Healwell Al Inc

TSX:AIDX

Earnings Call Analysis

Healwell Bolsters AI Ambitions Despite Challenges

Healwell, in its journey through 2023, saw significant shifts in its financial and growth landscapes. Its gross profit halved to $2 million with a gross margin percentage drop from 42% to 28%, attributable mainly to declines in its Khure revenue segment. However, they managed a smaller adjusted EBITDA loss of $8 million, improving from $9.7 million, by reducing operating costs. Despite falling quarterly revenues, from $3.04 million to $1.9 million, and a corresponding decrease in quarterly gross profit from $1.73 million to $557,000, Healwell's strategic moves in the form of acquisitions and investments are noteworthy. It acquired Pentavere, an AI pioneer in transforming unstructured healthcare data, and Intrahealth, bringing in high-margin recurring revenue and an expansive EHR platform. Healwell's M&A strategy and focus on AI-driven growth, particularly in the realm of early disease detection and decision support, are backed by a strong balance sheet with $10.9 million in cash and no bank debt, providing a solid foundation for prospective doubling of revenue run rate.

Transformational journey with a focused mission on AI in healthcare

Healwell AI has embarked on a path to position itself as a leader in healthcare artificial intelligence, with a clearly defined mission to improve healthcare and save lives through the early identification and detection of disease. This journey received a substantial boost with a strategic partnership with WELL Health Technologies, which also led to Healwell AI's stock market debut with a new ticker AIDX.

Capitalizing on a rapidly growing AI healthcare market

The company recognizes a remarkable opportunity within the AI healthcare market, which is projected to grow from $19 billion in 2022 to a colossal $281 billion by 2032. Despite facing competition from prominent players such as OpenAI, Healwell AI is poised to carve out its own niche in this burgeoning space.

Navigating financial challenges and strategic divestments

Financial results for fiscal 2023 reflect the firm's operational recalibration, excluding revenues from clinic operations sold to WELL and the anticipated sale of Executive Medical Concierge within MCI Polyclinic. The company has faced significant challenges, notably with a revenue decline of $2 million due to troubles at its Khure subsidiary, among other factors contributing to reduced revenues and gross margins compared to the previous year.

Strengthened financials with strategic capital raises

Addressing its financial difficulties, Healwell AI has bolstered its balance sheet, retiring a $3 million bridge loan from WELL and raising $22.5 million through different financings. With $19.2 million in cash, no bank debt, and a diverse debt portfolio, the company is in a healthier position compared to the prior fiscal year, ending with a strong balance sheet conducive to its growth strategy.

Strategic alliances and augmented Board leadership

Significant corporate enhancements include the appointment of Hamed Shahbazi, a visionary in digital health, as Chairman of the Board. The strategic alliance with WELL Health grants Healwell AI exclusive access to an extensive network, thereby amplifying its potential reach and impact within the healthcare sector.

Expanding U.S. footprint and highlighting pivotal acquisitions

New commercial agreements with WELL Health USA and Circle Medical signal expansion into the U.S. market. Major acquisitions such as Pentavere and Intrahealth not only contribute to top line revenue growth but also provide crucial technological capabilities and a solidified market presence, underpinning a strong M&A strategy that focuses both on driving innovation in AI and on achieving financial sustainability.

Leveraging M&A for strategic growth and technology integration

The company has a twofold M&A approach aimed at acquiring both nascent AI companies and mature firms with strong financials to integrate and bolster their AI technologies. Healwell AI also intends to build and deploy advanced clinical decision support systems and position itself as a key player in the rapidly evolving AI healthcare space.

Robust outlook with a clear path to doubling revenue

Healwell AI expresses a positive outlook based on its strategic initiatives. With a strong balance sheet, the company aims to more than double its revenue run rate by year's end and advance its presence as a leader in the healthcare AI industry, a vision supported by substantial inorganic growth and close ties with WELL Health.

Earnings Call Transcript 2023-Q4

[Operator]

Ladies and gentlemen, thank you for standing by. Welcome to Healwell AI Fiscal Fourth Quarter and Year-End 2023 Financial Results Conference Call.

[Operator Instructions] Please be advised that today's conference is being recorded.

I would like now to turn the conference over to Pardeep Sangha, Head of Investor Relations. Please go ahead.

[Pardeep Sangha, executive]

Hello, and thank you, operator. Joining me on the call today are Dr. Alexander Dobranowski, CEO of Healwell AI; and Scott Nirenberski, this company's CFO. I trust that everyone has received a copy of our financial results press release that was issued earlier today. Listeners also encourage a download a copy of our quarterly financial results and annual results with the management discussion analysis from SEDAR+, which we expect to be available later today.

Please note, a portion of today's call, other than historical performance, include statements of forward-looking information within the meaning of applicable securities laws. These statements are made under the safe harbor provisions of those laws. Please refer to today's press release and our management discussion and analysis for more details on the company's risks and forward-looking statements.

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 if it's required by law.

We use terms such as adjusted EBITDA on this conference call, which is a non-IFRS and non-GAAP measure. For more information on how we define this term, please refer to our definition set out in the management discussion and analysis.

And with that, let me turn the call over to Dr. Alexander Dobranowski, CEO.

[Alexander Dobranowski, executive]

Thank you, Pardeep. Good day, everyone. We hope that you're all keeping safe and healthy. And of course, we truly appreciate everyone for joining us today. I'd like to start today's call by providing some introductory commentary about the company [Technical Difficulty]

[Operator]

Please stand by one moment. We are experiencing some technical difficulties. Please stand by, your conference will resume shortly.

