WELL Health Technologies Corp
TSX:WELL
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
3.5
5.34
|
| Price Target |
|
We'll email you a reminder when the closing price reaches CAD.
Choose the stock you wish to monitor with a price alert.
This alert will be permanently deleted.
WELL Health Technologies Corp
You don't have any saved screeners yet
Welcome to the WELL Health Technologies Corp of First Quarter 2023 Financial Results Conference Call. My name is Laura, and I'll be your operator for today's call. [Operator Instructions] Please note, this conference is being recorded. I'll now turn the call over to Tyler Baba, Manager, Investor Relations. Mr. Baba, you may begin.
Thank you, operator, and welcome, everyone, to WELL Health's Fiscal First Quarter Financial Results Conference Call. for the 3 months ended March 31, 2023. 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.
Portions of today's call, other than historical performance, include statements of forward-looking information within the meaning of applicable securities law, including future-oriented financial information and financial outlook information. 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 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 as 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 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 is required by law.
We may use terms such as adjusted gross profit, adjusted gross margin, adjusted EBITDA, adjusted shareholder EBITDA, adjusted net income and adjusted free cash flow on this conference call, all of which are non-GAAP and non-IFRS measures. For more information on how we define these terms, please refer to the definition set out in today's press release and in our management discussion and analysis.
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, service future interest and principal debt repayments and fund future growth initiatives. Adjusted EBITDA should not be construed as an alternative to net income or loss determined in accordance with IFRS.
And with that, let me turn the call over to Mr. Hamed Shahbazi, Chairman and CEO.
Thank you, Tyler, and good day, everyone. We hope you're all keeping safe and healthy, and we appreciate you for joining us today. Overall, we're very pleased with our record-breaking quarter in which we achieved record revenue and growth across all key metrics.
WELL achieved revenue of $169.5 million in the first quarter, representing 34% year-over-year revenue growth. The first quarter of 2023 also marks our 17th consecutive quarter of record revenue. The company's growth was driven by acquisitions made over the past year as well as solid year-over-year organic growth of 21% in the first quarter. So most of our 34% year-over-year growth came from organic growth.
I'm proud to report that WELL has healthy cash flows having achieved almost $26.7 million in adjusted EBITDA in Q1 2023, resulting in adjusted free cash flow available to shareholders of approximately $10.8 million. Our record revenue, profitability and patient visits are a testament to the company's continued focus on tech-enabling healthcare providers and supporting them in terms of simplifying their work lives, modernizing and digitizing their practices and delivering the best healthcare possible.
We're extremely passionate about supporting our providers as we set up our business in a way that we only succeed if they do. This attitude and focus is what allows the company to continue to witness healthy growth across all its business segments, including both online and in-person care channels, with minimal impacts due to recession, inflation, supply chain or other macroeconomic effects.
Last quarter, we discussed a number of new catalysts that we felt were going to act as key tailwinds for WELL. We'd like to reiterate and update them as follows: one, the emergence of artificial intelligence, including generative AI to power revolutionary new tools that can dramatically improve the productivity of the healthcare provider. We will spend a considerable amount of time on -- later on today's call discussing our AI strategy and key progress updates.
Two, the increased likelihood of more public and private partnerships announced by political and public health leaders most recently in Ontario earlier this year.
Three, a commitment by federal authorities in Canada to add significant additional funding to help Canada, not only improve sustainability of its healthcare system, but to also digitize and modernize it.
Four, the demonstration, particularly in the United States of how valuable hybrid care networks are based on a string of highly visible multibillion-dollar acquisitions, where major companies such as Amazon and large pharmacy chains have been acquiring providers of scaled hybrid health care providers, particularly in primary care with strong physical and telehealth offerings.
To that end, WELL has considerably grown its physical infrastructure in the U.S., ending the quarter with 23 physical facilities from 5 at the end of December 2023 -- 2022, pardon me.
Five, our own M&A pipeline is very strong, and we are seeing some of the best opportunities we have seen in a while. We'll give this topic some due focus today.
Before I hand the call over to Eva to review the first quarter financial results, I'd like to provide some additional background on WELL and our growing patient volume metrics.
Over the past 5 years, we've have grown both organically and inorganically to one of the leading digital healthcare companies in North America. In Q1 2023, WELL achieved record patient interactions of approximately 1.4 million patient interactions, an increase of 27%, representing 5.6 million patient interactions on an annualized run rate basis.
In Q1 2023, WELL achieved 975,500 total omnichannel patient visits, including both Canadian and U.S. patient visits, an increase of 25% compared to the prior year. The growth of our patient visit metrics demonstrate the company's continued leadership position as the preeminent end-to-end health care company in Canada with increasing market share in the United States. I'm also pleased to announce that WELL has now surpassed over 3,000 practitioners who deliver patient care from one of WELL's owned clinics or business units.
We offer these practitioners a fully managed service, where the practitioners can focus on delivering care while WELL takes care of everything else. Furthermore, there are now over 28,000 unique practitioners who rely on WELL in some way to power their medical practices. That equates to more than 1 out of every 4 healthcare providers in Canada who uses one of WELL's technology solutions. These practitioners can pick tools and solutions on an a la carte basis, such as practice management, telehealth, revenue cycle management or patient engagement tools such as online patient booking or e-referrals.
