strategy expressed several ways.

Speaker 3

I'd like to now turn to the additional topics that we want to cover in the rest of today's presentation. First, a deep dive into our Canadian clinics business, including our M&A track record and pipeline. Second, I'll discuss some of our new growth-related initiatives we are undertaking as we scale our business for the future, including our WELL Health Intelligence Platform, our new WELL Research initiative, and the evolution of our CYBERWELL business into a new AI-focused platform. Thirdly, I'll provide an update on our strategically controlled technology businesses, WELLSTAR and HEALWELL AI. Lastly, an update on the strategic review processes of our U.S. assets. Let's now look at our WELL Canada business, which includes Canadian clinics, WELLSTAR and CYBERWELL, but excludes HEALWELL.

Speaker 3

WELL Canada generated revenue of CAD 151.7 million in Q1 2026, an increase of 26% compared to the same period last year. WELL Canada is demonstrating consistent growth with Adjusted EBITDA growth of 15% from Q1 2025 to Q1 2026, in line with prior year's 15% growth from Q1 2024 to Q1 2025. Adjusted EBITDA growth in the past 2 years has been in the upper end of our long-term target of delivering 10%-15% Adjusted EBITDA growth every year. Moving to our Canadian clinics business, where our performance has been exceptionally strong. Our clinics business, including our primary care, diagnostic specialty care, and longevity health, has exceeded 47% compound annual growth rate, or CAGR, in revenue over the past 4 years.

Speaker 3

While Adjusted EBITDA of our Canadian clinic business has grown at a CAGR of over 44% for the same four-year period. In Q1 2026, Canadian clinics achieved revenue of CAD 130.3 million and is on track to significantly exceed half a billion dollars in Canadian clinics revenue in 2026. In Q1 2026, Canadian clinics achieved Adjusted EBITDA of CAD 17 million, 28% better than Q1 in the previous year. In particular, WELL's primary care segment delivered Adjusted EBITDA margins of 8% in Q1 2026, up approximately 200 basis points from 6.2% in Q1 2025. The improvement reflects the combined impact of accretive acquisitions and ongoing execution of WELL's clinic transformation program.

Speaker 3

Our Canadian clinics network has grown to 253 clinics at the end of Q1 2026, compared to 128 at the start of Q1 2022. I want to put our Canadian footprint in long-term context. We currently represent a figure approaching 1.5% of outpatient primary care delivered in Canada. The Canadian primary care market remains overwhelmingly fragmented. Our long-term target is 10% market share within 8-10 years, and our internal modeling shows we can achieve that target while reducing our growth rate to roughly half of its present pace over time. The runway in front of us is substantial, and our objectives are achievable. Moving on, patient visits in our Canadian network totaled 1.3 million in Q1 2026, up 33% from 1 million in Q1 2025.

Speaker 3

Meanwhile, the number of billable providers reached 2,204, up 17 from Q1 in the prior year. We continue to recruit more physicians than ever. The WELL brand is gaining recognition as a place where doctors can focus on patient care rather than clinic administration and charting. That value proposition is working. Patient visits are continuing to grow faster than our provider count, which demonstrates increasing productivity across the network. As you can see from the 3rd graph, our patient visits per billable provider increased by 14% in Q1 2026 compared to the same period last year. While many factors contribute, we believe our technology tooling, including AI transcription and digital workflows, is a key driver of this improvement in productivity.

Speaker 3

To put this in concrete terms, our Canadian providers delivered an average of approximately 576 patient visits per billable provider in Q1 2026, compared to approximately 510 in the previous year's quarter. This is real, measurable productivity gain. It is the operational expression of our clinic transformation program and our AI tooling working as designed. Moving on to our recent Canadian clinic M&A activity. In Q1 2026, we acquired 3 clinics across 3 transactions, adding CAD 34 million in annual revenue and 77 new providers. While the number of transactions in Q1 was lower than recent quarters, the average dollar value per transaction was significantly greater in Q1 versus previous quarters because of the sizable eConsult platform business we acquired in Alberta. We're very pleased with the progress of our eConsult acquisition.