[Alexander Dobranowski, executive]

Operator, thank you very much. Apology, we had an internet issue. So I'll continue. Now I'm not sure where we got disconnected here.

So after I start the introductory commentary about the company, Scott Nirenberski, our CFO, will review the financial results for the fourth quarter and full year 2023, following which I will then provide a much more fulsome discussion, highlighting our vision, strategic plan for the company, the tremendous market opportunity and also some very exciting and material updates on what we have accomplished subsequent to the quarter. Afterwards, we will have time for Q&A and concluding remarks.

I'm thrilled to convey that Q4 was nothing short of a transformational quarter for the company. Completing the strategic transaction with WELL Health Technologies led by their visionary CEO, Hamed Shahbazi, which resulted in the effective debut with Healwell AI with a new stock ticker AIDX. This was the important first step with regards to our ambition to build Healwell AI as a leader in health care artificial intelligence.

I'd like to now continue by saying a little bit about what is Healwell AI and who we are? Healwell AI is a health care technology company focused on AI and data science for preventative care. Our mission, which we believe is an important one is to improve health care and save lives through the early identification and detection of disease. Using our own proprietary technology, we are developing and commercializing advanced clinical decision support systems, in other words, co-pilot technologies that can help care providers detect rare, complex and chronic diseases, improve efficiency of their practice, accelerate R&D efforts for therapeutic development of clinical research, and ultimately and most importantly, helped to materially improve patient health outcomes.

In a time of increasing patient demand for health care access and decreasing physician availability due to high workload, healthcare need assistance more than ever. This is where the value of our AI and technology-based solutions for healthcare providers comes into play. Harnessing AI, we've developed and validated world-class technology for screening clinical information, providing decision support to providers and optimizing patient care pathways.

Now by onboarding and engaging providers, we unlock clinical and commercial value driving our mission forward compliantly and safely. I'm sure that most of us have all been touched by a loved one who may have had a missed or late diagnosis. This issue is at the core of our mission to address. I think it's very important to highlight this as early disease detection saves lives and that is why we are so passionate about this mission.

Preventative care is a large umbrella term. Our area of focus of preventative care is in the early detection and identification of disease. To us, this is fundamentally the most important driver to execute on that will ultimately yield the highest results in improving patient outcomes and saving system costs. The earlier the detection, the greater the likelihood of treatment being successful. This is where AI comes in. AI can screen historical patient clinical information to help inform physicians of markers and signals for potential disease in patients earlier helping to reduce detection time.

I'd like to just take a quick moment now to provide some commentary and perspectives around healthcare AI. Despite significant healthcare innovation, the COVID-19 pandemic and its subsequent effects has streamed the healthcare systems worldwide. Patients bear the brunt of the strain, experience increased wait times for medical care leading to delayed diagnosis and worsened outcomes. Leveraging AI, we can empower both patients and physicians enhancing access, cutting healthcare costs and boosting patient outcomes.

The global AI health care market size is estimated to grow from $19 billion in 2022 to $281 billion by 2032. This is exceptional growth of an already very sizable market opportunity. But what I wanted to highlight here that is more important, despite the multibillion-dollar investment interest in the market behind companies such as OpenAI and others, we are still in very early days when it comes to healthcare AI market maturity.

Even 24 months ago, most AI-oriented companies in healthcare were very early stage, still working on product market fit. More recently, these companies have started to develop traction both from a revenue and from a validation perspective. That's why we believe the time is now for us to execute our strategy of growth as an early mover.

In addition, AI can also facilitate the identification and risk stratification of patients with rare chronic and complex diseases. Healwell has demonstrated tremendous success in these capabilities using AI to identify at-risk patients leading to proactive interventions and personalized treatment plans. I believe that the timing could not be better to position ourselves for first-mover advantage and execute on a land grab M&A strategy. I'll expand on this later.

Now let's look at our recent achievements. The fourth quarter was a historic chapter as we marked the debut of Healwell on October 2 with an unwavering commitment to revolutionize healthcare with AI innovation. On this date, the company announced the closing of its strategic transaction with WELL Health and relaunched as an AI and data science focused health care company. The fourth quarter was an extremely busy and productive time for us as we achieved many key milestones.

We forged this transformative strategic partnership with WELL Health. We secured significant financing through a $10 million convertible debenture and completed 2 bought deal equity financings for $8 million and $11.5 million. The latter was upsized from $10 million, effectively raising $29.5 million in total in the quarter. In addition, we completed a very key acquisition, a company called Pentavere, one of the leading healthcare AI platforms in Canada.

These milestones establish the framework for the company's growth and future success. We have maintained this pace of effort subsequent to the quarter as highlighted by the company completing the acquisition of Intrahealth in February 2024. We believe the landscape couldn't be more ideal to execute on our mission and build a high-growth leading AI company. I'll expand on this further, and I'll also provide additional details on the company's outlook later on in the call. But first, I'd like to turn it over to our CFO, Scott, who will review the financial results for the fourth quarter and year-end 2023.

[Gerald Nirenberski, executive]

Thanks, Alex, and good afternoon, everybody. Before I get into the details, I would like to mention that our 2023 results are not indicative of the company's current run rate revenues as the Intrahealth acquisition was made in Q1 2024. And this is expected to bring a significant amount of revenue and EBITDA to Healwell this year. Furthermore, 2023 results only included one month of contribution from our Pentavere acquisition and removed certain clinics in our Executive Concierge Medical business from the mix as discontinued operations.

