Spinout article
Well Health plans to spin out, publicly list SaaS and services business in 2025
Founder and CEO Hamed Shahbazi said spin out will unlock “significant shareholder value.”
Vancouver-based digital healthcare company Well Health has revealed plans to spin out and publicly list its software-as-a-service (SaaS) business segment, Well Provider Solutions (WPS).
“We believe [WPS] will be valued at a much higher valuation multiple than the value that is currently being afforded to Well Health.”
Hamed Shahbazi, Well Health CEO
On its Q2 2024 earnings call this week, founder and CEO Hamed Shahbazi said that Well’s current valuation is at a steep discount compared to the sum of its parts, and discussed a plan to unlock “significant shareholder value” by making WPS a standalone, Well-controlled public company in the first half of 2025.
Well’s WPS business provides a platform for electronic medical records (EMR), billing and revenue cycle management, patient engagement, eReferrals, telehealth, and medical apps. Shahbazi claimed that, to Well’s knowledge, there was no bigger market share owner than WPS and called it a “very healthy and profitable SaaS business with great growth prospects.”
“We believe [WPS] will be valued at a much higher valuation multiple than the value that is currently being afforded to Well Health,” Shahbazi said. “In addition, we believe we could accelerate the growth of this business as a standalone public company, which would then ramp up its own capital allocation program to ensure it is growing methodically, both organically and inorganically.”
Shahbazi went on to describe Well’s intentions to maintain a “strong economic and voting majority” following the spin out, ensuring WPS would continue to work with Well’s network of clinics, adding that there should be “no real changes” to how WPS operates and interacts with Well.
RELATED: Well Health acquires 10 primary care medical clinics from Shoppers Drug Mart
The earnings call also included updates on Well’s US-based digital patient service providers, Circle Medical and Wisp, which it acquired a majority stake of in 2020 and 2021, respectively. Shahbazi said the companies are not being assigned a fair value on the capital markets, and that Well has been exploring strategic courses for its call option on the companies. Potential courses of action include Well acquiring the remaining ownership of the companies, seeking an initial public offering or a reverse takeover, or selling the businesses entirely.
Founded in 2012, Well Health provides an end-to-end platform for healthcare providers, which includes tools for electronic medical records, practice management, billing, revenue cycle management, and data-protection solutions.
The firm, which trades on the Toronto Stock Exchange, has been executing an aggressive acquisition strategy in recent years and has closely aligned itself with Toronto-based healthtech and AI company Healwell AI. Well Health recently acquired 10 primary-care medical clinics across British Columbia and Ontario from Loblaw-owned Shoppers Drug Mart.
In its Q2 earnings, Well reported record quarterly revenues of $243.1 million, an increase of 42 percent compared to Q2 2023. Well also reported an adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $30.9 million, an increase of 11 percent compared to Q2 2023. Shahbazi said Well will provide more updates on the WPS spinout in the coming weeks and months.