COVID-19 has had devastating impacts, shifting the landscape and operation methods of many industries. However, it is precisely this shift that has catalysed a new wave of innovation and technological advancement in the space of healthcare. Canadian based WELL Health has found itself uniquely poised to harness this changing tide and pioneer the radical shift taking place. With its industry-leading telehealth platform and digital first approach to patient care, WELL has been able to swiftly assert itself in the industry as a leader and may well be shaping the future of how healthcare is provided.
CEO Hamed Shahbazi, the former CEO of TIO Networks, launched WELL Health with a clear goal: to positively impact health outcomes by leveraging technology to empower and support patients and doctors. To achieve this, WELL has championed the need for digitisation and further technological integration into the healthcare sector. Undoubtedly, the rising gap in numbers between patients and doctors available to treat them is a problem not easily solved through conventional methods. Therefore, the need to amplify the capabilities of doctors has become all the more necessary.
WELL Health operates as a multi-channel digital health company, taking a holistic approach to healthcare provisioning. It achieves this through operating one of Canada's largest primary healthcare clinic networks, Canada's third largest Electronic Medical Records (EMR) business which supports over 10,000 GPs in 2200+ clinics, one of Canada's leading telehealth platforms, and a number of other business units including its digital health apps, cybersecurity services, and its US based businesses which include Circle Medical, an industry leading telehealth offer based in silicon valley and CRH Medical, a large line of business that provides products and services to thousands of Gastroenterology doctors. . In doing so, WELL Health is able to operate within the intersection between two of the most imperative industries in 2021, healthcare and technology.
However, how has the up-and-coming digital healthcare giant fared in the wake of the pandemic? In short, it has thrived. Where many companies and industries suffered from the shock of a stay-at-home world, WELL was presciently equipped for the change. With a telehealth platform already in the foundations of its strategy, the pandemic only highlighted the relevance for digital innovation into the field of healthcare and accelerated its adoption amongst both healthcare providers and patients. This is because, unlike much of the economy, healthcare clinics and hospitals remained open out of necessity. Yet despite this, many people opted to see their family doctors and get medical attention virtually instead of in person and many physicians were required to adopt new healthcare methodologies considering the need for social distancing and responsibility. Care that didn't absolutely require an in person visit was best delivered through electronic methodologies. One of the main suggestions to explain this being the far greater convenience such telehealth services provide, with your doctor being only a video call away. As a result, WELL was able to capitalise on this switch to providing access to healthcare services remotely and contribute to its growth in 2020. Even now that vaccinations are on the rise, it is clear that both physicians and patients appreciate virtual care options and that virtual and in person care will complement each other. For example prescription renewals, follow up visits, and recurring chronic care management visits are often better served via telehealth.
In addition, the recent acquisition of CRH Medical Corp marks a milestone for the company's growth strategy. With a US$373 million valuation, the purchase of CRH became the biggest acquisition for WELL Health to date. In doing so, WELL stands to experience a significant boost to both its revenue and EBITDA. In Q4 of 2020, CRH reported US$36.8 million is sales which translates to a year-over-year growth of 21%. Moreover, CRH generates an estimated US$120 million in annual revenue with EBITDA margins equal to approx 40%. This coupled with a free cash flow of 25% and it is no wonder that WELL's financial prospects are bright. Yet, this is not the only benefit the acquisition of CRH provides for WELL Health. CRH currently supports 73 ambulatory surgical centres in 15 U.S. states and thousands of gastrointestinal physicians in all lower 48 U.S. states. Such a network should provide a strong platform for WELL Health to further expand into the North American market and improve its potential for growth. WELL has successfully optimized clinics in Canada using digital tools and experiences and via the deployment of cybersecurity related services, so now it can provision those services to these US clinics using the trusted advisor relationships CRH enjoys with its clinical customer base. With these successes and opportunities in mind, it is of little surprise that analysts anticipate WELL Health approaching an estimated C$300 million in revenues as well as an excess of 25% EBITDA and 18% free cash flow margins.
Testament to the vision of Mr Shahbazi is the continued support from Hong Kong business magnate Sir Li Ka Shing which speaks to the strength of the WELL Health strategy. Leading the most recent round of financing with a C$100 million stake between he and his partner, Sir Li Ka Shing's Horizons Ventures was joined by the CEO Hamed Shahbazi, senior management, and board of director members as well as Major North American institutional funds in bolstering WELL's capital availability. This all serves to ensure a very healthy balance sheet with more than $60 million in cash. This capital availability as well as the free cash flow it now generates is pivotal due to the many opportunities it allows WELL Health to explore without having to experience any meaningful dilution. As has been mentioned, the integration of technology into the healthcare sector is nascent, with a host of possible applications and digital experiences only beginning to be realised. As such, WELL Health's EMR platform is key. Data has proved to be essential in fostering evolution in many industries, and healthcare is no different. WELL's EMR platform provides a frictionless integration method of introducing new digital tools to practitioners, and forms the foundation for areas such as Telemedicine, Digital Patient Engagement, and Artificial Intelligence to see rapid advancement. With so many avenues for growth, coupled with its readiness to explore them, WELL Health has strong prospects to lead the industry in these fields and reap the rewards of their preparedness.
In summary, the future of healthcare lies in technology and digitization. Every industry must adapt to the continually changing landscape and movement towards digital. Digitization is inevitable in all industries and has already taken place in many, and healthcare is no different. Technology is but the latest frontier upon which this success will depend. Which firm is able to harness this change and champion the next stage in the evolution of healthcare remains to be seen. However, with the wind in its sails and the financial backing to keep the ship steady, WELL seems primed to take the lead into the new age of healthcare.
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