WELL Health Technologies Corp

TSX:WELL

Earnings Call Transcript 2020-Q1

[Operator]

Welcome to the WELL Health Technologies Corp. First Quarter Fiscal 2020 Financial Results Conference Call. My name is Colin, and I'll be your operator for today. [Operator Instructions] Please note, this call is being recorded.I'll now turn the call over to Mr. Pardeep Sangha, Vice President, Corporate Strategy and Investor Relations. Please go ahead.

[Pardeep S. Sangha]

Thank you, operator. Welcome, everyone, to WELL Health 2020 Fiscal First Quarter Financial Results Conference Call. Joining me on the call today are Hamed Shahbazi, Chairman and CEO; and Eva Fong, the company's CFO. I trust that everyone has received a copy of our financial results press release that was issued earlier today. Listeners are also encouraged to download a copy of our interim first quarter consolidated financial statements and management discussion and analysis from sedar.com.Portions 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. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management, are inherently subject to significant business, economic and competitive uncertainties and contingencies. These forward-looking statements include, but are not limited to, statements related to WELL's projected operating performance, financial results and condition, WELL's projected growth and growth strategy, cash flow and use of cash, business objectives and outlook, ability to complete potential acquisitions and acquisition strategy, cost reduction and shared services benefits and other matters that may constitute forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors, many of which are outside of WELL's control that may cause the actual results, performance or achievements of WELL to differ materially from the anticipated results, performance or achievements implied by such forward-looking statements. These factors are further outlined in today's press release and in our management discussion and analysis. We provide forward-looking statements solely for the purpose of providing information about management's current expectations and plans relating to the future. We don't undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any changes 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.As a reminder, to those analysts asking questions today during the question-and-answer session, that due to the securities laws, we are not permitted to comment on the recently announced bought deal offerings, use of proceeds or the prospectus. Questions should only relate to Q1 results or business-related questions covered in this call.And with that, let me turn the call over to Mr. Hamed Shahbazi, Chairman and CEO. Hamed?

[Hamed Shahbazi, Founder, Chairman & CEO]

