WELL Health Technologies Corp. (WELL) Earnings Call Transcript & Summary

Okay, everybody. Thanks for joining in. Pardeep, can you hear me?

Yes, we can. Yes.

Great.

Yes we can, Hamed. Thank you very much.

Great. Thank you very much for setting up. I've had just a little problem logging in here. But I think we're all set now.

Sure. I'll get going here. Welcome to the WELL Health Technologies Corporation webinar to discuss the announced acquisition of CRH Medical. My name is Pardeep Sangha, Vice President, Corporate Strategy and Investor Relations. Joining me on the call today are Hamed Shahbazi, Chairman and CEO; and Eva Fong, the company's CFO. Please note, this conference is being -- is going to be recorded. [Operator Instructions] Questions will be limited to analysts only. Portions of today's call, other than historical performance, include forward-looking statements. Let me just -- give me a second here. Is it sharing there?

Yes, it is. We can see it perfectly. Thank you, Pardeep. If you could go to the first slide, that would be great.

Yes. Let me just finish here. So just in terms of forward-looking statements, these are things made under the safe harbor provisions of those laws. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management, are inherently subject to significant business, economic and competitive uncertainties and contingencies. We provide forward-looking statements solely for the purpose of providing information about management's current expectations and plans relating to the future. We don't undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in our expectations or any change in events, conditions, assumptions or circumstances on which such statements is based, except if required by law. And with that, let me turn the call over to Hamed Shahbazi, Chairman and CEO of WELL Health Technologies. Hamed?