Speaker 3

As a reminder, the platform enables primary care physicians to securely connect digitally with specialists and receive timely clinical guidance asynchronously, reducing wait times and improving care coordination across providers. All clinical decisions remain fully led by physicians and licensed health providers. Our pipeline continues to grow. We currently have approximately CAD 260 million in clinic revenue under LOI or in advanced stage, covering 4 signed LOIs and 81 potential clinic opportunities. For WELL Canada, including WELLSTAR, we have approximately CAD 265 million in revenue under LOI or in advanced stage with 7 signed LOIs. Our total WELL Canada pipeline, including pre-LOI targets, deals under LOI, and advanced stage, represents more than 50 targets engaged, over CAD 440 million in annual revenue, and more than 125 clinics.

Speaker 3

This is the largest M&A pipeline in WELL's history, and when combined with the expanded CAD 400 million senior credit facility, which Eva Fong will discuss shortly, gives us strong visibility into our Canadian growth trajectory through 2026 and beyond. Before we move on, I want to spend a moment on something foundational we're building that I believe will shape WELL's next chapter, and that is the WELL Health Intelligence Platform or WHIP. WHIP is a unified data and AI foundation that consolidates operational and financial information from across our subsidiaries into a single secure and governed platform purpose-built for AI mobilization. In its first phase, WHIP is a step change in how we manage performance and continue to rapidly deploy AI across the organization.

Speaker 3

It gives us a true single source of truth, standardized KPIs across every clinic, service line, and segment, and real-time visibility for leadership. Reporting cycles that used to take weeks will move to days and then to real time. The strategic significance goes well beyond reporting. Our scale across more than 250 clinics is one of WELL's most important strategic assets, and the WELL Health Intelligence Platform is what compounds that advantage. It turns scale into faster decisions, sharper capital allocation, and stronger operating leverage, and gives us the ability to absorb future acquisitions without proportionally adding cost. Equally important, the WELL Health Intelligence Platform is the launchpad for accelerating AI deployment at WELL.

Speaker 3

A unified governed data layer is a prerequisite for everything we want to do with AI across the enterprise: predictive analytics, automated workflows, AI-generated learnings, and the patient provider and clinical experiences that we're building forward. Critically, we're embedding agentic capabilities directly into the WELL Health Intelligence Platform. The ability to deploy AI agents across finance, HR, IT, and other G&A functions to handle routine back-office work. Over time, we expect this to be a meaningful lever in managing G&A costs as the business continues to scale. We are investing now in the team and technology needed to build with properly, and we expect those investments to compound over time. The WELL Health Intelligence Platform is the foundation that enables the cost optimization program we are launching in the second half of the year, which I will discuss next.

Speaker 3

In short, WHIP is the infrastructure that makes the next chapter of WELL possible. We are focused on using advanced AI and integrated technology to enhance operating leverage as we scale. In the next few months and leading into the second half of our year, our plans are to implement a comprehensive cost optimization program designed to streamline internal processes, refine resource allocation, and reduce structural costs. We expect this program, combined with the operational benefits of WHIP, to drive margin expansion in the back half of 2026 and into 2027. We will share a further update in Q2 on both the WELL Health Intelligence Platform and our cost optimization efforts. Moving on, I'm pleased to announce the launch of WELL Research, the strategic consolidation of WELL's existing clinical research assets into a unified operating segment and brand for the life sciences industry.

Speaker 3

WELL Research brings together 4 differentiated assets we already own: our 250-plus Canadian clinic network, our 44,000-plus provider network through WELLSTAR, our patient consent platform, WELLTRUST, and our AI-powered real-world evidence engine via Darwin AI, which of course is part of HEALWELL AI. This marks an important strategic milestone for WELL and represents a meaningful evolution of our clinical research strategy. If you recall, in November 2025, WELL formed a clinical research joint venture with HEALWELL AI, including a Toronto-based contract research organization or CRO named BioPharma Services or BPSI, a clinical site management organization or SMO named Canadian Phase Onward Inc., also known as CPO. I'll take a minute to explain the difference between an SMO and a CRO because I think it's important.

Speaker 3

An SMO is a site management organization, which is a service provider that embeds directly within clinical trial sites, such as a physician practice and outpatient clinic, to handle day-to-day trial execution, including patient recruitment, study coordination, and protocol compliance. Whereas a contract research organization or CRO operates at a higher level, managing entire trials across multiple sites on behalf of sponsors. Together, these capabilities span the full clinical trial value chain from patient identification and consent through recruitment, trial execution, and real-world evidence generation. Before I walk through BPSI, I want to draw a direct line back to something we introduced in our Q4 call, WELLTRUST. As a reminder, WELLTRUST is the consent-first platform that allows us to mobilize patient data across our clinical network with explicit, revocable patient consent to match patients with appropriate clinical research opportunities.

