- HEALWELL achieved record quarterly revenue from continuing operations of $5.44 million in Q2-2024, 205% higher than the $1.78 million generated in Q2-2023 and 19% higher than the $4.58 million generated in Q1-2024.
- HEALWELL also reported net income of $2.54 million as compared to a loss of $9.81 million in Q2 2023. This was primarily due to the successful removal and settling of a significant number of liabilities incurred in past years.
- Management maintains a positive outlook, with HEALWELL’s yearly revenue run-rate now exceeding $65 million and aiming to reach a figure that is approaching $100 million by year-end, driven by a robust M&A pipeline supported by its strong cash balance, including proceeds from its recent $20 million equity financing.
- HEALWELL has now successfully launched its two-tiered business model of leveraging data science and Artificial Intelligence (AI) to support healthcare providers with co-pilot technologies and meet the needs of the pharmaceutical industry related to research and development and clinical trials orchestration.
TORONTO, ON, August 12, 2024 – HEALWELL AI Inc. (“HEALWELL” or the “Company”) (TSX: AIDX, OTCQX: HWAIF), a healthcare technology company focused on AI and data science for preventative care, is pleased to announce its condensed interim consolidated financial results for the quarter ended June 30, 2024.
Dr. Alexander Dobranowski, Chief Executive Officer of HEALWELL, commented, “During the quarter, we not only delivered record revenue and profitability, but we also significantly improved our balance sheet. We successfully completed a $20 million equity financing sourced mainly from long term institutional investors as well as settled and removed a number of liabilities incurred in past years which led to a significant net profit in Q2. The combination of these two events has notably strengthened our financial position, providing us with the necessary resources to advance our strategic objectives. The enhanced financial stability enabled us to complete the acquisitions of BioPharma and VeroSource on July 1, 2024, two pivotal moves that align seamlessly with our growth strategy. These acquisitions not only broaden our market presence but also enhance our capabilities, positioning us for robust expansion and long-term success.”
Dr. Alexander Dobranowski further added, “Our robust acquisition pipeline, coupled with our strong cash position, strategically positions us for substantial growth ahead. We anticipate that our strategic initiatives will drive us to achieve a figure approaching $100 million revenue run-rate by year-end, having already exceeded $65 million. This growth is underpinned by our continued focus on ramping up physician adoption of the HEALWELL platform, accelerating the sales of our AI tools and technology, and broadening our reach within the WELL Health ecosystem. We are seeing unprecedented opportunities in healthcare data science and artificial intelligence, and we believe that our advanced AI co-pilot technology is at the forefront of this evolution. Our commitment to enhancing healthcare delivery through innovative technology remains unwavering, and we are poised to capitalize on these opportunities to drive substantial value for our stakeholders.”
Anthony Lam, Chief Financial Officer of HEALWELL, commented, “During the quarter, in addition to our successful equity financing, we received approximately $8.8 million from the exercise of in-the-money warrants, both of which significantly strengthened our balance sheet. We reduced our liabilities by $14.3 million and acquired the remaining 20% interest in MCI Polyclinic Group. All together between a reduction in liabilities and injection of new capital, we strengthened the balance sheet by $43.1 million during the quarter. We are now well-positioned to explore strategic acquisitions throughout the year from a stronger financial position. Our debt is now limited to $13.2 million in convertible debentures and loans, excluding earn-outs to acquisition partners. Our convertible debt is expected to convert into equity, potentially reducing that $13.2 million of debt to a mere $1.6 million. It should be noted that if all of the Company’s outstanding in-the-money warrants were to be exercised, our cash balance would grow to approximately $45 million. With our robust financial position and reduced liabilities, we are confident in our ability to continue executing our strategic initiatives and delivering value to our stakeholders.”
A summary of the Company’s financial and operational results is set out below, and more detailed information is contained in the interim consolidated financial statements and related management discussion and analysis, which are available on the Company’s SEDAR+ page at www.sedarplus.com. Financial measures described as “Adjusted” in this news release are non-IFRS financial measures and may not be comparable to other similar measures disclosed by other companies. Please see Non-IFRS Financial Measures below for more information.