If you haven't had a chance to look at our Q1 2023 MD&A, or management discussion and analysis report posted to SEDAR this morning, I urge you to take a look, inside you'll find that we provided some enhanced segmentation, which now breaks down the business between our fully managed patient services and SaaS and Technology Services businesses. You'll find a lot of new detailed metrics across both U.S. and Canadian businesses as well as detailed KPIs on our SaaS and services businesses.
We'd like to continue to shine a light on all the different levers of the business to help investors and analysts better understand WELL and how we're delivering on our mission of tech-enabling providers. Let's look at this new lens on segmentation and how it reflects our business.
First, we've got our Patient Services business. This segment includes WELL's owned and operated network of clinics, which is Canada's largest network of clinics consisting of 139 clinics operating out of 77 physical facilities.
WELL strongly believes in the benefits of an integrated health offering and bringing together a diverse multidisciplinary offering of providers in the same setting. As such, many of the physical facilities have multiple clinics operating within the same location. Keep in mind that the total number of clinics across both the U.S. and Canada is north of 160 clinics operated out of 100 physical facilities, not including any ASCs, or ambulatory surgery centers, served by CRH Medical.
Our Canadian Patient Services business includes primary care, allied health, executive health, and diagnostic clinics delivered through in-person and telehealth means, which, combined, generating almost 504,000 patient visits in Q1 alone, a 14% increase over Q1 2022.
Secondly, in terms of segments, our Patient Services business in the United States. This group includes omnichannel healthcare services and solutions WELL provides in the United States targeting specialized markets such as the gastrointestinal market, women's health, primary care and mental disorders under the CRH, Circle Medical and Wisp business units.
Our U.S. Patient Services business generated almost 472,000 patient visits in the first quarter, an increase of 40% as compared to the same quarter last year, driven mostly by the organic growth at Circle and Wisp in addition to the acquisition growth at CRH.
Under the CRH brand, we are the leading provider of sedation services for colonoscopies in the U.S. in an ambulatory setting. In the U.S., WELL continues to expand its clinical presence with anesthesia services now being offered in 128 ASCs and GI clinics across 18 states. Headquartered in San Francisco, California, Circle Medical is a leading provider of telehealth based primary care, with an emphasis on mental health services, with a growing physical clinic network.
And then also part of this segment is, of course, Wisp, one of the largest and fastest-growing specialty telehealth businesses focusing uniquely on women's reproductive and sexual health. And then the third segment that you'll see is our SaaS and Technology Services segment. This group includes all of our best-in-class platform tools and services that help providers digitize, modernize and support their clinical operations, inclusive of EMR, billing, revenue cycle management, digital apps, including OceanMD and of course, cybersecurity and data protection divisions, which essentially form the entire practitioner enablement platform.
Keep in mind that WELL is a unique company with both patient services and technology. We own significant intellectual property which drive our industry-leading solutions and has created compelling and relevant links with healthcare providers all over the country. What is really interesting about the link between our SaaS and Patient Services segment is that WELL is the largest customer of our own platform. How is that for authenticity, a company that uses its own software at scale and demonstrate that it works every day.
Additional key metrics for this business unit include the fact that now the WELL EMR Group serves 3,900 clinics in Canada. OceanMD reported 190,000 e-referrals just in Q1. Our billing and revenue cycle management business has expanded to serving over 5,700 healthcare practitioners. And our apps.health now has 54 digital applications or apps on its platform, making it the largest healthcare-focused app marketplace in Canada.
With that, I'd now like to turn the call over to our CFO, Eva Fong, who will review the financials for fiscal quarter 2023. I will then come back and provide further commentary on our business units and, of course, our outlook. Eva?
Thank you, Hamed. I'm pleased to report that we had very strong results for the 3 months ended March 31, 2023. Our overall first quarter results were as follows. WELL achieved record quarterly revenue of $169.4 million in Q1 2023, an increase of 34% as compared to revenue of $126.5 million generated during Q1 of last year. This growth was driven by acquisitions and organic growth. WELL achieved record adjusted gross profit of $86.2 million in Q1 2023, an increase of 24% as compared to adjusted gross profit of $69.4 million in Q1 last year.
Growth in the company's adjusted gross profit is attributable to higher revenue in the period. Adjusted EBITDA was $26.7 million in Q1 2023, an increase of 14% as compared to adjusted EBITDA of $23.5 million in Q1 of last year. Adjusted EBITDA attributable to WELL's shareholders was $20.6 million in Q1 2023, an increase of 28% as compared to adjusted EBITDA attributable to WELL's shareholders of $16.1 million in Q1 2022.
Adjusted net income was $14.1 million or $0.06 per share in Q1 2023, an increase of 58% as compared to adjusted net income of $8.9 million or $0.04 per share in the same period last year. WELL generated 12% of its revenues from truly recurring and subscription revenues and 83% of its revenue from its highly recurring patient services revenues. That means that approximately 95% of its revenues are highly predictable.
I will now review our segment results, as described by Hamed earlier. Our Canadian Patient Services business achieved another record quarter with revenue of $50.9 million in Q1 2023, an increase of 23% as compared to $41.3 million in Q1 2022. Canadian Patient Services revenue includes revenue generated from our primary care and MyHealth. divisions.
