WELL Health Technologies Corp
TSX:WELL
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WELL Health Technologies Corp
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Ladies and gentlemen, welcome to the WELL Health Technologies Corporation Second Quarter 2023 Financial Results Conference Call. My name is Jenny, and I will be your operator for today's call. At this time all participants are on a listen-only mode. We will conduct a question-and-answer session later in the call, which will be restricted to analysts only. Please note this conference is being recorded. I will now turn the call over to Mr. Tyler Baba, Manager, Investor Relations. Mr. Baba, you may begin.
Thank you, operator, and welcome, everyone, to WELL Health Fiscal Second Quarter Financial Results Conference Call for the 3 months ended June 30, 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 laws, 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 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 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, 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's 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, I will turn over the call to Mr. Hamed Shahbazi, Chairman and CEO.
Thank you, Tyler, and good day, everyone. We hope that you're all keeping safe and healthy. We appreciate everyone for joining us today. We're very pleased with our record-breaking quarter and to be visiting with you today. In our quarter, we achieved record revenue and growth across all key metrics. Our record revenue, adjusted EBITDA, patient visits and provider count are a testament to the company's continued focus on tech enabling health care providers and supporting them and simplifying their work lives, modernizing and digitizing their clinical practices and delivering the best health care possible while exited Q2 2023 with over 3,200 providers and clinicians delivering 1 million patient visits, over 1 million patient visits. In fact, in the quarter through our own physical and virtual clinics without counting any of the technology interactions or technology-enabled visits that happen with other people's providers. In addition, WELL had more than 31,000 providers -- supported by our own SaaS and technology services. We are extremely passionate about supporting our providers and every day, we focus on supporting them better. And this attitude and focus is what's allowed our 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. Thematically speaking, there are a few catalysts that I wanted to touch on in today's presentation and they are as follows: one, continued resilience in our multidimensional health care delivery platform that has allowed us to continue to deliver outstanding record results 18 quarters in a row and allowed us to yet again upgrade our guidance this quarter for the balance of the year. The growth of our R&D teams and costs demonstrate that we continue to invest in our growth, not only with M&A, but with internal investment, constantly strengthening our internal ability to grow and innovate. This is not only contributing to the health of the company, but positioning us to grow organically, as evidenced by our big Ocean MD contract win today; three, our continued focus on artificial intelligence and strategic internal and external planning and investments that allow us to leverage AI to help our providers and patients at scale while becoming a more efficient company. Four, our disciplined M&A growth engine and how it continues to yield tremendous results; and five, our relentless focus on integration and digitization. WELL has exhibited a keen focus both in the U.S. and Canada to improve efficiency and leverage our size and scale by integrating aspects of our business. Our efforts to constantly improve and tighten up our integrations never really stops due to our growing capabilities, new innovations and our dynamic company culture. As we've discussed before, at the heart of our company is our digital platform, which is being worked on by an internal team of over 100 dedicated product and engineering professionals and several dozen more externally on both sides of the border. In Canada, our platform is quickly becoming one of the most important stretches of the digital health super highway for health care communications by enabling interoperability between HIS systems and core EMR systems and primary and specialized care providers. This was recently evidenced by our recent win with Ocean MD in British Columbia, where we were awarded a significant $38.5 million contract by the PSSA to help modernize and digitize the province's workflows with our next-generation e-Referral any consult platform. This contract win exemplifies just how strong our platform is, especially given that we now have substantial contracts with Ontario, Nova Scotia and now BC with other provinces engaged deeply with our business development teams. We are now working on taking our platform to the next level by elevating our product road map with the help of AI-related technologies. We're pleased to report that all of our business units are executing well, and we're expecting to have strong performance for the remainder of 2023. The company does not foresee any material influences or challenges that would impair its ability to deliver solid results in 2023 as we are poised to invest in and achieve significant growth while delivering on enhanced profitability. Just last month, we increased our annual guidance by $50 million to be in between $740 million and $760 million for the year. We continued improvement in our outlook, and I'm pleased to provide an upgrade to our revenue guidance, which we now expect to be in the upper half of the $740 million to $760 million annual guidance. Essentially, we're expecting annual revenue to exceed $0.75 billion, representing annual revenue growth of at least 32%. Just a reminder, our guidance does not include any unannounced acquisitions. We also continue to guide for maintenance of Rule of 30 performance for the year. Achieving $0.75 billion in revenue this year is a significant milestone, which demonstrates that we're well on our way to reaching $1 billion in annual revenue. Our strong organic growth profile and compelling acquisition opportunities gives us visibility into achieving $1 billion revenue run rate within 2 years. Our adjusted EBITDA -- for our adjusted EBITDA, we're also pleased to reiterate our guidance for annual adjusted EBITDA to increase by more than 10% over 2022 levels. Our revenue growth continues to outpace our EBITDA growth in 2022 due to the reinvestment of any excess cash flows back into the business for growth. In addition, our acquisitions this year have had lower operating margins than our existing businesses. It is quite common for us to acquire businesses that aren't as profitable as our own as we then digitize and modernize these assets and increase their operating margins to be more in line with our own profitability profile. This is what we do, and this is what we have a proven track record of doing, improving the growth and profitability of our acquired assets. With that, I would now like to turn the call over to our CFO, Eva Fong, who will review the financials for fiscal quarter -- second fiscal quarter 2023. I will then come back and provide further commentary on our business units and outlook. Eva?