The financial highlights for fiscal 2023 are as follows. Please note that these results are from continuing operations, which excludes clinic operations sold to WELL and the expected sale of Executive Medical Concierge within the MCI Polyclinic. Healwell achieved annual revenues of $7.3 million during 2023 compared to revenue of $10.4 million generated during 2022. Revenue from continuing operations was negatively impacted by a pause in customer activity at Khure due to the financial distress of the company, which had a roughly $2 million impact.

Declines in clinical research due to the timing of projects, which were more back-end loaded and wrapping in early 2024, which had about a $900,000 impact. And then the decline in MCI Polyclinic medical revenue for another $900,000 impact.

Healwell achieved gross profit of $2 million in 2023 compared to $4.3 million during 2022, driven largely by the aforementioned revenue declines in Khure. Healwell's adjusted gross margin percentage in 2023 was 28% compared to 42% in 2022. The decline in gross margin was largely driven by revenue declines and lower mix of technology and clinical research revenue, which carry substantially higher margins than medical clinic revenue.

During 2023, Healwell reported adjusted EBITDA loss of $8 million compared to adjusted EBITDA loss of $9.7 million in 2022. Adjusted EBITDA loss was smaller due to substantial reductions in operating costs from restructuring and streamlining the business in the wake of the company's prior financial difficulties.

Our fourth quarter 2023 results are as follows, and please note, again, these results are from continuing operations. Healwell achieved quarterly revenues of $1.9 million during 4Q 2023 compared to revenue of $3.04 million generated in 4Q of 2022. The decline in revenue was driven almost entirely by Khure due to customer concerns over financial viability of the company prior to its recapitalization. On a positive note, clinical research rebounded nicely as larger contracts began to ramp.

Healwell achieved gross profit of $557,000 in Q4 2023 compared to $1.73 million during Q4 of 2022. Gross profit was also largely impacted by the decline in Khure revenue. Healwell's gross margin percentage in Q4 2023 was 29% compared to 57% in Q4 of 2022, again driven by the decline in Khure revenue. During Q4 of 2023, Healwell reported adjusted EBITDA loss of $1.5 million compared to an adjusted EBITDA loss of $1.8 million in Q4 of 2022. The improvement in adjusted EBITDA for the quarter was driven by substantially lower operating costs during the fourth quarter, which declined 20% year-on-year and more than offset the impact of revenue declines in Khure.

I will now provide an update on our cash and debt position. During the quarter -- fourth quarter, Healwell significantly strengthened its balance sheet by raising a total of $22.5 million in gross proceeds from 3 financing. On October 1, 2023, the company completed a convertible debenture unit financing for gross proceeds of $10 million led by WELL Health and a syndicate of investors. At that time, the company also discharged and fully satisfied its $3 million bridge loan obligation to WELL Health. On October 17, 2023, the company closed a bought deal equity private placement financing at a price of $0.60 per share for aggregate gross proceeds of approximately 11 -- $8 million. On December 22, 2023, the company closed its second bought deal public offering financing at a price of $0.80 per unit for aggregate gross proceeds of approximately $11.5 million.

We ended the year on December 31, 2023, with $19.2 million in cash, no bank debt and $17.7 million in debt consisting of $10 million in convertible debentures, $6.2 million in secured debt on the original First Canadian Wellness loan and $1.5 million in low interest debt assumed from the Pentavere acquisition. This compares to a cash balance of $1.4 million, $1.7 million bank debt and $5.4 million of short-term secured debt on The First Canadian Wellness loan on December 31, 2022. The company retired its $3 million bridge loan from WELL simultaneously with the proceeds from the convertible debentures.

Most important, the debt profile of the company has dramatically improved with the convertible debenture financing and the maturity of The First Canadian Wellness extended a year to enable the company to conclude its legacy landlord liabilities. On this note, we are making significant progress on eliminating legacy landlord liabilities associated with the former MCI medical clinics and expect to have a positive update for you on this during the second quarter.

Finally, the company's trade and accrued payables fell 41% year-on-year on continued debt resolution and improved liquidity, which enabled the company to become current with its vendors. Subsequent to year-end, we completed the acquisition of Intrahealth, which led to a decline in our cash balance as we used cash to fund part of the acquisition. The company's cash balance today is approximately $10.9 million.

During the fourth quarter, we completed the following key transactions. On November 8, Healwell announced a strategic investment in doctorly, an innovative provider of comprehensive practice management software based in Germany as part of doctorly's recently completed a new round of funding. Concurrently, Healwell also entered into a strategic alliance agreement with doctorly, which provides Healwell with access to doctorly's rapidly growing healthcare provider base and support for provider onboarding onto the WELL clinical decision support platform.

On December 4, 2023, Healwell announced that it had completed the acquisition of a majority stake of Pentavere, a healthcare artificial intelligence company. This acquisition adds new high-margin technology revenue, access to multiple new key life science customers, new products, partnerships with major hospitals in Canada and the United States as well as experienced in sophisticated AI engineering team.

On February 1, 2024, Healwell announced that it had completed the acquisition of Intrahealth Systems Ltd. Intrahealth is an advanced SaaS-based electronic health records or EHR management platform for enterprise healthcare organizations across Canada, Australia and New Zealand. Alex will talk more about the Pentavere and Intrahealth acquisitions later in the call.