Thank you, Pardeep. Good day to everybody. We hope you're all keeping safe and healthy during these uncertain times due to the COVID-19 pandemic. We truly appreciate everyone for joining us on this call today and, of course, for supporting the company by being shareholders.On today's call, I will first provide some commentary on COVID-19, and how it has affected the business, especially as it relates to our VirtualClinic+ telehealth service, followed by some commentary from our CFO, Eva Fong, who will provide a more detailed summary of our fiscal first quarter 2020 financial results. I'll then come back and provide further commentary and an outlook for the business, followed by a question-and-answer session.Due to the worldwide outbreak of the COVID-19 pandemic, first quarter 2020 was a notable quarter, eventful, unlike anything we've witnessed before. WELL implemented its business continuity plan in the first quarter, resulting in its nonclinical staff working from home, while the company's corporate-owned clinics remained open throughout the COVID-19 pandemic as these clinics are deemed an essential service. Thus far, I'm pleased to report that WELL's publicly insured clinical patient services revenue has proven to be robust and highly resilient and generally in line with pre-COVID expectations. The reason for this resilience is as follows: WELL's primary care businesses generally composed of 2 components. Our family practice business and our walk-in business, with our family practice business being the bigger of the 2.Our family practice is characterized by family physicians who are serving and supporting a specific roster of patients often for many years. On any given day, these physicians know exactly who they will be seeing and generally why they'll be seeing them. This business was able to be immediately transitioned to a remote or virtual care paradigm via the use of telehealth as doctors and patients were able to immediately carry on their regular appointments via phone or use of our VirtualClinic+ telehealth platform. While it took hard work to make this transition possible with WELL's operating team working round-the-clock, we were able to execute on it fairly seamlessly and did not see any notable disruptions, truly an achievement.Our walk-in business on other hand was a bit trickier to transition. As in this model of care, physicians don't know who their patients are going to be on any given day and rely on physical walk-in traffic, which generally tends to be a byproduct of walk-by traffic where our clinics are situated. Well, as you can imagine, due to physical distancing and stay-at-home requirements, physical traffic patterns immediately decreased. WELL responded by immediately onboarding and activating these walk-in docs on its telehealth program, VirtualClinic+ at virtualclinics.ca. Here in line is one of the truly special attributes of our telehealth program. It is not just a health compliant video consult system that allows patients and doctors to securely see each other and conduct telemedicine, it actually originates patient volume for them. This means that doctors who wish to uberize themselves or make themselves available to serve virtual walk-in traffic can meet and see patients online, often for the first time.So if you're assessing the telehealth marketplace and you're comparing companies and systems, remember, there are companies who are providing platform tools and capabilities to allow doctors and patients to interact, and then there are companies who are actually providing doctors with access to new patients. It's important to note that acquiring patients is not an easy thing to do and something that we are executing on as evidenced by our results.To that end, WELL immediately ramped up a marketing and awareness program designed to attract patients who needed to see a doctor, but didn't want to break the stay-at-home orders from government and public health leaders, and weren't sure if their ailment was emergency or not -- considered an emergency or not. Our marketing program is a very sophisticated mix of digital performance advertising, using platforms like Google and Facebook, in addition to mass media tools like TV. I'll comment more on this later. In fact, VirtualClinic+ is truly a national service. Canadians from all over the country, that means every province in jurisdiction can log on and see a doctor with us. Those patients who are valid health card holders from BC, Alberta and Ontario will be able to do so at no cost since they will have full reimbursement on their visits from the government. The platform will validate health cards and protect practitioners so that all they have to do is show up and provide the consultation. Patients from other markets would need to pay a small consultation fees.Interestingly, we also witnessed a new phenomenon that we hadn't seen before. Because of our telehealth platform's capabilities, some of our family doctors, for the first time ever, started to serve patients outside of their roster, patients they didn't know. We believe that they did this for a couple of reasons. One, it was easy to do. If they're users of the platform and are all ready to see their own patients, the incremental effort to add a doctor to the pool of available health care providers to serve new patients is not that great, which is one of the underlying benefits and power of the platform. And two, because they could see that patients are interested in acquiring health care services online.What made all of this possible was not only the hard work of our team, but also the attributes of our telehealth platform, which include a sophisticated EMR integrated experience for doctors who serve on OSCAR. WELL's VirtualClinic+ program has onboarded hundreds of medical practitioners since launching at the beginning of March, and now has surpassed over 1,000 virtual payment -- virtual patient appointments per day multiple times. Furthermore, we are continuing to aggressively roll out VirtualClinic+ to our OSCAR EMR network of approximately 1,500 clinics and more than 8,000 physicians.While this has allowed us to maintain our pre-COVID forecast and beat consensus for Q1, remember, COVID really only truly hit us in the last 2 to 3 weeks of the quarter. What I believe is really exciting is that WELL's overall booking volume, this means virtual patients and/or physical patients from all sources in the last 30 days prior to this call has not only increased as compared to the last 30 days booking volume of the quarter, but it has also increased as compared to the same period last year, which was a healthy time for us.This means that our total booking volume is actually improving and accelerating as the pandemic has gone on. We believe that is because WELL is growing quickly in the online channel as well as seeing restorations in its on-site business. In fact, we've now seen increases in our physical walk-in volume for 5 consecutive weeks, while our online business continues to make substantial week-over-week gains, typically at double digits, percentage-wise. This is highly encouraging to us because it means that we didn't just swap telehealth for our on-site clinical business. We believe that if you were to personify or characterize our patient services business as a car or a vehicle, we went from 1 engine to 2 engines. With now both engines are becoming more powerful by the day propelling us forward as a company.Our telehealth program, VirtualClinic+ was developed collaboratively with a company by the name of Insig, which is a Toronto-based technology company, who has developed advanced telemedicine and patient engagement software.During the quarter, WELL made a sizable $5.94 million strategic investment in Insig and has become its largest shareholder. We have also joined Insig's Board of Directors and have deepened our collaboration with them. While formal market research doesn't yet exist, we estimate that WELL's telehealth program is already one of the top programs in the country. And if you were to combine the volume of WELL's program and Insig's other programs, we estimate that we may be in serious competition for telehealth leader in Canada. Please keep it in mind that Insig has already -- is already in market with programs that currently serve notable brands and businesses such as Rexall and Walmart, amongst others.We have now onboarded or enabled more than 800 health care practitioners in our telehealth programs. The vast majority of these practitioners are doctors that also include nurses and other health care professionals. You see another very unique attribute of our program, which I believe is unequaled by any other health care provider other than the WELL Insig platform, is the functionality that allows patients to literally browse the different health care provider profiles and select their preferred provider. This has not only made the platform less intimidating for patients, but it has also created connections. One incredible stat that I'd like to share with you today is that we have had almost 16% of all our visitors to VirtualClinic+ marketplace, see the same doctor 2 or 3 or more times. And we are not counting our family practice business here. We're only counting what would be characterized as virtual walk-in. This is pretty incredible because we are now organically creating attachments between patients and doctors that previously didn't know each other. As you may know, there are roughly 5 million unattached patients in Canada and many of them who are looking for a family physician, and many of them frustrated that they weren't able to find one. We are now seeing and that they are able to find physicians that they like on our platform. Thousands of patients are selecting doctors that they had a good experience with and going back to see them multiple times. We're also finding that many patients have gone on to see doctors in person inside clinics after seeing them online, often inside our own physical clinic network.As such, we're pleased to report that our bricks-and-mortar business has now evolved and transitioned to a clicks and mortar business as patients now have the flexibility to either see a doctor in one of our physical clinics or do a virtual consult using our telehealth program. We believe that COVID-19 has changed health care forever. And the only way to provide satisfactory care in the future is to have an omnichannel or bricks and clicks experience. This means that our physical clinics provide us with a distinct advantage over telehealth-only providers. This is because, as you can imagine, telehealth does have its limitations, and doctors and patients do often need to meet, so that patients can be more closely examined. We're also more than happy to recognize that a few weeks ago, the governments of BC and Ontario made important regulatory changes and added critical funding to support doctors and patients during the pandemic by boosting public insurance coverage for telehealth amongst other developments and changes that were helpful. Other provinces have done this as well, but WELL's exposure, as you may know, to BC and Ontario is greatest due to our network of EMR locations, which are predominantly in these 2 provinces.With that, I will turn the call over to our CFO, Eva Fong, who will go into more financial detail for the quarter, and then I will provide some additional remarks on our business and outlook before we open it up for questions. Thank you.