Thank you, Hamed. I'm pleased to report that we had very strong results for the 3 months ended June 30, 2023. Our overall second quarter results were as follows: WELL achieved record quarterly revenue of $170.9 million in Q2 2023, an increase of 22% as compared to revenue of $140.3 million generated during Q2 of last year. This growth was driven by acquisitions and organic growth. Year-to-date, WELL has achieved organic growth of 15%. WELL achieved record adjusted gross profit of $90.8 million in Q2 2023, an increase of 20% as compared to adjusted gross profit of $75.5 million in Q2 2022. Growth in the company's adjusted gross profit is attributable to higher revenue in the period. Adjusted gross margin percentage was 53% in both Q2 2023 and 2022. WELL achieved record adjusted EBITDA of $27.8 million in Q2 2023, an increase of 5% as compared to adjusted EBITDA of $26.4 million in Q2 of last year. Adjusted EBITDA attributable to WELL shareholders was $22.3 million in Q2 2023, an increase of 16% as compared to adjusted EBITDA attributable to WELL shareholders of $19.2 million in Q2 2022. Adjusted net income was $14.4 million or $0.06 per share in Q2 2023 as compared to adjusted net income of $17.5 million or $0.08 per share in Q2 2022. WELL generated 11% of its revenues from truly recurring and subscription revenues and 87% of its revenues from its highly recurring patient services revenues in Q2 2023. This means that approximately 98% of its revenues are highly predictable. I will now review our cement Q2 results. Our Canadian Patient Services business achieved another record quarter with revenue of $54.2 million in Q2 2023, an increase of 24% as compared to $43.7 million in Q2 of last year. With both primary care and my Health specialized care clinics achieving record revenue in this quarter. Primary Care revenues increased 39% to $24.9 million in Q2 2023 compared to $17.9 million in Q2 2022, primarily due to organic growth and acquisitions. During the second quarter, we completed the acquisition of 5 primary care clinics located in Calgary, Alberta from MCI One Health Technologies, which are expected to generate approximately $10 million in annual revenue. In Q2 2023, MyHealth revenue increased 13% to $29.3 million as compared to $25.8 million in Q2 2022. This year-over-year growth is attributable to an increase in diagnostic procedures performed and the addition of new cardiologists to MyHealth practice. The second quarter is also the seasonally strongest quarter for MyHealth, resulting in a 12% increase in revenue compared to prior quarter Q1 2023. Our WELL Health USA Patient Services revenue was $103.5 million in Q2 2023, an increase of 30% as compared to $79.6 million in Q2 2022, driven by growth over the past year in all 3 of WELL Health USA's lines of business, that is Circle Medical, Wisp and CRH. In Q2 2023, CRH revenues were $63.4 million, an increase of 25% as compared to $50.9 million in Q2 2022. CRHs case volumes also continued to be very strong with over 135,000 anesthesia cases completed in Q2 2023, an increase of 8% compared to Q2 2022. Case volumes in the second quarter were positively impacted by the acquisition of affiliated Tampa Anesthesia Associates, which closed in the prior quarter in Q1 2023. CRH sold more than 32,000 O'Regan [indiscernible] units in Q2 2023 compared to over 45,000 units sold in Q2 2022. This year-over-year decline was due to a promotional campaign in the prior quarter, Q1 2023 when CRH sold a record of over 59,000 O'Regan [indiscernible] units. With the conclusion of this promotional campaign, [indiscernible] unit volumes decreased in Q2 but have now returned to near normal levels in Q3. Circle Medical revenues were $21 million in Q2 2023, an increase of 34% as compared to revenue of $15.6 million in Q2 of last year. Although Circle Medical experienced strong year-over-year revenue growth as we had guided in our Q1 conference call, we were expecting softer results as compared to Q1 2020. Circle Medical has been focused on expanding its physical clinic footprint over the first half of the year to support the forecasted end of the public health emergency by the U.S. federal government. That would end some COVID regulations associated with telehealth medicine, which more in-person business is required. Circle Medical now has 27 physical clinic locations across 21 states in the U.S., a significant increase compared to last year when Circle Medical only had 2 physical locations in the state of California. As Hamed will cover in the outlook portion of our comments today, Circle Medical is back in growth mode now, and we're expecting a healthy finish in the back half of the year. With achieved revenue of $19.1 million in Q2 2023, an increase of 46% as compared to revenue of $13.1 million in Q2 of last year. In the first half of the year where customer acquisition costs are lower, we were intentional in reinvesting operating cash flows generated by this business back into WISP growth. The balance of the year should continue to see strong growth with slightly improved profitability. SaaS and Technology Services revenues were $13.3 million in Q2 2023, a decrease of 22% as compared to $17 million in Q2 2022. This decline was due to timing of contracts in the company's cybersecurity-related business. Cybersecurity and data protection revenue tends to be lumpy, which resulted in strong quarterly revenue in Q1 2023, followed by lower revenue in this quarter. We are expecting Q3 revenue to bounce back again for this segment. Outside of cybersecurity, our remaining SaaS and services platform business increased 29% on a year-over-year basis to $11.3 million in Q2 2023 from $8.8 million in Q2 2022. WELL ended Q2 2023 with a solid balance sheet. As of June 30, 2023, WELL had cash and cash equivalents of $35.6 million. WELL continues to be in good standing and fully compliant with all covenants related with this 2 credit lines, JPMorgan in the U.S. and Royal Bank in Canada. The debt from the 2 credit lines was approximately CAD 233 million as of June 30, 2023. I'm also pleased to report we have further reduced WELL's shareholder leverage ratio to 2.3x as at the end of Q2 2023 compared to 3x as of Q2 2022, and compared to 2.6x in the prior quarter as at Q1 2023. We define leverage ratio as net bank 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 over the past year. In terms of our share capitalization, as of August 9, 2023, WELL had 257,539,249 fully diluted securities issued and outstanding. That is my financial update, and I turn the call back over to Hamed.