During the fourth quarter, Healwell will also announced the commencement of trading on the OTCQX Best Market on November 21, 2023, under the ticker symbol HWAIF. OTC trading provides Healwell with access to U.S. investors while increasing its liquidity.

Before I turn it over to Alex, I'd like to make a few qualitative comments about the outlook. Despite the difficulties that the company faced in 2023, it is important to note that Healwell and its subsidiaries did not lose any technology customers during even the most challenging periods of 2023. Moreover, the recapitalization has gone a long way to reinvigorating the company standing with customers. We've seen an acceleration in interest in Khure screening demand that has translated into an acceleration in pipeline from existing and new customers.

Interest in Pentavere's AI-driven solutions has also seen an acceleration from prior to when Healwell purchased the company. We're excited about the addition of Intrahealth and the synergies that are possible with our screening technologies to deliver a truly transformational experience to healthcare practitioners and patients alike. In summary, I am pleased to report that Healwell's outlook is bright, it's in strong financial position and has capital to fund future acquisitions and execute on its organic growth initiatives.

I will now turn the call back to Alex. Alex?

[Alexander Dobranowski, executive]

Thank you, Scott. I would now like to talk about our very important relationship with WELL Health. WELL Health, as some may be familiar as Canada's largest owner-operator of outpatient medical clinics and leading digital health service providing software and services to more than 1/3 of all Canadian physicians. WELL also has a substantial business in the United States. WELL Health has become and grown into a very special company, one that is not just 1 of the largest healthcare and technology companies in North America, but also a critical piece of the healthcare fabric in Canada. WELL Health is the largest shareholder in Healwell and being part of the WELL family opens many doors for our company.

On February 27, the company announced the appointment of Hamed Shahbazi as Chairman of the Board of Healwell. Hamed Shahbazi is currently the Chairman and CEO of WELL Health, and has served on the Board of Healwell since the debut on October 1, 2023. The appointment of Hamed to the Chair of Healwell is strategically important for shareholders of both WELL and Healwell given the shared objectives between the companies. I'd like to extend my thanks and acknowledge [indiscernible] reward for his contributions as Chairman prior to this change.

One way to conceptualize the Healwell relationship with WELL Health is to highlight that WELL Health is a multi-jurisdictional clinic footprint, digital tools and just a huge amount of patient volumes. While Healwell has a clinically oriented artificial intelligence technology and data science capabilities and expertise. How have we been working with WELL Health? On October 2, we communicated that Healwell and WELL announced the strategic alliance agreement that provides Healwell with exclusive access to WELL's entire footprint of providers and clinics. On October 18, we communicated the launch of WELL's AI decision support to assist healthcare providers in improving early disease detection.

WELL's goal is to make AI-enabled decision support a core offering to all physicians supported by its fully managed and SaaS platforms, which collectively power more than 31,000 physicians. The technology that powers WELL AI decision support is the Healwell technology. In order for Healwell to maximize chances of success, we need to continue to onboard and engage with providers. This is critical to the success of any technology or AI-oriented company in healthcare. And WELL Health provides us with this access as highlighted by the WELL Health effectively white labeling Healwell technology as WELL AI decision support.

On March 14, Healwell AI announced new commercial agreements with WELL Health USA and Circle Medical, expanding further into the U.S. market. The agreements will allow Healwell to provide U.S. patients with access to its subsidiaries Pentavere and Khure Health for the purposes of identification of patients with potential risks of certain conditions. This really highlights the commitment of well health to these technologies and why this will be a driver of success for Healwell. What an opportunity this is for Healwell to have access to the entire WELL Health footprint.

I'd now like to talk about 2 of our most significant acquisitions to date, Pentavere and Intrahealth but first Pentavere. As Scott mentioned, Pentavere is an innovative AI health tech company based in Toronto focused on identifying eligible patients for approved interventions. Pentavere's expertise is a data abstraction and structuring combined with their extensive network and experience in specialty care, this all perfectly aligns with Healwell's commitment to providing the best possible care for patients. This acquisition not only adds top line revenue but also introduces key expertise, new footprints and access to valuable commercial customers.

In our view, Pentavere is one of the leading healthcare AI assets in Canada. Pentavere is led by an exceptional team with Aaron Leibtag, the CEO; and Steve Aviv, the CTO; who both have demonstrated deep sector expertise and capability in AI and commercial viability over the last 6 years, building Pentavere and its core data ingestion engine named DARWEN. Why the Pentavere acquisition is so important, is that Pentavere has developed and repeatedly validated its capability of taking unstructured data and making it structured in healthcare. This is a fundamental capability without which there is a low likelihood of success in healthcare AI as most data being captured today in healthcare is largely in an unstructured or unusable form. This is why the Pentavere technology is so critical to our strategy because the DARWEN engine solves for this problem and can be applied to all areas of healthcare, broadening the Healwell capability spectrum.

Now from an AI credibility perspective, it is also very important to highlight that Pentavere has built one of the most substantial bodies of evidence through published manuscripts and medical journals of any Canadian healthcare AI company. To date, Pentavere has published over 20 manuscripts validating the effectiveness of their AI technology with the recent manuscript being accepted for publication that highlights Pentavere strengths with regards to applying generative AI technologies, large language models for advanced use cases in clinical care. This underpins that Healwell has validated generative AI capabilities. This is one of the first instances of a large language model to be published that accelerates precision oncology and lung cancer globally. This is a very, very credible piece of innovation.

