Q1 reminder - Read The Outlook Bud F Hamed Shahbazi , Founder and CEO of WELL commented, "Q1-2023 was an exceptional quarter that exceeded all expectations and demonstrated the strength, depth and quality of our technology enabled care delivery platforms. WELL achieved 34% Year-over-Year revenue growth, largely driven by our organic growth which accelerated to 21% in the first quarter, the highest level of organic growth we've had in several quarters. This quarter also marks our 17 th consecutive quarter of record revenue. Our profitability and cashflow profile continue to be robust, as we achieved $10.8 million in Adjusted Free Cash Flow (1) to shareholders in Q1-2023, notwithstanding elevated interest fees. Given the strength of our outlook, we are pleased to increase revenue guidance again as we have for each of the past five quarters."
Mr. Shahbazi further added, "At the heart of our culture, is our purpose to passionate care and support healthcare providers. WELL exited Q1 2023 with over 3,000 providers and clinicians delivering care in our physical and virtual clinics and more than 28,000 providers supported by our SaaS and Technology Services. We are determined to faithfully support and 'tech enable' healthcare professionals with the very best technology available which now includes significant investments in Artificial Intelligence, or AI, based products and services that enhance provider productivity and effectiveness."
Eva Fong , WELL's Chief Financial Officer, added, "WELL has continued to demonstrate continuous growth, can drive significant cashflow to shareholders and lower its leverage levels effectively. I am pleased to announce that we have reduced our leverage ratio (4) of net debt to shareholder Adjusted EBITDA from 3.5x at the end of Q1-2022 to 2.6x as of the end of Q1-2023. With our leadership position in the digital healthcare industry and continued cash flow generation, we are well positioned for continued success in 2023 and beyond."
First Quarter 2023 Financial Highlights :
- WELL achieved record quarterly revenue of $169.4 million in Q1-2023, an increase of 34% as compared to revenue of $126.5 million generated in Q1-2022. This growth was mainly driven by organic growth of 21% but also included inorganic growth during the past year.
- Canadian Patient Services revenue was $50.9 million in Q1-2023, an increase of 23% as compared to $41.3 million in Q1-2022.
- US Patient Services revenue was $99.2 million in Q1-2023, an increase of 38% as compared to $72.1 million in Q1-2022.
- SaaS and Technology Services revenue was $19.3 million in Q1-2023, an increase of 47% as compared to $13.1 million in Q1-2022.
- Adjusted Gross Profit (1) was $86.2 million in Q1-2023, an increase of 24% as compared to Adjusted Gross Profit (1) of $69.4 million in Q1-2022.
- Adjusted Gross Margin (1) percentage was 50.9% during Q1-2023 compared to Adjusted Gross Margin (1) percentage of 54.8% in Q1-2022.
- Adjusted EBITDA (1) was $26.7 million in Q1-2023, an increase of 14% as compared to Adjusted EBITDA (1) of $23.5 million in Q1-2022 which was supported by more than $1.7 million in pandemic related government incentives.
- Adjusted EBITDA to WELL shareholders was $20.6 million in Q1-2023, an increase of 28% as compared to Adjusted EBITDA to WELL shareholders of $16.1 million in Q1-2022.
- Adjusted Net Income (1) was $14.1 million , or $0.06 per share in Q1-2023, as compared to Adjusted Net Income (1) of $8.9 million , or $0.04 per share in Q1-2022.
First Quarter 2023 Patient Visit Metrics:
WELL achieved a total of 1.4 million patient interactions (3) in Q1-2023, representing approximately 5.6 million patient interactions on an annualized run-rate. WELL achieved a total of 975,500 patient visits in Q1-2023, an increase of 25% as compared to 778,910 patient visits in Q1-2022. Canadian Patient Services visits increased 14% while US Patient Services visits increased 40%, on a year-over-year basis. Growth in patient visits over the past year was primary driven by organic growth but included some acquisition related activity as well.
First Quarter 2023 Business Highlights:
On March 1, 2023 , the Company completed the acquisition of 51% interest in Affiliated Tampa Anesthesia Associates, LLC (" ATAA ") for cash consideration of $6.1 million plus transaction costs. ATAA services two ASCs and is staffed by thirty-four credentialled practitioners.
On March 2, 2023 , the Company's venture capital arm, WELL Ventures, led an investment round alongside its partner Horizon Ventures and a syndicate of leading venture capital firms, in doctorly GmbH (" doctorly "), a medical practice management software provider based in Germany . As part of the investment and strategic alliance agreements, the Ocean platform, created by WELL's wholly owned subsidiary OceanMD, will be used as the exclusive booking and practice engagement platform for doctorly.
Events Subsequent to March 31, 2023 :
On April 26, 2023 , WELL Ventures announced the launch of its AI Investment program, focused on artificial intelligence and its applications in helping support healthcare providers with next generation tools. The WELL AI Investment Program will provide investees with capital as well as extensive support from WELL's ecosystem to help develop, test, refine, secure, de-risk and integrate the most promising such technologies into the Canadian healthcare ecosystem at scale. WELL's goal is to make a minimum of ten AI related investments of at least $250,000 each.
On May 10, 2023 , the Company launched WELL AI Voice, a transformational ambient scribe product that leverages generative AI to dramatically reduce a provider's administrative burden by privately and securely capturing a patient encounter conversation and automatically generating a succinct and medically relevant chart note for the patient interaction.
Outlook:
WELL is expecting its strong performance in the first quarter to continue across all its business units and for the entire Company as a whole. WELL's objective is to invest in and achieve significant growth while effectively managing its costs and delivering cashflow to shareholders. Management is pleased to provide the following guidance for 2023:
- Annual revenue between $690 million and $710 million , representing 21% to 25% annual growth as compared to 2022. Annual revenue guidance only includes announced acquisitions.
- Annual Adjusted EBITDA is expected to increase by more than 10% over 2022 levels allowing the company to invest in growth and continue to acquire market share.
WELL expects to continue to grow its Canadian Patient Services business both organically and inorganically and increase its market leadership as the country's first pan-Canadian clinical network with a highly integrated network of tech-enabled outpatient healthcare clinics across the country. Meanwhile, growth in the Company's US Patient Services business is expected to be primarily driven by organic growth while executing on highly disciplined capital allocation opportunities.
As a company with deep tech experience and capabilities, WELL has also made investments in AI technologies a key priority within the Company and expects to develop compelling new products and enhancements to roll out to WELL's vast provider network.
WELL's strong organic growth and robust cash flow profile allows the Company to continue to successfully execute on its acquisition plans. Management expects additional cash flows generated by the Company will be re-invested in the business and allocated in a disciplined manner.
WELL is a purpose-driven business that aims to transform the world for the better, as such the Company has embarked on an ongoing ESG (Environmental, Social and Governance) program. The Company is on track to publishing its annual ESG report in mid-2023 highlighting WELL's ESG strategy, reporting initiatives and targeted actions. For more information on WELL's ESG program, please visit: https://well.company/esg-report