Thank you, Eva. I will now provide some specific outlook on our business units. First, with primary care. We're expecting our primary care business to exhibit healthy growth in the second half of the year due to both organic growth and the acquisition of clinics from MCI One Health in Alberta and Ontario. During the second quarter we completed the acquisition of 5 clinics from MCI, which are located in Calgary and will have a positive revenue impact to our Q3 results. We've already started the integration of these 5 clinics into our national clinic network and things are going WELL. Then on July 19, WELL entered into an agreement with MCI that includes the acquisition of all but one of their clinical assets located in Southern Ontario, which are expected to generate annual revenues of more than $21 million. This acquisition brings more than 130 physicians to the WELL family and significantly expands WELL's footprint and breadth of services in Ontario. These MCI clinics in Ontario are expected to come on board in October and provide a revenue boost to our primary care business in the fourth quarter. Initially, we're expecting EBITDA to be negatively impacted by the acquired MCI clinics in Alberta and Ontario. Notwithstanding this, we've established a strong plan to improve the efficiency and output of these clinics by leveraging WELL's operating playbook, which includes extensive use of our practitioner enablement platform. As we go through the process of digitizing and modernizing these clinics, we expect them to become profitable in 2024. One of the exciting aspects of this acquisition is the fact that we will now have a much larger base of primary care clinics in Ontario and can refer into our MyHealth specialized care network, which will only strengthen our overall business in Ontario. And that leads us to MyHealth. My Health had an outstanding quarter with strong year-over-year growth and improved profitability with Q2 being seasonally the strongest quarter for MyHealth. We do expect MyHealth revenue to decline in Q3 2023 compared to Q2 due to seasonality, however, we anticipate a healthy trajectory is demonstrated in year-over-year strength in the back half of the year. In reference to Ontario's Bill 60, your Health Act, which allows out-of-hospital facilities to perform publicly funded surgeries and diagnostic procedures, including MRI and CT, we continue to await the highly anticipated final regulations and call for applications for licensing. Although exact timelines are not publicly released, we anticipate a call for applications to occur in Q4. MyHealth Center continues to be highly engaged throughout the process with the optimism of serving the patients of Ontario and helping reduce MRI and CT patient times the following calendar year. If successful in obtaining MRI/CT licenses additional capital cost to purchase the scanners and extensive leasehold improvements would be required. We anticipate lead times of close to 9 months to have these services fully operational clinics. As such, we don't expect any revenue in 2023 from the release of this regulation. I'll now discuss the outlook for our newly branded WELL Health USA business. On July 27, the company announced that it had rebranded CRH Medical and launched WELL Health USA, a multidisciplinary health care business spanning primary and specialized care with on and off-line operations at scale. Well Health USA's goal is to mirror WELL's mission of tech-enabled care providers in the United States, while digitizing and modernizing their health care businesses. In addition, WELL Health USA will leverage its deep U.S.-based health care expertise and structural advantages to create a whole new category of shared services that will benefit and deliver improved integration and facilitate further growth between WELLs U.S.-based lines of business. WELL Health USA is a highly profitable and rapidly growing business with operating run rate revenues of approximately CAD 0.5 billion. It's also important to note that we have a really outstanding team there with over 100 years of combined experience in allocating capital, integrating and growing health care businesses and working inside of some of the largest and most prominent health care companies in the United States. The different lines of business under WELL Health USA includes CRH Anesthesia, CRH O'Regan, Radar Healthcare Providers, Circle Medical and WISP. I'll now provide a quick update on these businesses. First, CRH. CRH is having an outstanding year so far. We expect CRH anesthesia case volumes to continue to follow normal seasonal patterns in 2023 with the highest number of cases increasing in each quarter, with Q4 2023 again being forecast as strongest revenue quarter again this year for CRH. CRH anesthesia services should get a boost in revenue in Q3 from the addition of 18 ASC practices from the CarePlus acquisition as well. Also, CRH's efforts to digitize operations are bearing fruit. CRH has invested substantially into its revenue cycle management program with implementations of numerous new digital tools designed to improve business intelligence, collections visibility and collections performance. On June 22, 2023, the company announced that CRH had made strategic investment in Graphium Health, a leading EMR company focused on anesthesia practices. The investment is part of a strategic alliance designed to further digitize and modernize CRH's back, billing and back office processes. Based on a recent pilot project with Graphium Health, CRH has demonstrated that it had improved its time to capture billable charges by 58% or 5.6 days and reduced its overall accounts receivable balance as the pilot project sites by 24%. As a result of the successful pilot investment, CRH Medical plans to expand this initiative to at least 54 additional ASCs over the next 3 years where CRH provides anesthesia services. Secondly, Radar. We're very pleased to be welcoming the Radar Healthcare Providers team to the WELL family as part of the CarePlus acquisition. Radar provides staffing and locum tenant services, focus on anesthesia providers with a specialization in anesthesiologists recruitment and placement for its network of customers, which include provider groups, hospitals and ASCs across 29 states. With a database of over 70,000 anesthesia providers to leverage, Radar has served over 150 clients to date and is well positioned to further increase its footprint of providers and clients. Greater adds significant upside for growth and diversification beyond clinical anesthesia services to include recruitment services. Radar is also well positioned to serve as a shared service provider -- shared service for provider recruitment and billing services to the other U.S.