Speaker 3

Since we introduced WELLTRUST to the market last year, last quarter, adoption inside our network has continued to scale. We are on track for the commercial launch of WELLTRUST later this year. WELL Research is the natural and necessary next step. WELLTRUST gives us the consent and identification layer, WELL Research gives us the operating capability to actually run the trials. Together, they convert what was previously a static clinic asset into an active, commercially viable research platform, and they are designed to be deployed as one integrated offering in the life sciences industry. BPSI brings 15-plus years of operating history, more than 2,200 completed clinical trials, 35-plus successful regulatory inspections, and over 20 industry awards.

Speaker 3

Historically, BPSI focused on lower margin bioequivalence studies for the generics market, a segment that has been structurally pressured by increasing price competition and a shift towards lower cost international markets. We're executing a phased transition. First, we are pivoting from bioequivalence and generics towards phase I trials for innovator drugs, which offer materially higher margins. Second, these early-stage trials create a pull-through effect, driving larger and more profitable later-stage trials. Third, those later-stage trials are where WELL's SMO capabilities driven by CPO and the overall scale of WELL's clinical network create additional competitive advantage. We expect this transition to take the balance of 2026 as we reposition BPSI and drive WELL Research to achieve profitability under this new model by the end of the year.

Speaker 3

Together, this positions WELL Research as a higher value partner to the life sciences industry with stronger economics over time to the point where this could be a substantial profitability upgrade and commercial re-rating of the WELL Clinic network. We will update you on this as we execute. Now I'd like to share with you some progress around our CYBERWELL business. Last month, we announced that WELL's prior cybersecurity assets of Cycura, Seekintoo, and Proack are now integrated into a single cybersecurity organization known as CYBERWELL with centralized leadership, governance, and service delivery. This consolidated operating model is powered by a new unified platform called CYDEcore Fusion.

Speaker 3

We have also brought on a new experienced set of executives to lead the effort at CYBERWELL, led by Jeffrey Engle and complemented with a newly formed advisory board with years of cybersecurity experience in national security, public policy, and regulated industries. We are operating in a landscape of escalating cyber threats. CYBERWELL's response is anchored by CYDEcore Fusion, our proprietary AI-enabled cybersecurity platform. CYDEcore Fusion unifies data from security operations, monitoring, and governance activities into a single context-enriched view, applying AI-driven analytics to identify patterns, surface emerging risks, and deliver predictive insight. Rather than delivering point-in-time solutions, the platform supports ongoing cyber resilience through intelligent automation and clearer accountability across security, technology, and risk functions.

Speaker 3

Consistent with the strategically controlled platform approach I outlined earlier, we expect to begin a process later this year to identify like-minded financial partners to fund CYBERWELL's growth while we retain strategic control. I want to briefly anchor WELLSTAR's performance in the regulatory and policy backdrop we discussed earlier. Unlike many SaaS businesses currently facing valuation pressure, WELLSTAR sits at the operational core of the clinics it serves, mission-critical infrastructure in a non-discretionary sector. The interoperability mandates and sovereign procurement priorities we covered in the Canadian healthcare update do not just support WELLSTAR's competitive position, they accelerate its strategic value as a Canadian-owned, certified, and fully integrated platform. Let's look at WELLSTAR's financial performance for the quarter. We're pleased to report that WELLSTAR delivered yet another strong quarter, generating revenue of CAD 21.8 million, an increase of 27% year-over-year.

Speaker 3

WELLSTAR achieved MRR, or monthly recurring revenue, of CAD 6.4 million at the end of Q1 2026, an increase of 38% as compared to Q1 2025. Adjusted EBITDA of CAD 4.9 million in Q1 2026, an increase of 14% as compared to Adjusted EBITDA CAD 4.3 million in Q1 2025. Adjusted EBITDA margins were 23% in Q1 2026 for WELLSTAR. I want to point out that there were approximately CAD 259,000 in pre-public related company costs in the quarter preparing for our spin-out plans. Excluding these costs, Adjusted EBITDA would have been CAD 5.2 million, an increase of 20%. Healwell also released its Q1 2026 financials earlier this afternoon. We're extremely proud of the progress made by Healwell, a company that we helped launch.