Primary Care revenues increased 45% to $24.8 million in Q1 2023 compared to $17.1 million in Q1 2022, primarily due to organic growth and the addition of new clinics. Primary Care revenue also benefited from a onetime stabilization payment from the BC government of approximately $0.5 million in the first quarter as well as higher billings from the new payment model for BC doctors that was implemented in February earlier this year.
In Q1 2023, MyHealth revenue increased 8% to $26.1 million as compared to $24.2 million in Q1 2022. The growth in MyHealth revenue is attributable to continued effort to alleviate staff shortages experienced last year leading to higher billable time for many of its diagnostic procedures. MyHealth also benefited in the quarter from the addition of new cardiologists to its practice.
Our U.S. patient services revenue was $99.2 million in Q1 2023, an increase of 38% as compared to $72.1 million in Q1 2022. U.S. patient services includes our CRH, Circle Medical and Wisp businesses. For Q1 2023, CRH revenues were $57.5 million, an increase of 19% as compared to $48.2 million in Q1 last year. CRH case volumes also continue to be very strong, with 132,580 anesthesia cases completed in Q1 2023, an increase of 13% compared to Q1 last year.
Case volumes in the first quarter were positively impacted by the acquisition of Affiliated Tampa Anesthesia Associates in the quarter.
Given the nature of how health plans and their deductibles work through the year for elective procedures, such as colonoscopies, fourth quarter is usually CRH's strongest seasonal quarter. And normally, we would expect CRH's Q1 revenue to decline from Q4. However, this quarter, we witnessed an increase of 10% in CRH's revenue from Q4 2022 to Q1 2023, which was largely due to a onetime promotional campaign for its O'Regan product, resulting in a record 59,620 O'Regan negator units being sold in the first quarter, an increase of 41% as compared to 42,280 negator units sold in Q1 2022, and an increase of 39% compared to 42,750 negator units sold in Q4 of last year. The O'Regan product promotional campaign has now ended and negator unit volumes have returned to normal levels.
Circle Medical revenues were $23.1 million in Q1 2023, an increase of 93% as compared to revenue of $12 million in Q1 of last year. Wisp achieved revenue of $18.6 million in Q1 2023, an increase of 56% as compared to revenue of $11.9 million in Q1 2022.
Both Circle Medical and Wisp have achieved tremendous revenue growth over the past year, which has been entirely organic in nature. Of note, we increased our ad spending in Q1 2023 for Wisp to take advantage of much lower ad rate in the first 3 months of the year as compared to the last 3 months of the year. Although this did have a softening effect of our overall adjusted EBITDA in the quarter, I'm pleased to report that Wisp still managed to achieve positive adjusted EBITDA in the first quarter.
SaaS and Technology Services revenues were $19.3 million in Q1 2023, an increase of 47%, as compared to $13.1 million in Q1 2022. The vast majority of this growth came organically, which was 42% growth year-over-year. Also in Q1, SaaS and Technology Services revenue growth was driven by exceptional growth in the cybersecurity and data protections business, which achieved its best quarter ever. Cybersecurity and data protection revenue tends to be lumpy, and we are not expecting this growth to continue into Q2 2023.
WELL ended Q1 2023 with a solid balance sheet. As at March 31, 2023, WELL had cash and cash equivalents of CAD 41.7 million. WELL continues to be in good standing and fully compliant with all covenants related with its 2 credit lines, JPMorgan in the U.S. and World Bank in Canada. The debts from the 2 credit lines was approximately CAD 253.4 million as of March 31, 2023.
I'm also very pleased to report that we have reduced WELL's leverage ratio to 2.6x as at the end of Q1 2023 compared to 3.5x as at Q1 of last year. We define leverage ratio as total debt excluding convertible debentures, less cash on hand, divided by shareholder adjusted EBITDA. The improvement in WELL's leverage ratio was achieved by a decrease in the company's debt levels and an increase in shareholder adjusted EBITDA.
In terms of our share capitalization, as of May 11, 2023, WELL had 253,787,569 fully diluted securities issued and outstanding.
That is my financial update, and I turn the call back over to Hamed.
Thank you, Eva. Before I speak to our outlook, I'd like to take a few minutes to talk about the development use and proliferation of artificial intelligence or AI-based technologies and solutions at WELL. I'm pleased to report that as a company with deep tech experience and capabilities, we have made AI a key priority within the company and are working on compelling new products and enhancements to roll out to our provider network.
At WELL, we have developed a 3-pronged AI strategy as follows: first prong is to develop and deploy new physician tools and technologies that better support our providers. Earlier this week, the company launched WELL AI voice, transformational ambient scribe product that leverages generative AI to dramatically reduce the providers' administrative burden by privately and securely capturing a patient encounter conversation and automatically generating a succinct and medically relevant chart notes for the patient interaction.
What makes WELL AI voice so powerful is not only its ability to leverage generative AI, but also its ability to communicate seamlessly with WELL's EMR products, making it easy for providers to deploy, manage and benefit from the technology quickly and easily without having to harmonize the usage of disparate tools.
Our focus is on provider-facing technologies in AI and thirdly, derisking and creating guard rails for this sort of technology for healthcare providers. We believe that AI technologies can be used safely and securely to increase the efficiency and effectiveness of healthcare providers and to deliver better patient outcomes.