[Eva Fong, Chief Financial Officer]

Thank you, Hamed. I'm pleased to report that we had a very strong first quarter 2020. WELL generated $10.2 million of revenue during the 3 months ended March 31, 2020, compared to $7.4 million generated during the 3 months ended March 31, 2019, an increase of 38%. This increase in revenue mainly is due to the company's acquisitions over the past year. We define gross profit as revenue less the cost of clinical and digital services. Gross profit increased 74% to $3.9 million for the 3 months ended March 31, 2020, compared to $2.3 million for the 3 months ended March 31, 2019, as a result of the increase in revenue in the period. Gross margin percentage increased to 38.5% for the 3 months ended March 31, 2020, compared to 30.7% for the 3 months ended March 31, 2019, which is mainly due to the addition of higher-margin digital services revenue. G&A expenses increased to $3.9 million for the 3 months ended March 31, 2020, compared to $2.4 million for the 3 months ended March 31, 2019. Increases were mainly due to an increase in wages and benefits as a result of acquisitions as well as an increase in headcount in the company's headquarters. Net loss from continuing operations was $2 million or a loss of $0.02 per share for the 3 months ended March 31, 2020, compared to a net loss from continuing operations of $1.5 million or a loss of $0.02 per share for the 3 months ended March 31, 2019.Throughout the quarter, WELL maintained a strong balance sheet. We ended the quarter with cash and cash equivalents of $17.5 million as of March 31, 2020, compared to $15.6 million as at December 31, 2019. The increase in cash was mainly due to proceeds from the convertible debenture financing in March 2020 in the net amount of $10.2 million.During the 3 months ended March 31, 2020, the company spent $7.6 million of cash on investing activities, which included $526,000 on the acquisition of property and equipment, $3.9 million on business acquisitions, $2 million in an investment in debt instrument and $1.2 million on deferred acquisition costs. The company believes that adjusted EBITDA is a meaningful financial metric as it measures cash generated from operations, which the company can use to fund working capital requirements for its future interest and principal debt repayments and fund future growth initiatives.Adjusted EBITDA is a non-GAAP measure and should not be construed as an alternative to net income or loss, determined in accordance with IFRS. For more information on how we define adjusted EBITDA, please refer to the definition set out in today's press release and in our MD&A. Adjusted EBITDA loss for the 3 months ended March 31, 2020, was $246,000 compared to adjusted EBITDA loss of $338,000 in the 3 months ended March 31, 2019. As of the end of the first quarter of March 31, 2020, the company had 122,049,877 issued and outstanding common shares. More recently, as of the close of business date yesterday, the company had 123,603,329 issued and outstanding common shares. That is my financial update.And I turn the call back over to Hamed.

[Hamed Shahbazi, Founder, Chairman & CEO]