Further to this, Pentavere has had a number of notable commercial successes with growing revenues and a very compelling pipeline. It has successfully commercialized with 11 life sciences customers, 5 of which are new relationships for Healwell. In addition, equally as important, Pentavere's DARWEN platform has been successfully deployed into 7 hospital networks along with signed data sharing agreements, including some of the largest hospital systems in Canada and 2 in the U.S.

Now I'd like to take a moment to highlight details about our second acquisition to date, Intrahealth. Intrahealth is a leading provider of SaaS-based enterprise class EHR solution, serving approximately 15,000 clinicians across Canada, Australia and New Zealand. With a global network spanning from small clinics to large healthcare delivery organizations, Intrahealth supports millions of patients with its suite of flexible software solutions. Intrahealth is expected to generate over $12 million in revenues in 2024, which reflects double-digit organic growth. Historically, Intrahealth has achieved over 80% gross margins, produced positive EBITDA and positive cash flows, over 80% of its revenue is high-margin recurring revenue.

After we completed the acquisition of Intrahealth, we announced plans to integrate our industry-leading AI tools with Intrahealth EHR platform, aiming to create a next-generation AI-powered EHR system. The synergies between Healwell AI's capabilities and Intrahealth expertise in EHR technologies presents an exciting opportunity to significantly impact the healthcare industry. By combining the power of AI with a comprehensive EHR platform, the goal is to unlock enormous potential to enhance patient care, all while reducing costs, and this, of course, is aligned with global value-based care trends.

Now importantly, I'd like to provide more details on our plans from an inorganic growth in our M&A strategy. This is a high priority area of focus for Healwell and this area of inorganic growth strategy is highlighted by the fact that we believe the market is ready for an early mover to execute on an AI technology, data science land grab, so to speak. Since our debut in early October, we have already demonstrated very compelling success in terms of capital allocation, and I'm very excited to share more.

Q1 intends to adopt a similar acquisitive growth strategy to WELL Health and will be WELL Health's capital allocation vehicle for preventative health and AI targets. We have a very full and active pipeline of acquisition opportunities. We are currently looking at numerous compelling acquisitions that fall into 2 categories: first, AI and data science companies that expand our current capabilities and are focused on early disease detection across all clinical domains. These types of targets are now starting to demonstrate revenue traction, achieve validation that their technologies work safely and compliantly. This is a very exciting time to be targeting AI-oriented healthcare companies. Pentavere is an excellent example of the kind of companies we are targeting in this first category.

The second category of acquisition targets are mature operating companies with strong financial profiles that would be vertically integrated with our AI technologies to drive incremental revenue and cash flow. Healthcare software companies such as EMR, EHRs, clinical research companies and also digital health companies are good examples from this category. These types of companies provide us with a vector of access to more patients, providers and clinical information but also importantly, we have a very strong profile from a financial fundamentals perspective with maturing revenue, positive EBITDA and free cash flows, Intrahealth is an excellent example of the kind of companies we are targeting in this second category.

By executing our M&A strategy against both these categories, we see a direct opportunity to acquire and integrate world-leading AI technologies and expand those technologies through acquired mature operating offerings, building a financially sustainable and exciting value creation vehicle in healthcare AI. Lastly, with regards to our M&A strategy, we are also targeting companies that are beyond the borders of Canada.

I'd like to now quickly and briefly explain some details with regards to advanced clinical decision support or in other words, what our physician copilot tools and how this ties back to our main strategy. As we continue to expand our AI capabilities at Healwell, we will ultimately build a platform that cannot just help screen and risk identify patients for rare and complex diseases like we can do today. We will also have the robust capabilities to support clinical decision-making across all clinical domains. That is what we mean by advanced clinical decision support, and this is what we are working towards.

As we acquire and also build out these capabilities, we will be launching in parallel what we call physician copilot tolls that will be specific for a particular clinical domain, for instance, our first validated and commercialized copilot tools are rare disease copilot that was built under our Khure Health Center and white labeled as well AI decision support. We'll be announcing much more exciting progress on this front in coming quarters.

Looking towards the future, you can picture Healwell AI's capabilities rapidly growing through acquisition of targets, as I mentioned, in that first category, building out the foundational platform of advanced clinical decision support, and then we will be deploying these technologies into our partners, healthcare systems like WELL Health, and also into our own platforms of access as highlighted by our second category of target companies. This we believe to be quite a compelling strategy.

From an outlook perspective, we have an extremely positive outlook based on our organic growth profile and our M&A strategy. I'm most excited by the immense potential for growth in innovation, particularly in the realm of AI technology. The entire boom of AI is just getting started. Healwell's strategic focus on inorganic growth aligns perfectly with this trend. We currently have a strong and active acquisition pipeline, as I mentioned but with the potential to more than double our revenue run rate by the end of the year using just the cash we have on hand.

Other significant areas of focus include onboarding more physicians onto the Healwell platform, increasing sales of our AI tools and technology, expanding Intrahealth's footprint and enhancing our presence within the WELL Health ecosystem. I look forward to sharing more news on these topics in the coming quarters.

And in closing, I want to reiterate that Healwell is a healthcare AI and data science company that has proven results in AI revenue from 6 of the top 10 largest pharma companies. The WELL Health relationship accelerates our growth with exclusive access to providers across North America. We have a very strong balance sheet with no effective bank debt, which enabled us to execute on our capital allocation plan.