Second Quarter 2024 Financial Highlights
Significant financial highlights for the Company’s continuing operations during the three months ended June 30, 2024 included the following:
HEALWELL achieved quarterly revenue from continuing operations of $5.44 million in Q2-2024, 205% higher than the $1.78 million generated in Q2-2023. The growth in revenue is primarily attributed to the acquisition of Intrahealth Systems Limited (“Intrahealth”) and Pentavere Research Group (“Pentavere”).
HEALWELL achieved Adjusted Gross Profit(2) of $3.76 million during Q2-2024, an increase of 669% compared to $0.49 million in Q2-2023. The increase in Adjusted Gross Profit is primarily attributed to the addition of Intrahealth and Pentavere.
HEALWELL achieved an Adjusted Gross Margin(2) percentage of 69% during Q2-2024, compared to 27% in Q2-2023. The improvement in Adjusted Gross Margin was also primarily due to the addition of Intrahealth and Pentavere.
During Q2-2024, HEALWELL reported an Adjusted EBITDA(1) loss of $3.68 million, compared to a loss of $9.89 million in Q2-2023. The improvement in Adjusted EBITDA was due to reduced operating expenses and elimination of loss-making clinic operations coupled with an increase in revenues to produce improved results over the comparable periods in 2023.
HEALWELL reported $2.54 million in Net Income as compared to a loss of $9.81 million in Q2 2023. This was primarily due to the successful removal and settling of a significant number of liabilities incurred in past years.
As at June 30, 2024, HEALWELL had $19.82 million in cash, compared to $11.34 million as at March 31, 2024. This increase was driven by an equity offering raising gross proceeds of $20 million, and the exercise of in-the-money warrants totaling approximately $8.8 million.
Second Quarter 2024 Business and Operational Highlights
Significant business and operational highlights for the Company during the three months ended June 30, 2024 included:
Equity Financing: On May 22, 2024, the Company conducted a private placement issuing 14,815,000 Subordinate Voting Shares at $1.35 per share, generating gross proceeds of $20 million. As part of this offering, the Company granted 7,407,500 initial warrants and 586,677 compensation warrants to the underwriters. These warrants are exercisable to acquire one Subordinate Voting Share each over a 24-month period following the placement’s closing at a price of $1.80 per share for the initial warrants and $1.35 per share for the compensation warrants.
New CFO: On June 4, 2024, the Company appointed Mr. Anthony Lam as its new Chief Financial Officer.
Acquisition of Remaining 20% Interest in MCI Polyclinic: On June 17, 2024, the Company acquired the remaining 20% equity interest in MCI Polyclinic Group Inc. (“MCI Polyclinic”). The acquisition was implemented by having MCI Polyclinic, a subsidiary of HEALWELL, purchase for cancellation the 20% equity interest owned by Health Network Efficiencies Inc. for $625,000 in cash and the transfer of Executive Medical Concierge Canada (2021) Ltd., one of MCI Polyclinic’s subsidiaries. This transaction makes MCI Polyclinic now wholly-owned by HEALWELL.
Settlement of Indebtedness: On or about June 28, 2024, MCI Medical Clinics Inc. (“MCI Medical”), a subsidiary of HEALWELL, entered into settlement agreements in respect of certain outstanding payables and lease arrangements, resulting in the extinguishment of approximately $2.9 million of payment arrears and approximately $3.9 million of potential future liabilities relating to rent and operating costs. Subsequently, MCI Medical also received the forgiveness of approximately $7.9 million of loans originally advanced by The First Canadian Wellness Co Inc. (“FCW”) in 2022 and 2023, as originally provided under the debt resolution and acknowledgement agreement between the Company, WELL Health Technologies Corp. (“WELL Health”) and FCW dated July 19, 2023.