The second prong for us is to establish centers of excellence at WELL to help our employees become better users of AI. Long term, this may end up being the most important facet of AI for us. We have placed high priority on the safe and secure usage of AI technologies as well and are well on our way to embrace the technology to increase the core productivity of the company. We are thoughtfully considering different ways of putting the technology to work, including hosting internal hackathon sessions to help us coalesce around best ideas. We're also in the process of hiring AI facilitators to help ensure that our teams are driving maximum benefit from AI.
Third prong is to place more bets or investments on AI and healthcare-focused companies. As part of our commitment to developing AI technologies, WELL recently announced that it was launching the WELL AI investment platform in our WELL Ventures group. whose goal is it is to invest in at least 10 companies this year with a minimum investment of $250,000 and to ensure that each investee has a strategic alliance agreement with WELL that allows it to benefit from WELL's healthcare ecosystem. Since launching this program, we have already seen more than 100 companies come inbound into our channels.
In addition, our apps.health platform is a very attractive aspect of the AI investment program as it provides a framework for AI-based technology companies to integrate with our OSCAR EMR as well as other EMRs and healthcare-related applications. We already have several AI-focused applications in our apps.health platform.
Lastly, for AI, we're also investigating opportunities to unlock the value of our own data to help further propel our providers and help them not only create more efficiency and productivity in their practices, but also importantly, better -- drive better patient outcomes. We believe that our data can help create new decision support systems in the future.
This is actually a good segue to WELL's ESG program. As you may be aware, WELL has a fulsome ESG program that is expressed at its dedicated ESG website at esg.well.company. There are effectively 3 key pillars to this program: One, our practitioner support and digital enablement, which of course, is our mission and mandate. The second is the safeguarding of patient data. And the third is to be a very healthy place to work.
We believe AI will profoundly impact and strengthen WELL's ESG program at all levels, but I'd like to zoom into Pillar #2 for a minute and discuss how we believe WELL can add societal value using its ESG program and commitments.
You see we believe that WELL's commitment to champion the cause of privacy, safety and security of patient data now needs to be achieved within the context of allowing patients to knowingly, in a clear and unambiguous manner, be able to have their data work for them and help them create personal insights for them that can help them acquire life-changing insights, but also support the greater good by allowing their data to be shared, again, knowingly for neural networks that are powering deep learning.
This is a very important, but highly fundamental shift. Data security is not good enough. It does not allow me as a consumer or as a patient to derive benefit from my data, especially as we shift into a world where we finally have the technology that allows machines to learn, find that needle in the haystack problem and provide outstanding insights.
And now I'd like to speak a bit about our outlook for 2023. We're pleased to report that all of our business units are executing very well, and we are expecting to have very strong performance in 2023 across all of our BUs and for the entire company as a whole.
The company doesn't foresee any material influences or challenges that would impair its ability to deliver solid results in 2023 as we're poised to invest in, achieve significant growth while delivering on enhanced profitability. As such, management is pleased to provide the following guidance for 2023.
We are increasing our guidance for annual revenues to between $690 million and $710 million, representing 21% to 25% annual growth. This is an increase from our prior guidance of annual revenue, which was between $665 million and $685 million.
We're also pleased to reiterate our guidance for annual adjusted EBITDA to increase by more than 10% over 2022 levels. Our guidance does not include any unannounced acquisitions. Previously, we've indicated that between our organic growth and steady acquisition program, we believe we have a clear line of sight to $1 billion in revenues in 3 years. Today, we'd like to report that we are now seeing one of the most compelling pipelines of acquisitions we've ever seen.
This doesn't mean we're going to rush out and execute on all of them as we're going to continue to be extremely disciplined in terms of our due diligence and our capital allocation processes. However, it does mean that if we are able to execute on some of these opportunities, we could potentially reach $1 billion in sales in less than times in 3 years.
Again, this is highly conditioned on our ability to execute on some of these opportunities, but highly encouraging to know that this potential exists, especially given the health of our balance sheet. Stay tuned on this as your team here at WELL executes.
I will now provide some additional outlook for our business segments. First, our Canadian Patient Services business, including primary care and MyHealth. It's become a lot more difficult for doctors to run their own clinical businesses. We talked about this in the past due to the increasing complexity brought about by hybrid and complex workflows, IT security and other challenges, making it very difficult for the physicians to run even small practices.
For this reason, we are seeing more physicians seek well out as a professional partner to help them run their businesses, so they can focus on providing patient care. Our model allows for healthcare providers to maintain similar pre unit economics, but end up seeing a lot more patients if they don't have to run a practice, which allows them to elevate care, improve earnings and better support the healthcare ecosystem.
Growth in our Patient Services business in 2023 will be driven by continuing to focus on organic growth and executing on a highly disciplined clinic acquisition program. Our organic growth includes recruiting more physicians and recruiting or absorbing clinics themselves. In addition, we have a very active pipeline of clinic acquisition opportunities ranging from single clinics to small networks.
I'd like to now comment on our MyHealth business in Ontario. WELL's Ontario-based MyHealth Partners is the largest single license holder and service provider for specialty clinics providing diagnostics in the province of Ontario, and we believe it is very well positioned to support the Ontario government's mandate, particularly in the areas of diagnostic imaging. Last quarter, we discussed the Ontario government's new multipronged strategy to reduce wait times by partnering with independent service providers for Ontarians, including areas associated with MRI, CT, colonoscopy and endoscopy services. We intend to apply for new MRI and CT licenses, which will be provided by the province of Ontario under this new program.