Thank you, Eva. The COVID-19 pandemic has introduced many uncertainties for many folks in many sectors. However, we feel the company, WELL Health, is very well positioned in the current environment. WELL has a very strong balance sheet, close to $30 million in cash, given our recent acquisition. This obviously includes the proceeds that we are -- have recently announced from our bought deal. So we actually haven't received the proceeds just yet, but we anticipate doing so very shortly.A robust pipeline of acquisition opportunities, a solid base of recurring revenue in its digital EMR business, and we are actively ramping up our recently launched VirtualClinic+ telehealth service. As we had discussed before, WELL's VirtualClinic+ platform not only allows family practice physicians to conduct virtual medical consultations with their own rostered patients, but also features a rapidly growing virtual health marketplace business. WELL's virtual health marketplace has practitioners online at all hours of the day facilitating a virtual walk-in experience for the millions of patients across Canada who do not have a regular family doctor. In order to support this direct-to-consumer offering, WELL has ramped up its marketing efforts, including TV, advertising on Global and CTV, some radio on CKNW, extensive performance marketing and experimentation on platforms such as Google AdWords, Facebook and other social media influencer campaigns managed by the company's internal marketing team and hired consultants. WELL also recently commenced the YouTube-based brand and advertising agency campaign through a partnership with Broadband TV Corp. Our advisers have noted that our general click-through rates and performance of the company's ad units and creative have been substantially above industry averages. Telehealth is also improving the long-term economics of our physical clinics. Going forward, we anticipate that physicians will be operating in a hybrid model of seeing patients in clinic as well as using telehealth. In this scenario, the physicians are not only required to be in the office as much. Therefore, each clinic can support more physicians than before. However, when doctors are not in the clinic, they're still billing through the clinic because of all the digital services, front office, back-office functions that are provided by the clinic. This has the potential to dramatically improve clinic economics. Hence, we are currently in the process of closing one of our clinics, actually, our worst-performing one located in Surrey, BC. Physicians from this clinic will be relocated to other nearby clinics in WELL's network that now have more space available because some doctors who typically practice in person are doing so via the company's telehealth platform part of the time, thereby allowing us to increase the utilization in our other clinics and improving our overall EBITDA profile.The WELL EMR group is the third largest EMR vendor in Canada and continues to migrate EMR customers from various acquired platforms to WELL's cloud-based version called OSCAR McMaster Professional Edition. We're pleased to report that the WELL EMR group is continuing to see strong demand and new sign-ups as high interest in telehealth is accelerating paper-based clinics to go digital with EMR software and services.Remember, there's still probably close to 15% of the entire country's clinics as of a few months ago, who were noted by Infoway Canada as being based on paper, hard to believe, but true. We are still expecting WELL EMR group's high-margin SaaS-based revenue to achieve double-digit growth in 2020, as disclosed in our investor call last quarter.During the quarter, our SleepWorks unit also continued to operate effectively and since has not only executed well during COVID-19 in terms of continued service and support for patients, but SleepWorks smartly realized that CPAP, or continuous positive airway machines and BiPAP machines are considered now, following the FDA's guidance to health care providers about those machines serving as ventilator alternatives on March 22, as being potential sales opportunities. And they were able to make these machines available to Canadian health care institutions. In fact, a major hospital group in BC acquired a number of these machines from SleepWorks, just in case there would be a shortage of ventilators.WELL continues to have a strong pipeline of potential acquisition targets to drive its inorganic growth strategy. As you're likely aware, the company's acquisition strategy is based on executing on a disciplined and accretive capital allocation program.As previously mentioned last quarter, due to COVID-19, WELL will likely increase its investment focus on technologies and services that can be provided remotely, such as EMR and telehealth-related businesses, while maintaining its focus on OSCAR-based EMR service providers as well as clinical practices that are more technology enabled.The company's goals for 2020 remain unchanged from our prior conference call: One, achieving organic revenue growth in both its clinical and digital portfolios; two, continuing to follow a disciplined acquisition strategy, which includes the acquisition of or investment in accretive health clinics, OSCAR-based EMR service providers and other digital health care technology companies; three, increase our market penetration in the telehealth service sector; and four, achieve positive adjusted EBITDA in the second half of 2020.In closing, I want to thank you all for joining us on this call today and thank our shareholders for their continued support. I would like to also thank WELL's senior management team and all our employees and contractors for their tremendous effort, especially during the COVID pandemic. I'm very proud of our employees who have responded to the challenges that COVID-19 presented.Finally, I want to express my gratitude to our physicians and clinical staff as they are the front line workers who have been keeping the clinics open and are providing unbelievable care through this COVID pandemic. We are forever grateful for all the health care workers in our clinics and frankly, clinics everywhere and also in many of the hospitals and care homes across the country who tirelessly look after our health and safety.And with that, I will now turn the call to questions. Operator?

[Operator]

[Operator Instructions] So we have a question from Nick Agostino of Laurentian Bank.

[Nick Agostino]

Sure. Am I -- can you guys hear me?

[Hamed Shahbazi, Founder, Chairman & CEO]

We certainly can, Nick.

[Nick Agostino]

I guess first question, just, I guess, confirmation here. My understanding is in BC, starting April, the government was going to implement a price increase on the insured medical side of your business. Can you confirm that, that price increase has gone through? Or did COVID have any impact or delay on that increase?

[Hamed Shahbazi, Founder, Chairman & CEO]

Yes, the price increase did go through. The nuance there was that, initially, it did not apply to telehealth, but it seems that since then, the province has actually now applied the price increase to telehealth services as well. We're trying to clarify that. But that would be great news. And we're very happy that they've gone ahead with the price increase.

[Nick Agostino]

Okay. Great. And then second question, just you guys are saying 800 doctors are on your virtual care platform, which I assume is as of the end of Q1. And when I think about the fact that you have about 180 or so physicians in your clinics, plus another 500 doctors, I guess, so you were penetrating within your EMR network. Just trying to wrap my head around the other 200, 220 doctors, my understanding -- or my assumption is [Technical Difficulty] from doctors outside of your clinic and EMR network? If that's the case, how are you going about, I guess, getting those doctors?

[Hamed Shahbazi, Founder, Chairman & CEO]

Yes. So Nick, that figure of 800 was the current figure. I was trying to provide sort of the latest and greatest in terms of how many people we've got enabled on the platform. As of March 31, I think we were a bit lower. You're right in that we have enabled most of our own physicians. So well over 100, I think 120 or 130. There's a bunch of our physicians that are part-time or locums. And so they -- a lot of those guys are not activated yet. But -- so a big part of this is definitely coming from our EMR group. And we also have some physicians -- what's really need with the Insig program is, we are also getting the benefit of their doctors when there are jurisdictions and times where our doctors are not able to provide the care, and so -- and conversely, we're doing the same thing. Some of our doctors are providing care to some of the different Insig and Tia Health programs. So I think what we did is we provided sort of a sum total of the number of doctors that are either registered on the program or were in some way, shape or form involved with supporting VirtualClinic+, which is the company's telehealth program.