Speaker 3

Healwell is a global healthcare software company with enterprise-grade data science and AI offerings, serving 70 of the largest health systems here in Canada and globally in 11 countries, including customers such as the NHS in the U.K., governments of France, Spain, Saudi Arabia, Abu Dhabi, New Zealand, Australia, and health systems in the U.S. Healwell achieved revenue of CAD 33.2 million in Q1 2026, an increase of 316% year-over-year. Healwell also reported positive adjusted EBITDA of CAD 735,000 in Q1 2026 compared to a loss of CAD 2.3 million in Q1 2025. Healwell will be hosting its webcast conference call tomorrow morning before market open.

Speaker 3

I hope you're able to check in and listen to HEALWELL AI's management discuss their progress and in particularly some of their recent AI and health system wins, demonstrating that the market is responding well to their efforts. Next topic I'd like to talk about is our current strategic review process of our U.S. assets. We are, of course, limited in what we can say about these strategic review processes, especially given the advanced nature of some of our work here and the negotiations we're engaged in. Nonetheless, I'll try to give you some high-level color. Firstly, we remain committed to our strategy of seeking strategic alternatives of the company's U.S. care delivery assets, including with Circle Medical and CRH. Similar to our last call several weeks ago, I can confirm that we are in active discussions with potential buyers for all three assets.

Speaker 3

We are navigating these discussions deliberately and with discipline to ensure we maximize value for our shareholders and find the right long-term partners for these high-quality businesses. These strategic alternatives reflect the capital allocation discipline I described earlier. We continue to like all these businesses, discipline matters. We're looking at multiple alternatives, not just divestitures. Whatever path we choose will not impair our ability to focus our capital resources and drive our Canadian clinic business. To our shareholders, I want to thank you for your patience as we bring these processes to the right outcome. Now I'll comment on each one of the U.S. businesses, starting with WISP. WISP achieved revenue of $29.1 million in Q1 compared to $29.5 million in Q1 the previous year.

Speaker 3

Adjusted EBITDA was a loss of CAD 0.9 million compared to CAD 0.5 million in Q1 2025. While revenue remains stable, Adjusted EBITDA reflects deliberate investments designed to strengthen WISP's long-term position. These investments include compliance and clinical excellence, product innovation with new launches, including a new mobile app recently launched with more enhancements planned for later this year. Strategic diversification through a new B2B vertical driven by a small acqui-hire we completed at the outset of the year, complementing the direct-to-consumer model. These investments are already yielding measurable operational improvement, and we expect WISP to return to EBITDA profitability in the second half of the year. Moving on to Circle Medical. Circle Medical reported revenue of CAD 36 million in Q1, an increase of 21%. Revenue included approximately CAD 12.8 million of net deferred revenue.

Speaker 3

Circle Medical's normalized Adjusted EBITDA was $2.9 million in Q1, which has grown sequentially over the previous quarter. Note that we expect to have minimal deferred revenue impact of approximately $4.8 million that is recognized in Q2 2026, with no more deferred revenue beyond that. As we indicated in our last conference call, we have a deal in principle with the U.S. regulators relating to the billing issues we had outlined last year in our Q4 2024 conference call. We look forward to finalizing these arrangements and reporting back to shareholders. Finally, CRH and provider staffing. The combined CRH anesthesia and staffing business generated $111.3 million in Q1 2026, compared to $114.3 million in Q1 2025.

Speaker 3

While the CRH anesthesia business was up 7% year-over-year, there was a small decline in overall revenue due to a decrease in the staffing business, as this business can be a bit lumpy. Adjusted EBITDA for combined anesthesia services and staffing was CAD 17.9 million in Q1 2026, compared to CAD 17.6 million in Q1 2025. While growth was challenged in Q1 2026, we actually improved EBITDA margins in the combined businesses. Now I'd like to pass the call over to Eva.

Speaker 1

Thank you, Hamed. The theme of our capital expenditures is investment for the future. Our capital expenditures in Q1 2026 increased by 88% from Q1 2025. This is primarily due to the addition of Healwell and our increased investments for the future. These investments include increase in capital expenditure due to the following. 1. Canada clinic transformation and new diagnostic equipment. 2. The newly launched WELL Research program. 3. Increase in CYBERWELL's new AI-focused platform. And 4. The increased AI-related capital expenditure at WELL Corporate, such as the WELL Health Intelligence Platform that Hamed mentioned earlier. Our Q1 2026 revenue grew 25% year-over-year to CAD 368 million. Even excluding the addition of Healwell and the net impact of Circle Medical deferrals, the underlying business contributed approximately CAD 22 million of net growth.