Investment in X.AI: On June 26, 2024, the Company completed an investment of US$2 million (CAD$2.75 million) in X.AI Corp., an artificial intelligence company founded by Elon Musk in 2023. The investment was made indirectly through a Think 1st Principles investment vehicle. Through this investment, the Company has gained access to the closed X.AI Developer Program, allowing the Company to leverage the world-leading technical and AI-oriented expertise and resources of X.AI Corp.
Events Subsequent to June 30, 2024
Significant business and operational highlights for the Company subsequent to June 30, 2024 included:
Acquisition of BioPharma Services Inc: On July 1, 2024, the Company acquired 100% of the shares of Biopharma from Think Research Corporation for a total purchase price of approximately $15 million. Founded in 2006, BioPharma is dedicated to advancing medical science in order to improve the lives of its patients by bringing pharmaceutical products to the market through high quality medical research. It uses state-of-the-art facilities and scientific expertise to provide customers with clinical trial services along with a full suite of support services.
Acquisition of Verosource Solutions Inc: On July 1, 2024, the Company acquired 100% shares of Verosource for a total purchase price of approximately $24.5 million. Founded in 2014, Verosource provides a VS Platform, which is an end-to-end, customizable, cloud-based solution that enables people, clinicians, and decision-makers to seamlessly access and work with healthcare data. It helps customers in digital transformation, integration of systems, adoption with right-fit cloud services, advanced analytics, enterprise resource planning and IT strategy.
Participation in Health Compass II Project: On July 10, 2024, WELL Health announced HEALWELL AI’s participation in the Health Compass II project, the largest DIGITAL initiative to date, which is supported by $15.3 million in federal funding over four years. HEALWELL AI’s Decision Compass module will enhance early diagnosis and care for rare and complex diseases through advanced AI technology. This collaboration underscores HEALWELL AI’s commitment to advancing healthcare through AI and interoperability, benefiting providers and patients across Canada.
Webcast and Conference Call Details:
HEALWELL will be holding a conference call and simultaneous webcast to discuss its financial results on Monday, August 12, 2024 at 5:30 pm ET (2:30 pm PT). The call will be hosted by Dr. Alexander Dobranowski, Chief Executive Officer, and Anthony Lam, Chief Financial Officer. Please dial-in 10 minutes prior to the start of the call.
Date: Monday, August 12, 2024
Time: 5:30 pm ET / 2:30 pm PT
For attendees who wish to join by webcast, the event can be accessed at: https://edge.media-server.com/mmc/p/ejqqmqy4
Attendees who wish to join by phone must visit the following link and pre-register: https://register.vevent.com/register/BIa66ea4dcfe1b4dd981a3ee71ae03ad54
Selected Financial Information
(in thousands of dollars, except percentages and per share amounts)
| Three months ended | Period over | Six months ended | Period over | |||||||||
| June 30 | period Change | June 30 | period Change | |||||||||
| 2024 | 2023 | $ | % | 2024 | 2023 | $ | % | |||||
| ($ in thousands except percentages) | ($ in thousands except percentages) | |||||||||||
Continuing operation |
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Revenue | 5,442 | 1,785 | 3,657 | 205 | 10,022 | 3,757 | 6,265 | 167 | |||||
Cost of Revenue | 2,129 | 1,454 | 675 | 46 | 4,319 | 2,923 | 1,396 | 48 | |||||
Gross Profits | 3,313 | 331 | 2,982 | 902 | 5,703 | 834 | 4,869 | 584 | |||||
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Research and development | 800 | 700 | 100 | 14 | 1,717 | 2,551 | (834) | (33) | |||||
Sales and marketing | 1,503 | 318 | 1,185 | 372 | 2,264 | 638 | 1,626 | 255 | |||||