[Nick Agostino]

Sorry, did I hear correctly that it also includes doctors that are on a Insig platform?

[Hamed Shahbazi, Founder, Chairman & CEO]

Yes. I mean, this would have been a smaller group, like less than 100. But yes, at times, if in our own program, like, let's say, in markets like Ontario, where initially we had fewer doctors, so we had a number of Insig's doctors help us support the national program there or, let's say, in other provinces where we necessarily have not done a kind of an onboarding drive with doctors.

[Nick Agostino]

Okay. And then my last question, I think in prior calls or in the last call, you spoke of the attraction, of course, to virtual to your VC operation, your virtual clinic operation. And that because of that, you're seeing more and more EMR interest at the same time, in other words, physicians are looking to go to digital, not just on the virtual side for their visits, but also with -- just to manage their own health care records operations. Are you seeing a lot of cross-selling successes? Or are most of your wins on the EMR and on the BC side still very much separated?

[Hamed Shahbazi, Founder, Chairman & CEO]

Yes. No, I think that's a good point. Just to reframe your question into a statement. I think what we are seeing is catalyzing behavior that's coming from telehealth into the EMR and vice versa. So what we are doing in our EMR division is, we're selling a telehealth plug in. That's a SaaS tool that allows you as a clinic or a doctor who has their own family practice to be able to essentially see your own patients. This is without our patient origination service, if you will. And so we expect that, that will further add tailwinds to our existing growth success story with EMR. So in the next few quarters, we'll try to comment on that as well. But yes, we are seeing people come in through that sort of telehealth door and say, "Gosh, you know what I would really like, the EMR that supports this experience." So yes, yes, that is true.

[Operator]

Your next question comes from Justin Keywood of Stifel GMP.

[Justin Keywood, Director of Equity Research]

And good to see the strong growth in the quarter. I was hoping just to get some clarity on the telehealth bookings exceeding 1,000 per day. Is that primarily from existing patients that are now using the telehealth platform versus an in-person visit? Or does that also include a large amount of new -- net new patients outside of WELL's clinics?

[Hamed Shahbazi, Founder, Chairman & CEO]

Yes. It's a great question. I think we're seeing both happen. I think a lot -- I would say probably equal parts. If you were to look at sort of 1,000 appointment a day, sometimes a bit more on the completely net new and sometimes a bit less. So yes, I think that's probably the mix that we're seeing right now. I will tell you that, again, both numbers are growing in aggregate. So there isn't sort of one number that's trending down, both are growing with us.

[Justin Keywood, Director of Equity Research]

Okay. That's helpful. And then for the onboarding of health care practitioners that are already using WELL's EMR system to VirtualClinic+. The press release mentioned 500 being onboarded already. I'm wondering, is the goal to onboard potentially 8,000 practitioners. I believe that's the number that's using WELL's EMR platform. I assume it's easier to convert these clinics that are already using the EMR and upgrading to the VirtualClinic+, if that's how you're looking at it?

[Hamed Shahbazi, Founder, Chairman & CEO]

Yes. Precisely. I mean, we see our EMR group and those 8,000-plus doctors as very fertile soil for our sales efforts in growing the telehealth program. And so a big part of our focus is really to make them aware of it, take them through the process. As you can imagine, it is a bit of a process just to get people acquainted with the software and through the necessary onboarding flows. We have made a lot of progress on the onboarding flows. And actually now as a physician, you can go through it yourself, meaning that there -- we've added enough tooling so that the physician can -- that really wants to jump on can do that. And we're going to be adding more of that tooling to make it even easier and easier for people to be activated. And yes, I mean that's a big goal for us, and I think a real kind of strong advantage for the company as it looks to really elevate its telehealth practice.

[Justin Keywood, Director of Equity Research]

Absolutely. I just had 1 more question. You mentioned the support from the government of Canada in changing the reimbursement for telehealth. And earlier this month, the federal government, they announced a $240 million investment in virtual care and mental health tools. Perhaps this shows the importance of virtual care in Canada going forward. But are there implications for WELL here? Can WELL perhaps participate in this initiative?

[Hamed Shahbazi, Founder, Chairman & CEO]

Yes. Justin, this is a really important piece of information that did come out and our Prime Minister obviously announced it, and there's a lot of enthusiasm around it. And we have been in touch with the federal government and have let them know that we are ready, willing and able to assist in any way. There's been few details on how that will actually be carried out. There's a bunch of different things that they could do. They could provide some of that funding to the individual provinces to support -- to provide greater support for these existing codes, they could expand the use of the codes. So we're very interested in understanding whether or not that will be the direction or some kind of other federal kind of claim code, if you will. But -- so -- but in any event, we're excited and looking to participate.

[Operator]

Your next question comes from Ammar Shah of Eight Capital.