Speaker 1

Adjusted EBITDA grew strongly year-over-year despite meaningful investments made in WELL Research, CYBERWELL, and the WELL Health Intelligence Platform. We expect these investment pressures to subside in the coming quarters, after which the underlying margin expansion of the platform will be more visible. Turning to adjusted net income. Adjusted net income doubled to CAD 15.5 million in Q1 2026 from CAD 7.5 million in Q1 2025. Adjusted net income was negatively impacted by our new group initiatives such as WELL Research, CYBERWELL, and the AI-related transformation initiatives. Operating adjusted free cash flow attributable to shareholders was CAD 1.6 million in Q1 2026 compared to CAD 11.8 million in Q1 2025. Adjusted free cash flow was negatively impacted by the following: increased spending for growth initiatives, including WELL Research, CYBERWELL, and AI-related transformation.

Speaker 1

The investments noted earlier on the call related to risk. Higher capital expenditures as discussed, and higher cash taxes compared to Q1 2025 due to timing of cash payments and improved profitability in certain subsidiaries. We view this adjusted free cash flow impact as temporary. As our growth initiative investment phase normalizes, we expect adjusted free cash flow conversion to improve significantly through the back half of 2026 and into 2027. Turning to our balance sheet as of March 31st, 2026. WELL ended Q1 2026 with a solid balance sheet, holding cash and cash equivalents of CAD 134 million. We remain in good standing and fully compliant with all covenants related to our two credit lines, JP Morgan in the U.S. and Royal Bank in Canada.

Speaker 1

The outstanding debt from these credit lines was approximately CAD 444.8 million as of March 31, 2026. This doesn't include HEALWELL AI's credit facility with the Bank of Nova Scotia, which is also in good standing with outstanding debt of CAD 48.5 million. During Q1 2026, we expanded and extended our senior secure credit facility to CAD 400 million with an additional CAD 100 million uncommitted accordion under a syndicate led by Royal Bank of Canada, JP Morgan, and TD Bank. This effectively doubles our current capacity and extends the maturity to January 2030. This enhanced facility gives us a significant financial flexibility to execute on our Canadian acquisition pipeline, which as Hamed described earlier, is the largest we have ever had. In Q1, we continued our normal course issuer bid or NCIB.

Speaker 1

In Q1 2026, the company bought back 177,600 shares. We're expecting to continue with our share buyback program for the rest of 2026 as permitted. I'm also pleased to report that we have the cash and available resources to continue to fund our organic and inorganic growth program, which are focused on Canadian clinics and WELLSTAR. That concludes my financial update, and I will now turn the call back over to Hamid.

Speaker 3

Thank you, Eva. We are pleased to reaffirm our guidance for fiscal 2026. We expect annual revenue in the range of CAD 1.55 billion-CAD 1.65 billion, representing reported growth of 11%-18% and normalized growth, excluding impact of any Circle Medical deferrals of 16%-22%. We expect Adjusted EBITDA in the range of CAD 175 million-CAD 185 million. This guidance includes approximately CAD 17.6 million in Circle Medical deferred revenue expected to be recognized in 2026, which carries close to 100% EBITDA contribution. It also only includes acquisitions announced to date.

Speaker 3

Excluding the impacts of the Circle Medical deferrals, earnings on a normalized basis, the company expects to continue to deliver per-performance in line with prior years of achieving better than 10% annual growth in Adjusted EBITDA and free cash flow growth, including acquisitions. Our guidance is sensitive to the timing of additional M&A and divestitures. We will update the market as needed. For WELL Canada specifically, which includes Canadian clinics and WELLSTAR, we delivered over 44% Adjusted EBITDA growth in 2025. We are targeting approximately CAD 800 million in revenue and over CAD 100 million in Adjusted EBITDA on a run rate basis within the next 12 months. Just as a reminder, we have established a substantial outpatient clinic platform over the past few years, which now serves as a robust foundation for scalable growth.