General and administrative | 8,346 | 2,964 | 5,382 | 182 | 14,494 | 5,316 | 9,178 | 173 | |||||
Impairment of right of use assets | 850 | – | 850 | – | 850 | – | 850 | – | |||||
Impairment of goodwill and intangibles | – | 7,629 | (7,629) | (100) | – | 7,629 | (7,629) | (100) | |||||
| 11,499 | 11,611 | (112) | (1) | 19,325 | 16,134 | 3,191 | 20 | |||||
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Financing expenses | 622 | 418 | 204 | 49 | 1,475 | 637 | 838 | 131 | |||||
Other income | (159) | (4) | (155) | 3,875 | (351) | (10) | (341) | 3,410 | |||||
Share of comprehensive loss from associate | – | (26) | 26 | (100) | – | – | – | –
| |||||
Changes in fair value of call options | 250 | – | 250 | – | 650 |
| 650 | ||||||
Changes in fair value of contingent consideration payable | – | (30) | 30 | (100) | – | (37) | 37 | (100) | |||||
Changes in fair value of investments | – | 11 | (11) | (100) | – | 134 | (134) | (100) | |||||
Loss on settlement of shares-contingent consideration | – | – | – | – | – | 677 | (677) | (100) | |||||
Debt forgiveness | (7,863) | – | (7,863) | – | (7,863) | – | (7,863) | – | |||||
Liability extinguishment | (3,088) | – | (3,088) |
| (3,088) | – | (3,088) | – | |||||
Impairment of investment in an associate | – | – | – | – | – | 2,180 | (2,180) | (100) | |||||
| (10,238) | 369 | (10,607) | (2,872) | (9,177) | 3,581 | (12,758) | (356) | |||||
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Income (Loss) before taxes | 2,052 | (11,649) | 13,701 | (118) | (4,445) | (18,881) | 14,436 | (76) | |||||
Income tax recovery | (531) | (731) | 200 | (27) | (765) | (950) | 185 | (19) | |||||
Net Income (loss)-continuing operation | 2,583 | (10,918) | 13,501 | (124) | (3,680) | (17,931) | 14,251 | (79) | |||||
Net profit (loss) on discontinued operations, net of tax | (43) | 1,105 | (1,148) | (104) | (54) | 667 | (721) | (108) | |||||
Net Income (loss) | 2,540 | (9,813) | 12,353 | (126) | (3,734) | (17,264) | 13,530 | (78) | |||||
Continuing operation |
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Adjusted Gross Profit (1) | 3,761 | 489 | 3,272 | 669 | 6,596 | 1,150 | 5,446 | 474 | |||||
Adjusted Gross Margin (1) | 69% | 27% | 42% | 152 | 66% | 31% | 35% | 115 | |||||
Adjusted EBITDA (1) | (3,676) | (9,893) | 6,217 | (63) | (6,275) | (12,615) | 6,340 | (50) | |||||
Adjusted EBITDA Margin (1) | (68%) | (554%) | (487%) | (88) | (63%) | (336%) | 273% | (81) | |||||
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Discontinued operation |
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Adjusted Gross Profit (1) | 105 | 2,944 | (2,839) | (96) | 340 | 6,271 | (5,931) | (95) | |||||
Adjusted Gross Margin (1) | 44% | 34% | 10% | 30 | 71% | 35% | 37% | 106 | |||||
Adjusted EBITDA (1) | 43 | (433) | 476 | (110) | 45 | (418) | 463 | (111) | |||||
Adjusted EBITDA Margin (1) | 17.8% | (5%) | 23% | (455) | 9.4% | (2%) | 12% | (510) | |||||
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Net income/(loss) attributable to Company shareholders |
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– Continuing operation | 2,625 | (8,700) | 11,325 | (130) | (3,289) | (17,902) | 14,613 | (82) | |||||
– Discontinued operation | (43) | (1,105) | 1,062 | (96) | (54) | 667 | (721) | (108) | |||||
| 2,582 | (9,805) | 12,387 | (126) | (3,343) | (17,235) | 13,892 | (81) | |||||
Weighted average number of |
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Of Share outstanding: Basic and diluted | 125,215 | 53,870 |
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| 119,205 | 52,900 |
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Net income (loss) per share -Basic and diluted |
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– Continuing operation | 0.02 | (0.16) |
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| (0.03) | (0.34) |
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– Discontinued operation | (0.000 | ||||||||||||