M&A will play a significant role at Healwell with already completed 2 key transactions in Pentavere and Intrahealth, with a clear path to more than doubling our revenue run rate by the end of the year. We believe that since we have the necessary building blocks in place to successfully execute in healthcare AI, the time is now to plant our flag as a leader in healthcare AI and execute against this mission.

Finally, I'd like to thank the entire team at Healwell and those -- whose hard work continues to elevate the company at higher levels. I'd like to thank our investment banking partners, also our partners at SAF, namely Brian Paes-Braga, I'd like to thank Hamed and the leadership team at WELL Health, plus, I would like to thank my Board of Directors. Also, I'd like to thank you all for joining us on this call today. We look forward to providing an update next quarter.

I'll hand it now back to the operator.

[Operator]

[Operator Instructions] The first question comes from Christian Sgro with Eight Capital.

[Christian Sgro, analyst]

This is the first opportunity we've had to speak publicly about Intrahealth following the release and closing of the acquisition. Just wondering if there's any other detail you could share on the growth plans for Intrahealth this year, what the market opportunity looks like in Canada and outside of integrating the AI suite into Intrahealth, what the plan is for that new business?

[Alexander Dobranowski, executive]

Yes, Christian, thank you. Nice to speak to you. Thanks for joining, and thanks for the question. And Intrahealth, is a very -- was a very important acquisition. And really, it solidifies a fundamental part of our foundation. And when I say the word enterprise-grade EHR, right, Intrahealth is an established company, an established product, right, that's in multiple jurisdictions. And to answer your question a little bit more directly, what is the potential here look like? Well, Intrahealth came with a lot of its already credibility and pedigree under our banner, and we've communicated in recent months and even as recently as this week, right, some of the immediate wins, right, that are a result of that long-standing kind of credibility and pedigree that Intrahealth has.

In terms of Canada, we kind of view the markets where Intrahealth is working in with significant opportunity still, and although the EHR market, EMR market is highly mature, where we believe we can unlock some additional value is because we have the capabilities to integrate some of the more innovative technology that we have. And as we move -- and I know that synergy seems fairly simplistic and obvious, right? But to actually move it forward, right, is something that we believe we have the capabilities and the credibility to do so. So we've spent -- since we've closed the acquisition, we've already spent considerable time in planning, active discussions and the first beginnings of technology integration.

And again, just like we've successfully white labeled our early disease detection in rare diseases copilot, right, under the WELL Health banner, that's one of the starting points of our work with Intrahealth. So I'll just pause there. I think I answered your question.

[Christian Sgro, analyst]

Yes, that's great context. Thanks for the details on Intrahealth. I'll switch gears for my second question on to the M&A. [ Sort of ] objectives and you've laid out buckets 1 and 2, maybe the first more data science oriented and the second, more of a platform or research asset. So my question would be, what would your priority be? What's more full in the pipeline right now? And what can we expect -- maybe in terms of order to the extent you can provide detail about where you're interested?

[Alexander Dobranowski, executive]

Yes. Thank you, Christian, and a really important question, right? Because as I highlighted during the call, our inorganic growth strategy is of a very high level of priority. And I'm in the -- the team at Healwell is in this privileged position, right, where we have the support of WELL Health in a few different functions, including from a corporate development function.

And to answer your question, Christian, we're focused fairly equally on both buckets, okay? So let me just unpack that. So the first bucket and just to be a little bit more clear. These are AI companies that are focused on early disease detection. And we're talking about companies from basically across all subspecialties, and we're evaluating companies in a number of exciting domains. So these are companies, right, that have proven and validated AI technology, so not just data science but genuine AI technologies and that are starting to have commercial success. So that's that first bucket.

And the second bucket, we're looking now at mature operating companies that we can then fully vertically integrate the more innovative technologies on the AI side into to generate obviously more improvements in margin and ultimately, free cash flow. And you mentioned the term platform. So we're looking at platforms and also tuck-ins into platforms that span a few categories. And as I highlighted, right, these span healthcare technology offering, software offerings, these span clinical research offerings, which is a very important vertical and also spans digital health offerings, too. And I can unpack that a little bit further. Going forward, you're going to see us demonstrate ideas from both of these buckets in fairly short order from an M&A perspective.

[Operator]

The next question comes from Jason Zandberg with PI Financial.

[Jalson Zandberg, analyst]

Just wanted to get an idea in terms of the time line that you'd expect for integration with Khure and Circle Medical in the U.S. as well as Pentavere and, WELL USA. Is this integration that will take a number of quarters before there are some commercial opportunities? Or sort of can you lay out the time line for that?

[Alexander Dobranowski, executive]

Sure. Jason, thank you so much for the question and good to speak to you. So let me frame this for a moment. So we announced, right, the execution of agreements, right, with these WELL health U.S.A. subsidiaries. And that actually takes a bit of planning and effort to get done. And both Pentavere and Khure Health have the appropriate or have satisfied the appropriate regulatory requirements, right, to be able to operate and compliantly commercialize in the U.S. So all that had to be done and that's very important.

And to answer your question more directly, we have just added actually 2 very talented individuals to the leadership level of Healwell from an operations perspective. And these 2 new additions are effectively acting as my Co-Chief Operating Officers, and one of their top and important mandates is to facilitate and accelerate the speed of integration into the WELL Health ecosystem and also into other health systems. So basically, to help us unlock these opportunities. So I would be expecting that we would see the beginning of a commercial return on these relationships exiting this year. So there's still some planning that's required and then there's resourcing. But a lot of the, let's say, the regulatory heavy lifting has all been completed.