-based businesses in WELL's portfolio. Furthermore, WELL Health USA intends to expand the scope of Radar to other specialties and health care professionals such as physician specialists, primary care and nursing professionals. We're off to a great start with Radar so far and seeing revenues and growth in line with our expectations. And now for Circle Medical. Last quarter, we mentioned that there would be some temporary softness in medical -- Circle Medical's Q2 results as management's focus had shifted from expanding its physical clinic network and the prompt return to growth as the company makes growth it's primary priority again, we were right on both accounts. The Circle Medical team put an enormous amount of focus and energy into being compliant with the end of the public health emergency in May and expected removal of COVID era waivers allowing companies such as surgical medical to prescribe controlled substances via telemedicine. This involves expanding its in-person clinic network from a few clinics to 27 and seeing over 13,000 telemedicine patients, 66% of our target in person within 1 quarter, a logistical feat unmatched by Circle's competitors. The waivers were extended at the last minute, and we are optimistic that recent moves by the DEA will lead to a more flexible regulatory environment that allows for prescription of controlled substances without an in-person appointment where clinically appropriate. Either way, we are resilient and extremely well prepared for any direction that the DEA takes given our robust in personal clinical network and proven ability to rapidly adapt to changing circumstances. We were accurate in our prediction of a rapid return to a focus on growth post public health emergency. Based on booking data, we have high confidence that Circle Medical is already exceeding a run rate of over CAD100 million and profitable in August, and we expect strong month-over-month growth for the balance of the year. The growth in revenues and our projections for the balance of the year has primarily to do with Circle Medical growth team turning their attention from establishing a strong physical network to onboarding physicians. In fact, in the last 4 weeks, we have increased the number of physicians onboarded by more than 25% over the previous month and continue to ramp up as we have retooled our provider recruitment process to onboard more providers in the less time than before. And now a few words on WISP. Last quarter, we discussed how West is retooling some of its key product and distribution partners, which resulted in slower growth in Q2 and minimal adjusted EBITDA contribution in the first half of the year. I'm pleased to report that WISP has mostly completed this work and we are now expecting revenue growth to be stronger in the second half of the year with improved profitability. Additional spending in Q1 and Q2, primarily on marketing costs, to gain new patients and drive additional revenues is already starting to pay off thus far in Q3. In fact, July was a record month of revenue for the company with USD 5 million in revenues. With the recent launch of our new and improved online platform, we are now able to launch new products more quickly and efficiently and have plans to launch 10 new products over the next several months. For example, just a couple of weeks ago, WISP became the first telehealth brand in the United States to bring DoxyPEP, the morning after pill for STDs to market. Finally, our SaaS and Technology Services business, as we had previously guided in our last call, cybersecurity and data protection business had close to its best quarter ever in Q1. But being a lumpy business, revenues declined in the second quarter as we had expected. Cybersecurity revenues can often be impacted by the timing of hardware shipments at the end of the quarter. Thus far, Q3 is looking like a stronger quarter again with several contracts delivered. We're expecting a bounce back in cybersecurity revenues, while the rest of the SaaS services business continues to perform with steady growth and profitability. OceanMD is a key component of our SaaS and technology services group and is emerging as a leader in patient engagement and e-referral solutions. Ocean's e-referral software allows primary care providers to send their request to surgeons through the Ocean e-Referral network instead of faxing, e-mailing or mailing, which makes surgical console easier -- referrals easier and reduces wait times for patients. OceanMD is already the dominant e-referral solution in the province of Ontario. Last quarter, we reported that OceanMD has been selected by the province of Nova Scotia first referral solution. And this week, obviously, today, OceanMD, we reported signed a $38.5 million contract with BC PSSH providing an array of digital services such as e-referrals, e-consults and e-orders to help -- tech-enable providers with the best-in-class digital interoperability tools. With this win in BC, we feel OceanMD has the potential to become the e-referral standard across the country. OceanMD has notably proven its ability to reduce wait times by as much as 52 days, including a 35-day reduction in referral processing time alone, thereby significantly improving access to care. In Ontario, the implementation of OceanMD's platform was shown to result in a 12% reduction in medically unnecessary MRIs, underlining a direct cost saving impact for provincial health systems. One of the things that is really truly special about Ocean is that it's the only piece of commercial software that we know of that connects with all the major EMR NHIS systems in the country. That means that it connects into TELUS Health, Accuro, Wells Oscar and other EMR systems in addition to major EMR and EHR systems for hospitals such as Epic and Cerner. Moving on to the WELL EMR Group. We're also very excited to report that our intra-health EMR team was selected by another government agency in New Zealand on a significant multimillion dollar contract, which includes over $1 million in ERR and more than $1 million in implementation services. I'll now provide an update on our AI-related activities. We're incredibly excited about the potential of AI and healthcare. Our vision is that AI-powered solutions can have positive impact on the health care sector by giving health care providers clinical and decision support tools that will give them their time back, enhance clinical productivity and provide a better patient experience. We are determined to faithfully support and tech-enabled health care professionals with the very best technology available, which now includes significant investments in AI-based products and services. Last quarter, I highlighted that WELL had made AI a priority, and I'm pleased to report that we're starting to see some of the operating improvements as a result of leveraging AI