We anticipate that new licenses will be awarded in the second half of 2023. If MyHealth is successful in its application, we would need to incur additional capital costs to purchase imaging equipment and for leasehold improvements. We anticipate lead times of several months to having these services fully operational in clinics. As such, we don't expect a meaningful contribution in 2023 if we were to win these licenses.
Our outlook for Q2 remains positive as we're expecting MyHealth to report a strong quarter as the second quarter is seasonally the strongest for MyHealth historically. Almost all of MyHealth's revenue arises from referrals from physicians, and as such, as there are more working days in Q2 compared to the slower summer months, or the December holiday season, MyHealth therefore, experiences more patient volumes in the second quarter.
And now some commentary on U.S. Patient Services businesses, including CRH Circle and Wisp. For the CRH business, we expect CRH case volumes to follow normal seasonal patterns in 2023. With the number of cases increasing in each subsequent quarter as we expect Q4 2023 will again be the strongest revenue quarter for CRH. It should be noted that between Q1 and Q2 2022, CRH received more than USD 2 million in pandemic-related government assistance. This grant helped offset labor costs and thus improved EBITDA in Q1 and Q2 last year, which will not be repeated in Q2 2023.
Also, as Eva previously mentioned, CRH revenue in Q1 was boosted by a onetime promotion on O'Regan product sales. We're not looking to repeat this product promotion in Q2. Hence, we do expect O'Regan product sales to decline in the second quarter, which should not materially impact overall results.
For our Circle Medical business, Q1 will be a transformative quarter, in which Circle built out its physical clinical network already a leader in providing telehealth services for primary mental health. I'm pleased to report that Circle Medical aggressively grew its physical clinic network to 18 clinics across the United States as of the end of Q1 2023 compared to only 2 clinics at the end of December.
The expansion of Circle Medical's physical clinic network will improve its hybrid care capabilities and strengthen its ability to better support its patients. The new clinics strategically located in cities across the United States offer a range of medical services, including primary care and specialty care.
The clinics are equipped with state-of-the-art technology, staffed by highly qualified healthcare professionals and designed to provide a seamless healthcare experience for Circle Medical's excellent telemedicine platform. The clinic expansion of our Circle Medical network positions the company well for the end of the public health emergency in the United States.
Going forward, our plan is to follow a slower and more measured patient expanding Circle's physical clinical network as compared to the aggressive pace that we've witnessed. We expect the expansion of Circle Medical's physical footprint and related investments to create some softness around their results in Q2, but we believe this will further fuel their growth in the back half of the year and have considered this as part of our overall guidance.
Our Wisp business is expected to continue to experience healthy revenue growth in 2023. However, we are purposely reinvesting any cash flows generated by this business back into growth. The additional spending is primarily on marketing costs to gain new patients and drive additional revenues. As a result of this reinvestment, we are expecting minimal adjusted EBITDA contribution from Wisp in the first half of the year, which is also retooling some of its key product and distribution partners in Q2. So while we expect revenues to be strong over the full year, we will have lower growth temporarily next quarter in Q2 2023.
Finally, SaaS and Technology Services. The outlook looks promising for our SaaS and Tech Services group. And as Eva noted earlier, this group had incredible growth in Q1 with 42% organic growth. Also for the first time in a while, SaaS and services comprised more than 10% of WELL's overall revenues, which is really great to see. As part of the SaaS platform, let's talk about Ocean. Ocean is emerging as a leader in patient engagement and e-referral solutions. Most recently, OceanMD's referral platform was selected by the province of Nova Scotia, which will make surgical consult referrals easier and reduce wait time for patients.
The e-referral software allows primary care providers to send the request to surgeons through the Ocean e-referral network instead of faxing, e-mailing or mailing. Already, the dominant e-referral solution in the province of Ontario, we feel OceanMD has the potential to beat the e-referral standard across the country. And we are currently in the bidding process for additional e-referral related proposals in other provinces across Canada.
Meanwhile, the technology assets acquired from CloudMD have been well integrated into our Provider Solutions group with Juno EMR completing our acquisitions for the OSCAR EMR-based providers and clinic aid fitting in with our building and revenue cycle management division. Also, as Eva pointed out earlier, cybersecurity and data protection had its best quarter ever in Q1. But being a lumpy business, we don't expect this level of activity in the second quarter. Hence, we are expecting our overall SaaS and Technology Services revenue to experience a slight decline in Q2 as compared to Q1.
In summary, we're very pleased with our financial performance thus far in 2023 and look forward to delivering strong results again for the rest of the year. Our outlook for 2023 remains positive. Hence, I'm confident in raising our annual guidance again. We have many tailwinds driving growth in the business, and we have a committed and disciplined team to ensure that we're able to execute on our objectives.
Finally, I'd like to thank you all for joining us on the call today and thank our shareholders and investors for all of their support. The capital markets has been supportive of our vision and provided us with the funding needed to pursue our goals and, of course, power and tech enable our healthcare providers.