Speaker 3

By integrating AI and advanced technology into our operations, we're actively enhancing our operating leverage and driving greater efficiencies across the business. To further strengthen our financial position, we expect to implement a targeted cost optimization program in the second half of the year aimed at reducing structural costs and expanding margins as we continue to scale. As noted earlier, the company maintains full commitment to disciplined capital allocation, with its Canadian clinic program as the primary destination for incremental capital. This focus is what is the central rationale behind the company's intention to proceed with the spin-out of WELLSTAR and its ongoing evaluation of strategic alternatives for its U.S. care delivery assets. In closing, Q1 2026 demonstrated that WELL's model compounds. We delivered record first quarter results, accelerated our Canadian growth engine, strengthened our balance sheet, and advanced value unlocking initiatives across our network.

Speaker 3

The strategic clarity we have today built around being the operating system for modernizing Canadian healthcare positions us strongly for the years ahead. I'd like to thank our board of directors, our senior management team across all the various different operating subsidiaries of the company and all of our employees and contractors. In particular, I wanna thank our healthcare practitioners and frontline workers who provide highly competent patient care every day and make a difference in the lives of our patients. Thank you all for joining us today, thank you to our shareholders, investors, and analysts for their continued support. We'll now open the call to questions. Operator?

Speaker 6

Thank you. The first question comes from Gianluca Tucci with Haywood Securities. Please go ahead.

Speaker 2

Hi, Hamed and Eva. Congrats on the quarter. Hamed, the Canadian business is looking quite good. As you continue to add clinics to the network, where do you see margins scaling to in primary care as you achieve your 10% market share goal?

Speaker 3

Yeah. Thanks, Gianluca. You know, I think the growth in margins that we see, you know, it was very much intentional, not by accident, and we'd like to continue to see those margins increase. Candidly, our goal is to be well into the double digits over time. I would say you can continue to see, expect to see improvements there over the next little while.

Speaker 2

Okay. Thanks, Hamed. Just changing gears, on the Ontario EMR opportunity. In a perfect world, how do you foresee, WELL Health, CYBERWELL and, HEALWELL and even WELLSTAR combining together to tackle this RFP or RFQ? Has the timing of the, spin out of the WELLSTAR changed given this opportunity is out here?

Speaker 3

We've been absolutely very active in coordinating between our various different parts, and we're gonna put forth a really compelling solution. As I mentioned on the call, in my script, you know, we do expect this to be a multi-vendor solution. We've sort of now heard some indications around that. And that really makes a lot of sense when you consider the fact that there are 3 substantial vendors of size in the Ontario marketplace there, with ourselves and TELUS Health and Loblaw's QHR. You know, I think there's gonna be aspects of this RFP that are gonna give new opportunities for new business.

Speaker 3

As I noted, the budget is fairly significant for what Ontario is trying to achieve, but it will likely involve the involvement of multiple vendors. I think we're in a really good position here, and this is why we spent some valuable airtime talking about, you know, the combined benefits of our proposal that we're gonna put forth.

Speaker 2

Thanks, Hamed. I'll pass the line.

Speaker 6

Thank you. The next question comes from Justin Keywood from Stifel. Please go ahead.

Speaker 4

Hi. Thanks for taking my call. Nice to see the results. The target to expand WELL Canada to CAD 800 million in sales, the timeline seems to have been shortened by, call it one quarter as compared to the March update. Does that reflect maybe higher confidence in the organic growth outlook or perhaps some of these files are moving a bit quicker than anticipated?

Speaker 3

Thanks, Justin. I'm glad you noticed. Yes, that is correct. We have advanced the timeline a little bit since our last conference call, and we're really pleased to be able to do that. Yes, absolutely that does reflect some confidence that some of these files are moving forward. As you know, unblocking, you know, Unblocking some of the, you know, capital resource capabilities and having that upsize facility does give us the capability to be a little bit more ambitious. Obviously, as you know, we're very disciplined around maintaining reasonable leverage levels, and we will continue to do that. Yes, we do see some confidence that we'll that will hopefully be able to drive this a little bit quicker than we thought before.

Speaker 4

Great to hear. Thank you. I'll pass the line.

Speaker 6

Thank you. The next question comes from Douglas Miehm with RBC Capital Markets. Please go ahead.