internally, including: one, reduced team member Q-monitoring. One of our platform teams first-line support group now leverages GPT4-powered AI solutions that pull answers from internal resources and automatically response to acquiring customers; two, we're leveraging intelligent chat bots to provide improved access to knowledge outside of support hours as well as improved response rates and experience for patients who are reaching out for support; and three, a number of our internal development teams have been heavily leveraging Microsoft Copilot and starting to benefit from generative AI solutions that can significantly increase developer productivity. In addition to this, we're working on compelling new products and enhancements to roll out to our provider network. In Q2, we did just that with the launch of several key initiatives, including WELL AI voice and the WELL AI investment program. And a few words on AI voice. WELL AI voice is a transformational ambient scribed product that leverages generative AI to dramatically reduce the providers' administrative burden by privately and securely capturing a patient encounter in conversation and automatically generating a succinct and medically relevant chat note for the patient interaction. WELL AI voice is a powerful tool that is able to communicate seamlessly with WELL's EMR products, making it easy for providers to deploy, manage and benefit from the technology quickly without having to harmonize the usage of disparate tools. Providers love WELL AI voice because it allows them to focus more of their consultation time on the patient and spend less time taking notes. Patients love the experience because they no longer have to compete with the doctor's laptop for attention. One of our physicians was recently quoted by our sales team as saying, WELL AI voice has made my work life amazing, and now I look forward to coming to work to use it. Strong statements like this demonstrate the value of WELL AI voice and the real impact it has on day-to-day lives of positions. We've had a controlled rollout to ensure quality, safety and security and ensure that results are as intended to date. And we can say that WELL AI voice has seamlessly integrated into more than 5,000 patient visits so far. We've seen strong user growth with the average physician using the tool for more than 230 sessions per month. All of this demonstrates growing trust in our product and its efficiency in the real-world healthcare setting. While we are providing this technology for subscriptions in our EMR network, we are also planning to roll it out to the majority of WELL's primary care operations in the balance of the year and are excited about the benefits that it affords our internal network. As part of our commitment to developing AI technologies, WELL announced the AI investment platform, whose goal it is to invest in at least 10 companies and to ensure that each investee has a strategic alliance agreement with WELL and allows it to benefit from WELL's health care ecosystem. Since launching the program, we've already connected with more than 125 new companies and have spent considerable time to narrow down the group to approximately 2.5 dozen companies where we're having deeper conversations. We are already in discussion on terms with a handful of these companies and expect to have some exciting developments to share soon. Before we conclude the call, I'd like to provide some additional commentary on the MCI strategic alliance and investment. As part of the agreements with MCI, WELL purchased the MCI Ontario clinics for consideration of $1.5 million and acquired the debt of a key creditor for $3.5 million to help facilitate the deal. Finally, WELL will also lead a new investment round into MCI in which WELL will commit at least $2.5 million as part of a convertible debenture financing of up to $10 million. Going forward, MCI will be strategically focused on its leading AI, data science and rare and complex disease detection platform. WELL also intends to enter into a strategic alliance agreement designed to provide WELL clinics with leading-edge technology from MCI and better position MCI as a key national leader in Canada. As part of the strategic alliance, WELL has joined MCI's Board of Directors and subject to satisfaction of certain conditions. WELL will also hold an option to acquire up to 30.8 million Class A and Class B shares in MCI over time. This means that WELL will have an opportunity in the future to acquire control of MCI One Health. In the event elects to do so -- it elects to acquire the multi-voting shares it has optioned out subject to the terms and conditions of its various agreements, covenants and rights. We believe the multibillion-dollar disease detection industry is a big opportunity for MCI with its Cure Health platform. Cure Health is already available on the apps.health platform and is integrated into WELL's Astepro EMR. We're looking forward to working with MCI in developing and amplifying this world-class technology. In addition, we believe MCI is an ideal company for building additional healthcare-related data science and AI technologies. We're really excited about the upside investment potential offered by the new strategic direction and the recapitalization of MCI One Health. We have big and extensive plans here folks, stay closely tuned. In summary, we are very pleased with our financial performance thus far in 2023 and look forward to delivering strong results again for the balance of the year. Our outlook for 2023 remains positive. Hence, I am confident in upgrading our annual guidance again with more of our guided EBITDA appearing in Q4 versus Q3. And please keep in mind that the big contract win announced today doesn't contribute meaningfully to this year's results. 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. In closing, I will provide an update on our ongoing ESG program. I'm proud to have released WELL's second ESG report on July 7, entitled, 'Taken care of the care providers'. This report highlights WELL the ESG strategy, reporting initiatives and targeted actions. WELL is a purpose-driven company that aims to transform the world for the better, as such, our ESG report outlines this objective. Finally, I want to thank you all for joining us on this call today, and thanks to our shareholders and investors for their continued support. The capital markets have been very supportive of our vision and have provided us with the funding needed to pursue our goals and support our providers. I would also like to thank WELL's senior management team and all 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. They remind us every day why we're here, and we are here to support them. With that, we will be open to receive some questions now. Operator, can you please facilitate.
Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question [Operator instructions] you will hear a ton from acknowledging your request. Questions will be taken in the order received. [Operator instructions] Your first question is from Allen Klee from Maxim Group.
Yes. Congrats on the strong results. In regards to the Ocean Medical -- OceanMD contract with British Columbia, that's for $38.5 million, can you tell us when you think revenues may start and the $38.5 million is spread over how many years?
Thanks, Allen, for the question. It's a 5-year contract. For the balance of this year, we expect to do some services work so it will be fairly minor revenue generation this year as we sort of ramp up the services and implementation side of the business. And then we'll start to see the real licensing revenue come on next year. And I think then we'll see a much more meaningful contribution to our results next year.
And one other follow-up question. For Circle Medical, could you go into a little bit more of the actions that you've taken and why that gives you confidence that with the change in the regulations that this is going to return to growth mode?
Yes, thanks. It was really just the focus of the team. The entire focus of the team went to preparing for the PHE as that was a date that was very much forecasted by the Biden administration and at that point in time, it was forecasted that a number of those COVID era conveniences would fall off. So it was very important for us to have the in-person network set up. Since that time, that same team has now moved their focus towards growth. And we're very pleased with what's happened because, again, based on booking data in August here, we can certainly see that, that has been, as we thought, would be a U-shaped recovery. This was sort of a temporary -- think about it as a lost quarter of growth really to support the PHE and now we're back to the kind of growth that we had been accustomed to over the last couple of years. So we are -- so it's really the focus of the team and the retooling of the provider acquisition. We are frankly seeing tremendous results in provider acquisitions. Provider acquisition was fairly impacted by the focus on the PHE and now that whole growth team is back focused on engaging those providers. And I believe just in 1 week, we onboarded between 15 and 20 providers, which is really incredible and very, very difficult to do.
Your next question is from Christian Sgro from Eight Capital.
I'll also start on the OceanMD win this morning and congrats. We already asked about the time line there and what to expect this year and next. But I'm just wondering with Ontario and Nova Scotia already live, is the model there? It seems transactional and doctors opt-in as the benefits are clear to practitioners and patients. But do you expect a similar sort of ramp as doctors come on board next year, the following? I guess, similar to the provinces you're live and already for this all to become high-margin, scalable revenue over time.
Yes. Thanks, Christian. Each of these contracts is a bit different. I would say that the BC contract is probably the best one so far just in terms of the predictability that we have for revenue, and this is why we haven't really announced contract values before for Ocean. And so I think we're very excited by that, and it reflects kind of the plan to roll this out in a very comprehensive fashion in BC, which has been a little bit different than the approach that was sort of organically taken in Ontario, even though the government backed it significantly and funded it, it was still fairly opt-in based and organic in Ontario, which obviously was very successful. As you're probably aware, we have over 8,000 physicians signed up in Ontario. But we do expect, again, a faster rep here in D.C.
That is helpful. I'll ask just one more question. Another congratulations in order for the big CarePlus acquisition closing. So my question there. Just anything you're able to share on the financial profile to help with our understanding of the size and for modeling. And then you touched on it in the prepared remarks that some of the synergies or integration you see ready out the gate across that CRH and the U.S. business?
Sure. Yes. I mean, look, CarePlus effectively had 3 components to it from a revenue perspective, really 2 components, and that is the radar recruiting and then the ASC business, which I referenced in my script, what's really unique and great about this asset is that the ASC component fits perfectly within our network. We're very good likely acquirers for that. But we already had a little bit of, call it, personnel revenue at CRH. We were already sort of dabbling in this area of lending our providers out to other sites. And this really turbo-charges that. So the radar recruiting really strengthens the entire CRH anesthesia platform, but it then allows us to extend that platform into other forms of care providers, which then position us to provide very valuable shared services and provider recruiting to our other U.S. lines of business. So we're very pleased with that. So when we express some of this confidence that we have in EBITDA, it is really coming from the fact that we're getting some EBITDA from the actual acquisitions, but we're expecting some nice synergies there as well. Generally speaking, we expect there to be roughly a 10% EBITDA margin contribution with the activation of all those synergies. And given what we pay for it, I mean, that really puts us in a position where we generally paid gosh, with all those synergies probably in the order of 5 to 6x EBITDA. And obviously, we have to work hard to make sure that those are synergies that we can obtain. But if you know WELL, you know that we are very, very rigorous in assessing those synergies. And we would put these more in the less speculative or non-speculative bucket than we would be speculative. Hopefully, that gives you a little bit of color.
Thank you. Your next question is from Rob Goff from Echelon.
You were pretty bullish in terms of saying Watch for big and substantial things from Cure and the data analytics. Can you describe a bit more of your picture there, your strategy and like a time line for that unfolding?