I would also like to thank WELL's senior management team and our employees and contractors for their tremendous effort. In particular, I'd like to thank our team of healthcare practitioners and other frontline workers who provide unbelievable patient care every single day. They remind us why we are here and what we are doing to support them. Thank you. And with that, we'd like to open the call for questions. Operator?
[Operator Instructions] Your first question comes from the line of Doug Taylor from Canaccord Genuity.
Congrats on a great start to the year. I'll start with, I think, the most obvious question in that it's been just 2 months since you established your annual guidance for the year and you're making a pretty material increase here in it. And that's not because of M&A. In fact, you've actually sold a business it seems since quarter end. So I guess the question is, where is the major source of surprise and upside versus your original expectations for this year?
Thanks, Doug. That's a good question. Look, if you just annualize our Q1 results, you'll see that there's already a lot of strength in the platform. And if you just look at the organic growth that we've seen from reliable organic growth from a lot of the different aspects of the business, including our U.S. Patient Services. And actually, our Canadian business. We think that this level of increase is fair and something that we as a management team can get behind with conviction.
I'll note that with 21% of elevated organic growth that we had this year -- sorry, this quarter as compared to last year, it was actually pretty evenly weighted to between the U.S. and Canada. U.S. was a bit more and Canada was a bit less, I believe Canada was around 18%. But sort of gone is that narrative where the only thing that's growing for us is Circle and Wisp.
We had excellent performances clear across all of our business units. And I think that's very, very encouraging. Of note is our primary care business as well. And look, we talked about some of these trends and tailwinds, some of the increased healthcare spending across the country, I think, it is starting to show up as well. So that's a bit of color for you.
As a follow-up then, maybe I'll ask. You mentioned the incredible increase in your -- and then the footprint -- physical footprint of Circle and just your U.S. Patient Services business overall, I think it's at 23 clinics as at the end of the quarter. Can you maybe just refresh us on what your ambitions are there for a clinic footprint within the U.S. market, so we can kind of understand how far you intend to take that physical location build-out?
Yes. I mean, look, the need for ramping this up quickly was to harmonize this with readiness for the public health emergency. There was no other kind of burning need to do that. And this is why in the script, I mentioned that further increases will be more moderate because we feel that we've already established a pretty good platform to support patients. But as the business grows, we are committed to hybrid care. We think it results in the best patient outcomes. And we think that is also where sort of the world will land now that public health emergency is finishing up. And so we don't have any particular goals in terms of wanting to be at a certain number, but I do believe that you will continue to see this number go up.
And should we -- just a related question, the staffing of those clinics, it's one thing to establish it, but to staff it with the appropriate professionals. Is that something that's lagging? Or are you able to do that at the same pace? And I'll pass the line after that.
Yes. And look, this is why I think what Circle did was truly remarkable, and this is why I was sort of preparing for some Q2 softness because I think it's hard to execute on everything all at the same time. And so we think that they're going to catch their breath a little bit in Q2 and get back to doing instead of kind of having a lot of the kind of all hands on deck approach to growing their physical footprint, really being able to benefit from that. I think it gives the business enormous contrast with its competitors. And we're seeing still elevated NPS scores, and they're changing lives with their platform. And we think that we have certainly high hopes and expectations for the balance of the year for them.
Your next question comes from the line of Christian Sgro from Eight Capital.
Several of the tech services metrics spiked nicely in the Q1 quarter that providers in the network referrals, those sorts of metrics, wondering -- there wasn't any M&A in Canada to sort of obviously support that bump. But wondering where the traction is coming from, if there's any new efforts to get practitioners onto the platform? What's the part of the lift in those metrics?
Thanks, Christian. I think you're seeing, in terms of our success in the tech and SaaS -- kind of SaaS and platform services is the benefits of integration. There is a lot of focus on bringing those elements together. As you may remember, those -- a lot of those were actually separate business units. So collapsing those into one unit, establishing connectivity between them and actually getting out and selling them as a bundle, I think it's been really, really key.
And I think management and team have really worked hard on integration. And I -- it's one of the things I'm really proud of. WELL isn't just good at finding great assets and acquiring them, we're also really good at integrating them. And I think that may be a more important part of our M&A strategy. And so I think what you're seeing here is the combined benefits of that platform and being able to speak with one voice about how we can tech enable providers.
Okay. Perfect. And the second question I'll ask is on artificial intelligence, which is becoming core to the offering and some of the structure internally. AI voice was certainly an exciting start this week. But wondering if there's any other concrete examples or things you could leave us with on products and other solutions you go to market with on the AI front in the coming months or quarters?
Sure. Look, I think this whole category, I mean, AI voice talks about capturing an encounter and creating a note, a medically relevant note that usually would take providers a long time to do because they have to observe the entire conversation all of the different notes, and they have to create this sort of condensed medical note.
The thing to think about here with AI is that we think it's sort of -- a lot of the patient-facing -- we're not focused on patient-facing elements of the business. We think that on the provider side of things, think about Alexa for providers as a vision, AI voice is just a component of that.
We think -- and we are investing in this vision of a provider really being able to just talk to their software as opposed to having their head buried in the software. And having that software not only be able to capture notes, but actually digging deep, of course, with patient's informed consent, but digging deep into the data and identifying things that could be helpful in that interaction.