[Ammar Shah, Research Analyst]

Congrats on the quarter. I guess starting out here. I'm wondering if you can talk a little bit about the announcement whereby the OSCAR brand didn't call that -- is under the WELL umbrella now. Is there anything that you guys have planned on the sort of branding or marketing front that could sort of improve that even if [indiscernible] or anything like that?

[Hamed Shahbazi, Founder, Chairman & CEO]

Yes. Thanks, Ammar. You're right. That was a pretty substantial announcement that we had about OSCAR and our close knit relationship and strategic alliance with McMaster. As the largest educational institution, I think they're starting to demonstrate their awareness that WELL is very well prepared and positioned to carry out some of the stewardship and really help develop and evolve OSCAR, especially given the large market share that we have now. And so we've now taken on some stewardship and governance of a particular streams of OSCAR from a new MD certification perspective. We also were able to confirm our rights to have access to the marks in perpetuity, which we think is very, very material given how popular OSCAR is in the country. To your point, there's enormous opportunity for us now to add value to OSCAR. And I think one of the biggest areas that we wish to do so is in bringing together the community of third party developers. And so you're going to see a lot of emphasis. There are already dozens and dozens of applications that have been written by the digital health community in Canada for OSCAR. And not many people actually know about them. There isn't sort of one place that you can go that would -- where you could find all of these things or you would not have a way of understanding whether or not they're safe to interact with. And so WELL believes that there's a real role to play in that. And I think you're going to see us really get involved in that in bringing that community together. When you see all the developer enthusiasm around OSCAR, and our view is when you see that clinics and doctors really win as do patients, and we'll be able to demonstrate that OSCAR is by far the most engaged platform with the developer community in Canada. Even though it's not the biggest, it will be by far the one that has the most engagement with the developer community.

[Ammar Shah, Research Analyst]

Great. No, that's good color. And switching gears on the virtual care front. Can you just talk to how that opportunity has evolved, call it, from the end of the quarter and then into April and now into May, just in terms of demand levels, if that's sort of accelerated even as of today?

[Hamed Shahbazi, Founder, Chairman & CEO]

Yes. And I tried to provide some color on this. Obviously, our initial focus with telehealth was very much to make sure that we were able to support doctors and patients in our own clinics. It allows -- our first focus. We just wanted to make sure that we had business continuity and very quickly, we realized that the episodical nature or the virtual walk-in nature of the business was enormously valuable for those walk-in docs who now had extra cycles to give. And so now we are very focused on on-boarding them and providing them with business continuity, which again, doesn't just mean access to a tool, it means access to patients. And that's where I think we've really shone here in our ability to bring a platform which includes patients. And so the color that I was trying to give in my earlier commentary was I really see our patient services revenue is now having 2 engines, whereas pre-COVID, we were at one engine. We very much believe that our clinical revenue will be continuing to improve and grow. And we actually, again, believe that virtual care enhances our clinical revenue because the ability for physicians to bill [indiscernible] individual clinics to actually bill outside of the walls of the clinic through the clinic. So that actually makes the clinic not just -- the clinic doesn't just have exposure to on-site revenue, it has exposure to offsite revenue too. And so -- and the color that I was giving about how in the last 30 days, we've actually had more patient visits in terms of all sources than we did in the last 30 days of March, which is obviously, when the pandemic just started breaking out. So we're much deeper into things, and we are stronger, and our business is growing. And so that, to me, is just a fantastic proof point in how we've been able to propel the company forward with this platform.

[Ammar Shah, Research Analyst]

Okay. And then just finally from me is how do you -- how has the acquisition landscape changed, if at all, post pandemic? Has that long laundry list of targets you had, has that grown? Or sort of still intact? Any color there would be great.

[Hamed Shahbazi, Founder, Chairman & CEO]

Yes. I mean, it's grown. Obviously, there are certain entries or companies in that list that are less attractive and some that are more attractive. For example, looking purely from the clinical side of things, we are less interested in clinics that don't come with a roster of patients. We've come to really understand and appreciate the value of a patient record. Before it was thought that patient records in health care weren't as valuable, as let's say -- as compared to, let's say, the dentistry practice. We're seeing that, that is not true, that they are valuable. And if there's an opportunity for us to acquire clinics that are more technologically enabled, let's say, they're less paper-based, we're also much more interested in OSCAR-based clinics. Even though you could say, hey, if you buy a clinic that doesn't have OSCAR, there's a synergy there. What we're seeing is just the immediate inertia of being able to add all our different clinic optimization tools that are obviously all tuned for OSCAR. We can really advance those clinics a lot more quickly and see other synergies that really benefit. So I mean -- I think we, obviously, are also very interested in digital patient engagement and looking high and low for telehealth assets that we think are accretive. And might I add that we are also looking more down in the U.S. as well.

[Ammar Shah, Research Analyst]

Okay. Actually, Hamed, I had one other question. In the early days, you guys had invested in Circle Medical, I believe, and I think, obviously, with the way telehealth has expanded everywhere, any [ participation ] in that backdrop had benefited. I'm just wondering if you can talk at all to how you look at that investment, if there's any follow-up opportunities or anything like that?