Sure. Well, look, I mean, you have to wonder why are we so excited about making NCI a national leader and really getting behind them. First of all, we've been watching SCI for quite some time. We felt that they were a company with a great group of people and an excellent idea, but they were essentially 2 businesses. They were in a clinic business and they were in the data science business. And when we approached them, we said, gosh, we think we can be really helpful here and help you focus in on one strategic focus. And this is why it made so much sense for us to buy the clinics. But we're not about to invest in another company and help make them extremely successful without being really involved ourselves. And so the ability for us to then essentially leverage this option that we have negotiated as part of our transaction documents to be able to acquire Class A and Class B shares, which afford us to access to their multi-voting shares? -- is quite meaningful and basically allows us to really consider the potential to activate a pathetic control with MCI. And that's very meaningful. It's not something that happens every day, especially with a senior-listed TSX company. And we have a partnership already with them. It's an early stage 1, but we have seen Cure health in action within our app marketplace. And we can see that it works. We can see that patients and providers are driving value, the pharma communities driving value. They are some of the biggest names in pharma that are paying to participate in this business. And so again, our advantage in having this ecosystem-based approach with Apps.health has allowed us to see the best that Canadian health care has to offer. And we -- with now -- as I mentioned in my script, we expect to dramatically improve the number of clinics that cure has access to and really empower our providers with that technology. And that really kind of overnight makes MCI, call it, sort of the remaining company, a national leader. And I think you're going to see significant investments in growth in that business over time and quite a lot of enthusiasm. And so that's why I mentioned, stay tuned and express the excitement around it.
And one more, if I may. It's on OceanMD, could you talk to whether the province -- the provincial wins to date have been on a competitive basis -- and is this a platform that you could see taken across other Commonwealth countries.
Absolutely. All of these wins are extremely competitive, Rob. We hats off to the talented and committed team at OceanMD and our Platform Services group, they -- you've got to be really good to win these contracts. They are very long sales cycles that involve a tremendous amount of hard work to basically surpass that threshold of proof to demonstrate to provincial public health leaders that we've got what it takes. And look, yes, we're already thinking through our international strategy. We've already started some conversations, but we have so much momentum here in Canada. We don't want to take our eye off the ball. And as I mentioned, we do have other provinces that we're engaged with, and we hope to be talking about more wins with Ocean in the future.
Your next question is from Michael Freeman from Raymond James.
My question is on WELL Health USA. I appreciate this rebranding and also the provision of shared services, very similar to the model that we see in Canada, and we see it working in Canada. I'm wondering what are in the early days of providing these services across the network, what are some aspects that are -- that are similar to the Canadian context you can leverage the expertise from the Canadian context. And one aspect might be unique to the U.S. context that you're tackling a new with this new effort.
Yes. Thank you, Michael, for the question. There's a number of ways where WELL Health USA can help our other lines of business. I'll give you one example. Each of Circle WISP and CRH presently use different legal and professional services, they're getting -- they all have good confident counsel and professional advisers, but they're different ones. And so just aligning and harmonizing that to one, we expect will improve cost performance. One of the key components of the recent CarePlus acquisition for CRH is Premier Choice billing. So now we have quite robust revenue cycle management capabilities internally. We -- this is one big area of focus. This is not something we've decided to do, but aspirationally, one day, we could decide to provide revenue cycle management to all of circle, for example, presently Circle is paying an external vendor today, millions of dollars per year. So that would be millions of dollars to the bottom line if we could activate that. Again, it's not something we've decided to do just a second, but I know it's something that management is really thinking about working on. That's a great example of, let's say, a more aggressive aspirational one, and then there's lower hanging fruit like legal, professional, insurance, HR systems. CRH just had very mature systems and excellent agreements that they've already structured with providers to support their employee base. So there's a lot to draw on there.
All right. Great. That's very helpful. And now I'd like to talk about the acquisition pipeline you're dealing with today. I wonder if you could describe that profile and composition of that pipeline. In recognition of this continued narrative coming from you and the team describing potentially $1 billion in revenue within the next couple of years and doing some like math, it looks like another CarePlus type acquisition could nearly get you there. So I wonder if you could comment on this.
Yes. Good point, Michael. Look, if we did have other CarePlus Link acquisition, it would happen pretty much instantly because if you look at our revenue run rate to achieve more than $0.75 billion for the year, our revenue run rate is obviously a lot higher -- we're going to end the year a lot higher than that. So I would say that we're pretty -- the reason why I'm mentioning it in our press release and my quote is we think this is a very achievable goal in the next couple of years without really big acquisitions. Just with respect to our regular sort of bolt-on -- our diet of bolt-on clinics and our organic growth. It's not to say that there won't be anything bigger, but I think to your point, we can just accelerate that and draw that goal in a lot tighter and earlier if we make another big acquisition. So yes, I mean, all those opportunities are at our disposal right now.
That's really helpful. And if you'd entertain one more quick one. Also talking about are it looks like the EBITDA margin profile is relatively different from the rest of the business and would likely impact the EBITDA profile for the balance of this year and going to next year, while some of WELL's earlier acquisitions will benefit from the WELLs team's hands being on it and optimizing profitability there. I wonder if you could talk about EBITDA outlook for 2024.