There are so many cases that I've heard of, and it's -- a lot of them are, frankly, just very sad stories about how doctors somewhere in that patient record had information that should have kind of come up or he could have become aware of. But it's just buried too far deep -- and that means that providers can sometimes miss stuff. And interactions can be caused with drugs that are prescribed. And this is what's truly incredible about the ability to confidently prosecute a database of patient data, again, with the appropriate approvals.
So I think this is a vision that's going to take time, but it's one that I think fundamentally changes the patient-doctor interaction and just reduces errors and improves elevated patient outcomes.
Your next question comes from the line of Allen Klee from Maxim Group.
There seems to be no response from Mr. Klee's line. I will now clear his question.
Your next question comes from the line of David Kwan from TD.
I was wondering, can you talk about maybe how you see the margin progression here for the balance of the year? On the EBITDA margin side, I guess, particularly given what I assume is going to be a moderation in growth in terms of the ad spend for Circle and West versus what you spent in Q1 but also maybe factoring I guess, Circle's clinic footprint, which I assume would lead to a bit of a near-term drag on margins?
Yes. And look, with Circle clinics, not all of them are sort of big flagship clinics. A lot of them are smaller clinics, again, just designed to support the patient volumes. So we're still thoughtful about making sure that we don't create a creator in our results. But yes, I do agree that -- and that's why I mentioned that there will be some softness initially.
As far as overall progression, I think if you look at sort of where we're guiding on revenue and our commitments on EBITDA, we are being intentional about investing in growth. We really like the elevated organic growth profile of the company. And -- but, at the same time, we want WELL shareholders to feel that they can rely on a certain level of profit growth.
And this kind of brings us back to the framework of Rule of 30. We feel like it's great for management to have the flexibility to thoughtfully kind of focus on organic growth at times and operating margins and not need to feel like they need to overoptimize on anyone.
We want to accommodate this growth. And so I think you're going to see sort of margins be pretty stable. Again, this is ex M&A. And as I mentioned, there's a very good chance that there will be M&A. So I have a feeling that the M&A will be more impactful to margins than the actual trajectory of the organic growth.
No, that's helpful, Hamed. And would you talk about the softness -- expecting some softness in Circle's results in Q2. Was that related to revenue growth or profitability or both?
We think it will be a little bit of both. Again, it's something that we think gets made up in the back half of the year just based on all this growth that they're experiencing since those numbers that I mentioned, they've even grown the physical footprint even more in Q2. So yes, it's been a pretty frenetic pace. But yes, no, we're still of the belief that they will have another phenomenally organic growth fueled kind of phenomenal performance for the year.
And 1 last question. Just on that expansion of the clinic footprint understanding that you want to try to cover off, I guess, visibility is to patients that are being prescribed controlled substances. I guess with the footprint that you have right now, like can you say like how much of the business that is still maybe out there that isn't kind of within those geographic regions where you are right now and kind of what the revenue at risk is?
The revenue at risk is actually really, really nil, I'll tell you why. Notwithstanding our preparations for the PHE, the DEA actually went ahead and extended those waivers until November. So I'm not sure if you're aware of that. But we had to get ready. We knew that the end of the PHE was happening. But even though Biden ended the official PHE, the DEA as it relates to controlled substances, which I think was the focus of your question, have been extended and more flexibility is allowed for companies like Circle.
So really, we ramped up to be there and to be able to support this, but we will continue to enjoy those flexibilities for quite some time. And even in November, there will be a 1-year grandfathering period after that. So they want to give, it looks like ample time for anyone operating in this space to be able to make this transition. That just came by the way in the last few days.
I saw that extension till November. I was just wondering more like when it eventually comes into effect, how much of that revenue could be impacted?
Yes. I mean look, as of now, we don't -- it's not even a thing. But with the locations that we had ramped up, we were kind of positioned to support the vast majority of our revenues and customers and continue our growth path. And our budget continues to be very strong for Circle. Even -- this was even pre the understanding and recognition of the fact that these restrictions would have additional flexibilities associated with them.
Your next question comes from the line of Jason Zandberg.
Apologies -- your next question comes from the line of Michael Zeeman from Raymond James.
Congratulations on a tremendous quarter. My first question is on acquisitions. I mean, at the end of last year, you talked about a robust pipeline starting at the year as we saw very little came through in Q1. It sounds like you're still very bullish about the prospects for this pipeline. I wonder if you could give us a bit more color on perhaps like what that pipeline looks like, perhaps how many deals are sort of looking -- you're looking at in the near term, maybe total deal value and maturity across that funnel?
And then given -- you gave some commentary about clinics being the focus of this -- of your M&A. Wondering if you could talk about perhaps focusing on Canada, geographic areas of focus and creating ecosystems of multidisciplinary clinics. And I'll leave it there.
Yes. Thanks, Michael. Look, yes, I think you nailed it. Clinics is the focus, both in the U.S. and Canada. WELL's business can be characterized as wanting to accumulate this precious and scarce resource of providers. I mean there is -- at the end of the day, the people that deliver care and demand for healthcare services is extremely high in both countries.
And most growth, what we found, is not -- doesn't seem to be challenged on the demand side, but more on the supply side. So WELL has, I think, a very focused strategy on acquiring assets that are provided rich so that we can accumulate that precious and rare resource and -- increasingly precious and scarce. And so that manifests itself in a number of ways. It manifests itself -- and why do we want clinics?