[Hamed Shahbazi, Founder, Chairman & CEO]

Yes. I mean, listen, Circle is a great partner. We were really pleased and fortunate to invest in them in the realm that we did. And we've been in touch with them as we have with other partners. And we understand that they've done a really good job managing through COVID and also doing some really unique things as far as leveraging their telehealth platform for COVID testing. So that's one of the great things that you do get out of making these investments. You do get some of the thought leadership associated with that. And we believe the operators there are really smart. And I think we try to make sure that we all get together once in a while and share feedback.

[Operator]

Your next question comes from Rob Goff of Echelon.

[Robert Goff, MD & Head of Research]

Congrats on a very good quarter. If I could ask you perhaps to take on the lens of a physician. How is the physician who's on the telehealth seeing their own efficiencies and their throughput capabilities. And as a ensuing question, how are you balancing the demand in clients or patients with the availability of physicians?

[Hamed Shahbazi, Founder, Chairman & CEO]

Yes. I mean, so -- I mean, I'll comment on the first one. Listen, one of the best things -- I mean, this has been obviously a horrible event overall for the world, and the destruction has been -- and deaths and just the misery and economic loss associated with it has been breathtaking. We do feel that -- very fortunate to be in a position to get behind and support physicians during this time. I mean, I think that's given us -- that empowerment has given us a lot of a lot of positive feeling inside the company. But one of the other things that's really given us positive feeling inside the company is, it's just the changed management sort of catalyzing behavior that this is caused with our physicians and how much more open they are to digital health. If you and I were to have talked a year or 2 ago, our very reason for coming into this industry exists as a company was we thought that there was an under modernization and digitization happening in Canada as compared to the other countries. You probably heard me say numerous times of the 40 countries that have modern medical systems, Canada ranks in the last quartile. And a lot of that was because of the will of physicians to go along and change and digitize. And they didn't really need to because most of them own and operate their own businesses and -- because of this extremely fragmented nature of the business. And so what's happened here, because of physical distancing, is doctors have gotten very, very interested in all things digital. And that has -- I mean, we felt the tailwinds were already there. That's why we got into the business. We saw kind of a generational shift with millennials coming in as doctors, and they wanted to see more online, but that has turned into a gale force wind. Now doctors of all ages and backgrounds are interested in digital. And that is probably more material and interesting that even patient's interest in seeing those doctors because obviously, doctors were -- that interest was there before on behalf of patients. We always saw it. It was that doctors were skeptical and were not meeting them there. And so leading to your second question about sort of supply and demand. Yes, that is something that we think about all the time, and we are -- that's one of the reasons why we're doing all this demand generation and are really ramping up our marketing. Because we really believe that it's important to do our best to originate patients effectively for the doctors that are coming online. So far, I would say our physicians have been really pleased that they have had access to new patient volume. We've heard it clear across the roster. And keep in mind, too, like we talked about a substantial number of practitioners being registered. But the process of getting registered and onboarded and ramped up, it is a process that does take time. So a lot of those 800 physicians aren't even really truly contributing yet. And I think that's what's exciting is that we do have a lot more inventory coming for health care services so we can really ramp up demand.

[Robert Goff, MD & Head of Research]

And as you're seeing the traction with telehealth, how might that play into or intrude with your development of a WELL affinity network across your OSCAR customers?

[Hamed Shahbazi, Founder, Chairman & CEO]

Well, that's basically what we're doing. So when we go to our OSCARs, and we go to those doctors and clinics and the OSCARs, we're selling them a telehealth plug-in because, again, a lot of them have -- a lot of them know who their patients are. But a lot of them also have the same configuration that a lot of our clinics had, which was they may be a mix of family practice and walk-in. And so from a family practice perspective, the tool, the SaaS-based tool just allows them to immediately have a great experience with their EMR, have access to the data and have great workflow and being able to connect with those patients. But they face the same problems that we did on their walk up side. And so what's great is that now they can essentially quickly use the platform to uberize themselves or make themselves available in the sort of supply pool of physicians for that demand to come in. And so -- I think you called it an affinity network, we're calling it loosely kind of like our marketplace, but we're working on some branding so that we can really evolve this because we think that it's important that we give this product a name that allows patients and doctors to organically interact and match. Not just with our physicians, again, don't think of VirtualClinic+ as a marketplace as just being WELL physicians, it's really physicians from all over the place.

[Operator]

Your next question comes from David Kwan of PI Financial.

[David Kwan, Technology Analyst]

You talked about ramping up the spending on marketing and advertising and like for the VirtualClinic+. It looks like the sales and marketing was up about $90,000 year-over-year, I think and combined with SleepWorks advertising. Can you talk about how we should think about your spending on that over the next couple of quarters. I assume we'll see a big pickup in the near term, and that it'll come down as you want to maintain a certain level just to keep that demand generation on the patient side going.