[Jalson Zandberg, analyst]

That's perfect. That's great color. Second question, just wanted to get an update more on the Canadian side in terms of onboarding physicians onto the Healwell platform. Any update you can provide would be helpful.

[Alexander Dobranowski, executive]

Yes. So -- and Jason, you're touching on probably one of the most critical drivers to facilitate and accelerate commercial success in healthcare AI. And I just want to clarify just for a moment, if I may, and I'll be brief. But in healthcare as opposed to other sectors, right, you're working in a realm where there is sensitive clinical information, and you're working in a realm that can actually impact patient outcomes. So the compliance framework, again, is extremely important, right, to have fully buttoned up, and that's something that we focus on with considerable resourcing.

And just to be clear, Jason, we're never taking clinical information and monetizing that information directly. That is just certainly not anything that we focus on. What we're doing is actually supplying our provider partners with clinical decision support tools that help from them in their day-to-day work, identify these patients that it might have fallen through the cracks. So physician onboarding and engagement in a compliant way is a very important function.

Now to date, with the predecessor company over the last 3 years under the Khure Health banner, we have onboarded just north of 600 providers onto the platform. Not all of them have remained active but it's quite a sizable quantum. And now, Jason, since October 1, we have this wonderful partner with WELL Health. And again, as I highlighted, this addition of 2 new members to the leadership team, right, part of their role, of course, is to activate the WELL Health U.S.A. subsidiaries, but also to help with physician onboarding and we're starting to see that success now. And Jason, I'll be a little bit more clear with regards to the specifics around these numbers as we get a bit more traction, and we'll be communicating how many providers are onboarded, et cetera, and what to expect from a velocity perspective.

[Operator]

The next question comes from Gabriel Leung with Beacon Securities.

[Gabriel Leung, analyst]

A couple of things. First, Alex, just going back to the previous question. I'm curious if you -- and just talking about the onboarding of the WELL positions onto Khure. I'm curious to hear whether there's been any pushback, I guess, from either WELL's in-house providers or providers -- non-WELL providers that are using their software right now, whether there's been any pushback to having Khure integrated onto the EMR?

[Alexander Dobranowski, executive]

Gabe, really, really good to speak with you. Thanks for the question. And again, highlighting a very important point. So this is -- and this goes back to the detailed work that I had the privilege of being with Hamed prior to the transformation of the predecessor company. So Hamed Shahbazi at WELL Health had started to put wheels in motion where we would be leaders and champions of this type of technology with the healthcare systems. And Gabe you're right, providers are very busy they're over work. There's a lot of stress and demand. So engaging with new technology is not a high priority.

But Hamed and the leadership team at WELL Health has been able to carefully navigate those nuances and build the culture that fosters adoption. And this is really important. This is why we believe Healwell AI has a really amazing opportunity here to be incredibly successful because most healthcare AI companies, they're going outbound to many different health systems, and those systems do not have a culture, they don't have the resources or the tact to help onboard their own providers. They're -- everyone's too busy focused on their own priorities. But this relationship with WELL Health is different.

And I'll highlight, Gabe, that we went as far as actually white labeling our technology. So it's validated. It's got the stamp of approval from WELL Health, right, at the executive level for the providers to use this technology. And look -- and Hamed is in fierce agreement with myself where this is the future of healthcare Artificial intelligence tools combined with strong EMR offerings, this is where we're headed. And I believe -- I can't speak for Hamed directly but I believe he wants to make sure that WELL Health is ahead of that curve.

So there's even discussion around having these technologies as opt-in components of the WELL Health offering. So when you're a physician and you go work at WELL, these all come as de facto tools. You're never, of course, forced to use anything but they're there. And that's a very rare relationship to have as a healthcare AI company where you can go and work with one of the largest provider networks in the world in this type of a format.

So we paid particular attention Gabe. I know it's a long-winded answer but particular attention to how do we actually get adoption in provider adoption. And I can say it's tricky, right because I'm a physician myself.

[Gabriel Leung, analyst]

Got you. Also, can you -- are you comfortable talking a bit more about what the current pipeline of opportunities is looking like within -- with your life science partners in terms of patient screening opportunities and the number of opportunities you're dealing with right now, the size of some of these opportunities? And whether some of these opportunities are dependent on you actually integrating with some of WELL's providers for us?

[Alexander Dobranowski, executive]

Yes. Okay. So let me unpack this. So Gabriel, we've noticed compared to 3 years ago, right, that there's also a shift among life sciences at a more readily openness to actually onboard and work with these types of innovation -- innovative products, okay? So that's number one. And I'll just give you a quick example. So 3 years ago, you wouldn't find at most large life sciences companies at the leadership level a lot of individuals that are oriented on data science or real-world evidence creation or artificial intelligence. Now they've all populated teams of these people that can then go and evaluate different companies from a credibility and feasibility perspective.

And that's why I highlighted actually again how important it is that through this acquisition of pentamer, we also have this -- one of the largest bodies of evidence of peer-reviewed published evidence of the credibility of our technology, right, where that's now become an important point of discussion with life sciences.

From a demand perspective, we have never been in a stronger position with regards to our pipeline. And although through the transformation of the predecessor company into Healwell, that revenue was inherently on pause. We are now in Q1, seeing the first material reacceleration events in that revenue. So this year, I'm framing that, okay, we're going to get back and match what we've done historically, and really set the foundations for an outstanding growth here from an AI revenue perspective in 2025. But there's -- because we have such an active pipeline and interesting demand, there are a few opportunities and sizable ones that if they convert on a faster time line, which is a potential, right, this year could be pretty interesting from an AI perspective.