Sure. I knew this question was coming. And look, we took a very deliberate approach in 2023, which was -- we wanted to demonstrate that we were committed to a certain material step-up in EBITDA growth. But we were very intent on demonstrating that we are a growth company. And so outside of that defined step-up in EBITDA growth, we were then going to invest the balance of our cash flows into growth, and that's really working. I think there are other companies that are very successful. Again, looking at other mature TSX companies, we've seen at least a couple that have employed this methodology, and I think it's going to be the same type of approach for next year, where we then take our sort of total 2023 EBITDA, we then make a commitment probably similar to this year's commitment. And we say, hey, look, we're going to continue to invest the rest of our EBITDA and cash flow -- free cash flow in growth. And I think it's the right thing to do because we are still fairly alone, especially here in Canada with respect to our activities and growth and particularly in M&A and with smaller clinical networks. And I really want to stay focused on growth, particularly because we've been able to demonstrate that as we grow and acquire these clinics, we have been able to help providers. And by helping providers the byproduct of that is we've been able to grow and improve margins and growth in these clinics. And we're getting pretty good at this. And of course, we're loading up more clinics. So our -- the execution will be more difficult, but we're up to the challenge.
Your next question is from David Kwan from TD Securities.
I wanted to get some color on the Circle business. I know in the segmented information, the EBITDA looks like it turned negative this quarter. I suspect that was obviously the distractions that led to the -- the revenue is declining sequentially, but I'm assuming also kind of the costs of all the clinics and the startups there. So just trying to get understand how you see the clinic rollout impacting the margin outlook for Circle's business.
Yes. Thanks, David. You're right. There's definitely a lot of the -- with the focus of starting up and driving all that clinical infrastructure did impact our Q2. But we're done now. I mean, we're not really expecting to grow the clinical network too much further at this point in time. We built appropriately for the end of the public health emergency. And we're very robust. We're very much ready for any decision that the DEA or the public health officials take in the United States given that they sort of kicked the can down the road on some of those COVID era conveniences. Just in the past few days, we've also heard that the DEA may again improve some of those conveniences. So it's possible that our clinic network is now very comfortable for us in terms of where its positioning is. And so I think we're well positioned. I think that we're going to demonstrate a fairly strong back half of the year weighted in profitability into Q4 and I think Circle is going to deliver.
So you expect that the business can return to positive EBITDA in Q3 and Q4 and into next year?
Absolutely, absolutely. We already see it in August. July was a transition month, but we did see higher revenue. And August, definitely is on track for our growth objectives for the balance of the year. We will see positive EBITDA in Q3, but much higher numbers in Q4. That's sort of what we're looking at.
Great. And just one last question. So it looks like, I guess, 27 of the 33 clinics in the U.S. are Circle Medical, and I think the balance of the CRH bond in clinics there. I'm guessing that none of them at this point are kind of multidisciplinary where you might bring in services from WISP or CRH in particular? And just curious how many of those clinics would you like to see kind of these multidisciplinary clinics similar to what you might have here or what you have here in Canada?
Yes. No, thanks. We actually do have a couple of multidisciplinary clinics. So we have a couple of sites where Circle and CRAs are collaborating already, which is great to see. And we do expect that we're going to start to add with over the next quarter or 2. And those discussions in terms of what does the WISP in person offer look like? What does it tackle, where would the sites be? Those are all starting to kind of roll out now in terms of thinking through what the implementation of that would look like. But I would say that's very much -- we're sort of setting the table this year, and we'll provide some guidance for 2024. But I think we'll hopefully see some more momentum now that we've launched WELL USA into 2024 on multidisciplinary.
Thank you. Your next question is from Jason Sander from PI Financial.
Thanks for letting me ask some questions. Just first of all, I'd like to, again, congratulate you on the OceanMD contract, that's a big win. I want to know are you able to talk at this point about any bids in the other provinces sort of what would be the expectations of rolling this out in other provinces?
Yes. Look, unfortunately, I can't get into specific names, but we do have one other province that we hope to be contracting with in the not-too-distant future and discussions with other provinces are always occurring going on. The other thing I'll mention is that there are further activities and developments ongoing on the national scale. As we talked about earlier this year, there's increased investments going into -- from a federal funds perspective into digitization efforts for the country. And one of those priorities is e-referral for the country. And so we're also engaging in those efforts, and we do believe that they will bear fruit, albeit those will occur more slowly over time, and they could also show up and manifest through the provinces themselves. But it is great to know and see that e-referrals is a federal priority as WELL and being already in a great position and really being a national platform already between BC, Ontario and Nova Scotia. I think we are very well positioned to acquire some additional business there. Hopefully, that's helpful.
Yes. No, that's very helpful. And just one further question. You talked a lot about the potential upside of MCI as a stand-alone after you've purchased the clinics in terms of their care AI applications. I just wanted to know in the -- you have that call option. I don't believe in the press release it talked about the cost you to execute that. Are you able to divulge that information at this point?
We haven't publicly talked about the quantum of the call option. I'll just say that it's not prohibitively expensive for us and something that if we see the right environment and opportunities, it's something that I think is well within our means. And that's -- I wouldn't be playing up our ability to carry out and accomplish -- pass the control transaction if that was provisional expensive. Let's just put it that way.
There are no further questions at this time. I will now hand the call over back to your host for closing remarks.
Thank you very much, everyone, for being with us today and hearing about our development, and thank you for the great questions from the analysts. Again, we are excited about our growth and momentum, lots going on, and we look forward to returning in 3 months and presenting our Q3 financial results. Until then, enjoy the rest of your summer and be safe. Thank you.
Thank you. Ladies and gentlemen, the conference has now ended. Thank you all for joining. You may all disconnect.