Operator

Yeah, good afternoon. Just related perhaps to the last question. When you think about the gating factor of onboarding this new revenue and the number of clinics that you're gonna have to take on, have you solved for that? I know that in the past, it was one of the reasons why you weren't able to go ahead with all the available acquisitions that you probably could have done at the time. I'm wondering if that's improved significantly or if you expect it to improve in the near term.

Speaker 3

Yeah. Great, great question. I think, Doug, we, I think we've been really intentional about elevating the company's ability to process these bigger acquisitions. I would also say that, you know, you're seeing this reflected in the margins. We are also now pursuing what could be viewed as higher quality assets that do have better margin impact and probably a bit less of a, you know, need for transformation. Of course, we'll still transform these assets, we'll still apply our software, but they're coming into the network with better structural margins, you know, with better operations. As you can see, we're not doing as many absorptions.

Speaker 3

We're still doing them, but they take a lot of time and effort from our team and we really wanna apply our clinic transformation teams to the highest leverage opportunity humanly possible. We're being very intentional here about really elevating the margins and this business as we, you know, get to that CAD 800 million goal.

Operator

Oh, that's very shared. Just a quick follow-up based on what you mentioned. Would you given better margins, bigger size of these clinics, apparently, do you expect to pay more for those? Maybe you could talk about the increase in the EBITDA multiples that might be associated with that. I'll leave it there. Thank you.

Speaker 3

Yes. I would say in some cases, we would pay slightly higher, but we do believe based on what we can see that the implied multiples over time will continue to reflect the, what we've seen in the past, which is, you know, better than 20% IRR rates. Everything that we're doing, everything that we're looking at does reflect those types of IRRs, and we're very much committed to that. I would say, net-net over time, we believe that these will actually operate at better implied multiples.

Operator

Excellent. Thank you.

Speaker 6

Thank you. The next question comes from Michael Freeman with Raymond James. Please go ahead.

Speaker 5

Hi, team. Congratulations on the quarter. Thanks for taking my question. I like seeing the stat on visits per billable provider increasing over time. I'm curious, you know, how do you see the headroom available in this sort of provider utilization? You know, is there any natural limit here? Like, how do you see this growing over time?

Speaker 3

Yeah. It's a really good point, Michael. You know, this is a stat, as you know, we started tracking, you know, publicly here and reporting on a few quarters ago, and we continue to see really good trends here. I think we feel very confident that we can continue to deliver the tools and we actually believe that as WELLSTAR deploys and further builds out its agentic AI platform, that this could take another leap up. Of course, it takes time. You know, there's change management with doctors.

Speaker 3

You know, the agentic platform, you know, has a really transformational approach in being able to leverage voice to help drive providers and in their, in their, you know, daily functions and the work that they do inside the consult room. I would say that that does mean that we expect to see improvements over time. Of course, that also, you know, there's probably M&A reflections in there because as more and more clinics come into the network, you know, that's a, you know, an overall kind of blended number that we're providing. We do have confidence that the core productivity of the provider will improve, especially as the agentic capabilities in this sector, you know, come forth.

Speaker 5

Okay. Thank you. Now on CYBERWELL. You mentioned that you might be looking for a third-party capital partner to fund growth. Could you talk about what sort of opportunities you would seek this unit to pursue? What sort of, you know, capital quantum we're talking about?

Speaker 3

You know, we haven't really, you know, discussed too much of, you know, finalizing that number. I would say that to start with, I don't think that we would look to raise more than CAD 10 million to begin with. We're already in discussion with certain parties. You know, the operator of CYBERWELL came from a significant exit in a cybersecurity business that he ran in the United States, where they were, you know, very recognizable venture and private equity investors. So we feel really confident behind Jeffrey Engle's leadership. We'll be able to bring in capital. And, you know, we also see greater and greater need for what CYBERWELL does.

Speaker 3

You know, I think that data protection will continue to be a really important part of our story. We look forward to partnering with investors to deliver on the mission there.

Speaker 5

Okay. Thank you, Hamed. I'll pass the line now.

Speaker 6

Thank you. We have no further questions. I will turn the call back over to Hamed Shahbazi for closing remarks.

Speaker 3

Wanted to thank everyone for tuning in today. We look forward to speaking to you again in August. Meanwhile, we will report back on all the key strategic initiatives that we talked about here today and look forward to, you know, providing news as it, as it is available. Thank you so much, and have a wonderful day.

Speaker 6

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating, and we ask that you please disconnect your lines.

Powered by Quartr