Well, clinics are great. It's not so much the physical 4 walls that you get in the clinic. But what you do is you get providers that are entrenched with patient volumes, demonstrating that there's a pattern of delivering care in a sustainably economic manner. And then, of course, the WELL business model is to come there and ameliorate that in a significant way with our tech and expertise.
So we see deep pipeline opportunities in both the U.S. and Canada. They're a little bit different though. In Canada, I would say, a lot of smaller networks. In the U.S., I think they're bigger networks in the U.S. We're also looking at different innovative approaches to acquiring providers. For example, services that provide locums to hospitals and clinics. This is highly desirable for WELL to be able to traffic in those types of areas because, again, it puts us in a position where we can be partnered with a provider, tech enable that provider and have that provider improve their productive outcome. Hopefully, that's helpful.
That's very helpful. I appreciate that, Hamed. As a follow-up question, I wonder if you could shed some light on the government of Canada's investment over 10 years starting now in the modernization of the healthcare system, among many other things. You mentioned that you're seeing some of this healthcare spending showing up across the country. I wonder if you could expand on what you're seeing? And then also just looking down the road, how WELL could further benefit from this investment?
Sure. I'm sure you're aware of some of the improvements and pay for doctors here in British Columbia, where I am. I think we're seeing -- after many years of not really staying current with doctor pay, BC has dramatically ramped up it's pay and even providing some onetime payments, I think Eva covered that off in her script. So we're not just seeing onetime payments. We're seeing new programs. We're seeing an effort to make primary care providers feel that they are participating in a business that does not leave them behind.
If you kind of compare CPI and the pre unit economics of a physician in some parts of the country like BC, it was quite lacking. So our understanding is that there will be other spiffs and upgrades across the country as we sort of deal with this health care crisis, which, again, to a great extent, can be characterized as a lack of primary care physicians. I mean it's other physicians, too, but I will say mostly primary care physicians.
All right. That's really helpful. If I could throw one more thing in here. You mentioned that Wisp is seeking to retool its offerings. I wonder if you could shed some light on that.
Sure. I mean, look, they're a pure play provider of women's reproductive and sexual health. And there's a bunch of different products and services that they provide. They are -- as they scale, they're adding new partners, reviewing old partners, making sure that everyone is ready, able to scale. As you grow your business, you encounter different situations and opportunities for improvement.
And I think we believe we got a tiger by the tail here with Wisp. We feel that because especially of their kind of scalable growth trades in terms of -- that revenue that you saw, I think, the $18 million this quarter, that's not supported by a high number of providers. And so it's enormously scalable due to the asynchronous nature of the business.
And so we -- so really, a lot of the actual fulfillment responsibilities rest with your actual partners. Once a patient has been cleared for a medication and a script has been established, making sure that those scripts manifest in products delivered on time in a highly compliant way, I mean these are things that, as we grow, we want to expand the products. We want to add partners that can give us more access.
And so I think what you're going to see with time is that Wisp is going to expand its product line. So I think it's very exciting because we're not seeing any slowdown of any of the categories they're in currently, but we see opportunities to kind of participate in a number of new categories.
And for our last question today, we have Justin Keywood from Stifel.
On the 10 strategic investments in AI at $250,000 each, I'm curious why those parameters? Is each investment not unique where maybe it warrants more or less? And I think in the opening remarks, there was mention of 100 potential acquisition opportunities. Is that just within AI? Or is that larger across primary, specialty care and potential digital assets?
Thanks, Justin. Yes, the 10 is really -- first of all, I'll start with the number 10. It's really a number that's demonstrative of our commitment. So we want to have at least 10. And I think I said this year, I kind of meant really in the next 12 months is our goal. But if you look at our press release, we didn't say they'd be $250 million each, we'd say they'd be a minimum of $250 million each. The point there is that we just -- we want to make sure that we're not approached by folks asking for $30,000 or $40,000 or $50,000 for something that's really, really early stage.
But at the same time, we think that it's important not to come in into a more mature AI company where our investment would get lost and would be irrelevant. The idea here is for us to use our structural advantages, which include our provider network, our EMRs, our digital health highway to help these companies proliferate their technology.
When we put out that press release, we were -- we thought we'd get a response, but we were really surprised, and that's the 100 number. No, these were specifically related to the AI investment program. We had 100 reach-outs just in the past few days since that announcement.
So it kind of floored us. And it's great because we are seeing some incredible business plans, operators out there because -- and again, I don't think they're necessarily seeking us out for our cash. There's plenty of people that are willing to give you cash right now. But the fact that WELL can bring -- at health, it can bring the largest provider network in the country, that it can bring connectivity with so many health systems -- digital health systems in the country, I think, is something that really truly is top of mind for these entrepreneurs. Hopefully, that's helpful.
Thank you. And that ends our Q&A session for today. I'd now like to turn the call back over to Mr. Hamed Shahbazi for any closing remarks.
I'd like to thank everyone for joining us today and for all your support. We look forward to getting back to you on all our advancements in AI, in M&A. and of course, our efforts to tech enable providers in a confident and passionate manner. Thank you for your time. Have a great day.
Thank you, sir. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines. Have a lovely day.