And lastly, just to satisfy, I think you're asking about, okay, is this predicated on onboarding WELL physicians, et cetera. The indirect answer here is, yes, we need to keep onboarding physicians right to maximize the opportunity. We never had exposure on boarded a single provider for WELL Health prior to this transaction. So now we have this effective gateway of growth with the right, as I mentioned, foundational cultural steps in place to do it, right, of over 3,000 providers. And we're actively onboarding these providers today. So there's certainly -- we have all the building blocks in place, plus the first commercial indications that this is a reaccelerating business line for us. Thanks, Gab.

[Gabriel Leung, analyst]

That's great. Appreciate that. I just had one last question for Scott. So with the inclusion of Pentavere and Intrahealth sort of on a full quarter basis combined with your core business, directionally, how should we be thinking about EBITDA relative to the negative [ $1.5 million ] that was reported in Q4?

[Gerald Nirenberski, executive]

Sure. Yes. So the EBITDA was frankly better than expected in Q4. Now part of that was the fact that we had cost reduction measures in place, and we had quite a bit of attrition as the company went through the difficulty last year and basically had almost no cash to operate. So as you can imagine, to reramp here to ramp some of these other things, there is going to be some investment to make that happen. Obviously, we are going to be very judicious about the way those dollars are spent to maximize return on those dollars for you.

So the way to think about it is Q1 would certainly be a higher burn rate just because you're reinvesting in the businesses to accelerate them. And then as the revenue folds in through the year, you'd expect it to be progressively better through the year, and obviously, our goal at the end of the day is to be cash flow positive. That will take some time, and I'm not telling you we're going to be that there this year for certain but the Q1 is really sort of your [indiscernible] of maximum negativity.

[Operator]

Our next question comes from George Ulybyshev with Clarus Securities.

[George Ulybyshev, analyst]

Just a couple of here -- questions here. The first one is, do you have any updates on your plans to launch new commercial initiatives in various other specialty areas outside of the rare disease space? Or is that -- or is it too early days for you guys?

[Alexander Dobranowski, executive]

Yes. Thanks, George. The short answer is yes, we do. And there's 2 paths for us doing that. We're expanding our capabilities organically beyond the rare and ultra-rare disease space. We've actually started in the chronic disease space for screening patients and finding patients at high risk for chronic diseases. And then we're also going to expand these capabilities directly through acquisition.

[George Ulybyshev, analyst]

Got it. Thanks, Alex. And just one more here. On the M&A front, I believe at some point in the past, you stated that you have looked at over 100 potential acquisitions, were those mainly in Canada or the U.S.? And also, what kind of valuation multiples are you guys seeing on these assets?

[Alexander Dobranowski, executive]

Yes. So George, a lot of these candidates were outside of Canada as well. And part of the benefit that I mentioned earlier is we've had support from the WELL Health corporate development team and also the result of some of their prospecting. From an AI perspective, from a valuation perspective, George, we're seeing that these early-stage debenture-backed companies, right, are faced significant headwinds. And they're facing down rounds, et cetera, right? It's been -- from a macro perspective, it's been quite challenging. So valuations have certainly compressed.

And then George, because of our exclusivity with well Health, because of the capabilities and access we have to well health and, of course, our own AI capabilities, we're able to be in a strong negotiating position with some of these targets. So we're seeing multiples of revenue between 10x to 20x depending on specific factors with regards to each particular AI company that we've been in negotiations with.

[Operator]

The next question comes from Michael Freeman with Raymond James.

[Michael Freeman, analyst]

Congratulations on a very big year. I have one question. So the strategic alliance you have with WELL Health, there's probably no better partner to have in Canada to integrate your technologies into. Now thinking about the U.S., there's -- we've seen recent integrations with Circle Medical and CRH. I'm curious. Under the terms of your agreement with WELL, are you able to pursue business with other payers or provider network, sort of healthcare networks in the U.S. as we've seen investments from some of these big players in AI-specific technologies recently?

[Alexander Dobranowski, executive]

Michael, really good to speak to you. Thanks for the question. And look, I'll frame it [indiscernible], because look, Hamed has a very strong thesis here in what results they do with Healwell, right? And remember, WELL Health is one of the largest investors, right, supporting the company in multiple facets but also has an option to control Healwell when Healwell satisfies certain conditions. So it's in WELL's best interest rate that we have unfettered support, and we can grow, right, across all verticals where we have access to and geographies. So we are actually empowered to grow with other health systems in the U.S. by WELL.

And actually, currently, our company at Healwell like Pentavere is commercially active with 2 very large health systems in the U.S. and also historically under our banner with Khure Health, we have worked and still worked with one of the largest nephrology clinic groups in the U.S. and commercially active. So this is -- we're -- to answer your question, we're actually empowered to grow and succeed, right, and of course, WELL Health wants to see the tremendous success for Healwell.

[Operator]

I show no further questions at this time. I would now like to turn the call back to Alex for closing remarks.

[Alexander Dobranowski, executive]

Thank you, operator. In closing, I'd like to thank everyone once again for joining our call. Thank you to the analysts for their questions. Everyone, please stay safe and healthy, and we look forward to providing more updates in the future. Thank you.

[Operator]

This concludes today's conference call. Thank you for your participation. You may now disconnect.