[Hamed Shahbazi, Founder, Chairman & CEO]

Yes. Great question, David. I mean, yes, we think it's a really important time to be out there and acquire customers because we -- internally, we talk about this as the concrete analogy, like pre-COVID, this business is really established. It's like concrete, right? I mean, the way the patterns and the way people -- patients and doctors interact. COVID comes along and magically turns the concrete into fresh concrete. And that fresh concrete will form again. But it's going to form around a different channel mix. And so we believe that it's important that we have a short term, a shorter -- relatively shorter-term period where we are ramping up our marketing anomalously as compared to future sort of program managed levels, meaning like sort of future periods of time where we'll come down to kind of a maintenance mode, if you will. And we think of that as probably a couple of quarters where we think our marketing spend will be elevated. And again, it's because of this time where we believe the market is resetting and reforming itself. And obviously, we have the capital to do it. But as you know, we're really, really fiscally prudent. And so we -- notwithstanding that, again, we believe it's a really good time to step that up. And what we'll be trying to do in the future is almost providing you with very clear guidance on that so that you can even see our EBITDA -- adjusted EBITDA with and without those marketing contributions, especially because, again, we believe we'll go down to a maintenance amount that will be more in line with past periods. Although obviously, I think, more elevated than past periods because we didn't have those types of spends before.

[David Kwan, Technology Analyst]

So can you quantify, I guess, how much safer Q2 we should be expecting to see, Hamed?

[Hamed Shahbazi, Founder, Chairman & CEO]

It's hard to tell. As you know, we don't provide a lot of guidance on these things. I think if you were to take the elevated marketing spend that we did have for the portion of the quarter that we had, I think you could be fairly liberal in terms of extrapolating that against the full quarter. So certainly, we think that it's in the hundreds of thousands.

[David Kwan, Technology Analyst]

Well. That's helpful. I guess on the -- for your own clinics, can you say what the breakdown has been, I guess, since the pandemic started in terms of virtual or telehealth deployments versus in-clinic appointments?

[Hamed Shahbazi, Founder, Chairman & CEO]

Yes. So one of the things -- I've been doing when I comment on our business here, as I've been referencing VirtualClinic+ as telehealth. But we have also been -- our physicians have also been serving patients through their own phones. Let's say there's a doctor that is not fully set up yet or is calling an elderly patient or a patient that's not very sophisticated in terms of using program. So if you actually add telehealth with and without VirtualClinic+, we have been over 50%, majority telehealth in terms of serving our patients, which I think goes to show you how incredibly disruptive this was to the traditional channel. As I mentioned, though, earlier in my prepared remarks, we are seeing for 5 consecutive weeks now, well before any kind of opening or discussion of opening happened, there being more and more people who are going to the clinics. So again, we're seeing excellent signs that, that business will recuperate and come back to, I think, robust levels.

[David Kwan, Technology Analyst]

That's helpful. I guess you talked about better optimizing the space and capacity within your clinics and with, I guess, that Surrey clinic shutting down and reallocating the doctors to nearby clinics. I know in some of your clinics, I think in [indiscernible] in particular, I've seen some space that you can open up additional rooms there. Can you comment on kind of where you are on that standpoint? And then as well, trying to find new doctors to help boost the new kind of capacity?

[Hamed Shahbazi, Founder, Chairman & CEO]

Yes. Yes. I mean that's what really excites us is we -- we've been able to keep our revenue intact for the most part and really then accent it with all the different VirtualClinic+ programs and accelerate our total visit volume. In the clinics, again, because of the phenomenon where clinic docs are able to bill outside of the clinic walls, but bill through the clinic, meaning that the clinic still gets credit for the revenue. This essentially allows us to drive up utilization and/or density of the clinics. Now you may ask, well, like you said, hey, doesn't that mean that you will have the need for more doctors? Yes. I mean, we will not have a need for more doctors, but we want more doctors now because we can fit more doctors. And that's the phenomenon of what the clicks and bricks has done. And -- but this is -- here lies what we think is a bit of an unfair competitive advantage for the company because this has not just changed for us, it's changed for everyone. If you're a doctor now, it doesn't really make sense for you to have your own practice where you will need to support patients through bricks and clicks, it may make more sense for you to take your roster of patients and bring it to a program like WELL so that you can have access to brick-and-mortar platform when you need it, and you can have access to telehealth when you need it. It may not make sense for you to have the full rent associated with that business anymore. So again, we also think that this helps more clinics and more doctors to come and join an enterprise-grade platform like ours that provides both bricks and clicks support.

[Operator]

Okay. So that is all the time we have. Excuse me, that's all the time we have for questions today. Please proceed.

[Hamed Shahbazi, Founder, Chairman & CEO]

Well, I just wanted to really thank everybody for joining during -- especially during these challenging times. And of course, thanks to the analysts for their questions. We really appreciate your continued coverage and telling the story to your stakeholders. I also want to stress to everyone just to maintain your social distancing. And if you need to see a doctor, obviously, try telehealth, whether ours or some other platform, but we would love to hear your feedback. You can visit us at virtualclinics.ca. And you don't need an app, you just browse on and find a practitioner that suits you. So thanks, everybody. Please stay safe and be well.

[Operator]

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating, and I ask that you please disconnect your lines.