Thank you, Pardeep, and thank you to all the shareholders and capital markets participants who have joined the call today. We have an analysts-only question-and-answer period and, of course, other folks who can listen in. We're fortunate to have a number of great analysts on the story, I think, 11 or 12 at this point in time. We're just delighted to share this news with all of you. This is something we've been working on for quite some time. And as you may have heard from me before, what we look for in a great acquisition is a capital allocator. We look for opportunities that are accretive across 3 vectors: financial accretion, strategic accretion and cultural accretion. And I have to say this opportunity has all 3 in the spades. I'll start with the cultural. The team at MyHealth is truly a remarkable team, and we're really -- feel grateful and fortunate to be able to work with them. We've had a fantastic process. As you know, these processes can be quite substantial and challenging over time and the collaboration was fantastic. On the strategic side of things, this deal makes WELL the largest owner-operator of outpatient medical clinics in Canada, and that is really quite notable. And we're really quite excited to share that news. That's a combination of clinics, obviously, with our large British Columbia core of clinics where we started our journey. And of course, the clinics that we own in Quebec and now, of course, MyHealth's 48 locations, which are mostly focused on specialty care and diagnostics. MyHealth is a unique asset. This is the platform that has been really bringing together a number of these, again, specialty clinics, specialty practitioners and diagnostics and creating a real tech-enabled future leaning and focused business. And telehealth has been used extensively. About 75% of all of the visits have been done through telehealth. And when we combine the telehealth businesses that WELL is involved with -- as you may know, we own multiple platforms in a substantial patient services business. When you combine that with MyHealth, you really get what we, based on our research, believe to be the leading multidisciplinary telehealth service provider in Canada. And the third vector being financial is something that, again, we're very pleased to share with you today MyHealth has phenomenal numbers. As noted in our press release today, this is a health care powerhouse that has been growing at 40% revenue and EBITDA compound annual growth and completed 25 acquisitions of 33 clinics over the past 8 years and has also experienced 15% on organic growth, which is quite an outlier in this area of business. The sort of QoE pro forma revenues that is expected in 2021 for the asset is roughly $100 million at around a 20% EBITDA margin. When you start to compare that with what WELL was before, which is approaching $300 million and substantial EBITDA revenue -- EBITDA run rate, we start to get close to numbers around $400 million in revenue and around $100 million in EBITDA. And when you look at the actual per share accretion, you'll see that, on a per share basis, revenue accretion that we're experiencing is 28% and EBITDA is at 23%. We think these numbers will improve over time as they have in previous situations. And again, I think this, combined with some of the other things that we're doing as a company, just continue to demonstrate the capital allocation prowess of the company. We are paying roughly about 10x upfront normalized EV/EBITDA. This multiple will compress over time as the team meets the earn-out -- the 4-year earn-out that we have, the all-in multiple, based on meeting the full earn-out would imply closer to about a 6.5x multiple. So that's not easy to do, but we have all the faith in the world in this team. They're truly a talented group, and we're going to obviously be doing everything in our power to help them meet that earn-out. Next slide, please, Pardeep. I've already mentioned a couple of these things anyway. So I'll just kind of walk through some of the other sort of key things. We are paying $206 million upfront and a $60 million earn-out over 4 years. And again, that's -- if that earn-out is reached, which we hope it does, it implies that we've had a phenomenal result here all in. We are issuing equity at a substantial premium at $9.80, and a big part of the purchase price is being paid in equity. And we are also very fortunate to be supported by the Royal Bank of Canada and a syndicate of 5 additional banks and who are providing us with $82 million of immediate drawdown on close to support this acquisition. It should be noted that we are not providing any additional collateral other than the MyHealth asset in obtaining this debt. So that's a fantastic result for WELL, given that there's no cross-guarantees or no security perimeter beyond MyHealth. And this is sort of similar to what you saw with what we did with CRH, where we have the USD 300 million JPMorgan line that exclusively sits on top of the CRH asset and does not have exposure to the other areas of WELL. This essentially means that outside of the MyHealth and CRH security perimeters or business units, WELL is completely unlevered. So all the other EBITDA, all the other assets in the WELL -- in the WELL family do not have any leverage. And those banks are providing us with very strong additional committed capital and accordion capability for us to grow for many years with MyHealth. So we're very excited about that support that we're receiving. You'll be hearing more about that over time. I want to draw to attention the technology leadership that we are, that we believe is really coming with this asset. And we believe that a big part of what makes MyHealth be able to deliver these fantastic results is, obviously, the strength of their management team but also their use of technology. This is an extensive tech-enabled asset. They have their own IP. They have a whole digital toolkit. They have a very sophisticated business intelligence process that they've used. And at every chance that they could, they have leveraged software and workflow to improve the patient experience and to empower practitioners, which is really big for us. A big part of WELL is practitioner empowerment. I mean practically everything we do is in some way, shape or form related to practitioner empowerment and enablement. What's really unique about this asset is during the pandemic, obviously, during the lockdowns -- initial lockdowns where physical distancing didn't allow some of these medical consultations to take place, there was obviously a reduction in revenue. But as those lockdowns were off, the revenue came back extremely quickly. It was very resilient, and a real culture of telehealth was born. And now 75% of all medical consultations performed in the MyHealth family are done through telehealth. And this was very notable for us. And again lots of credit is owed to the team there for not only pivoting, but really embracing this and becoming a leader in this area. They have really created an integrated clicks-and-bricks approach and used their outpatient clinic model to deliver timely results, which we believe has -- is what really has driven the underlying value -- intrinsic value of this company. If you look at this company, It has something like 1,400 or 1,500 Google reviews. I think that's actually on the next slide. We'll get there in a second. But yes, it's -- the timeliness and service delivery I'm sure has saved lives, but has also really served to improve the intrinsic value of this business. We see significant digital enablement and cross-collaboration between us. We'll talk a little bit more about that later. And we are talking about a very profitable asset with strong EBITDA margins. It should be noted again that the company has been a very successful capital allocator, and the average ROI of 42% is pretty remarkable. We looked at every deal that the company has done, and I think all but one of them experienced substantial organic growth. And that's really, really remarkable in this business. Next slide, please. I'll pass this one over to Eva, our CFO.

Thank you, Hamed. So as Hamed has pointed out earlier, WELL has entered into an agreement to purchase all the issued and outstanding shares of MyHealth Partners for a transaction value of $206.3 million plus future conditional earn-out of up to $60 million for a total transaction value of $266.3 million. This transaction is fully funded through a combination of cash, shares, vendor takeback and future earn-out as follow. Number one, we're going to issue 9.6 million common shares in the capital of the company representing about $94.3 million to be issued on the closing date at a deemed price of $9.80 per share, which is a 38.1% premium to the 5-day volume weighted average trading price of the company's common shares on the TSX, which are -- preceding today's announcement, which is approximately $7.10 per share. These shares will be subject to certain volume-based voluntary resale restrictions. Number two, there's going to be a cash of about $82 million to be paid on the closing date, subject to customary closing adjustments. This cash is provided by a new senior debt facilities that I mentioned earlier, which is to be provided by a syndicate of banks led by the Royal Bank of Canada. And it will be leveraging exclusively the collateral of MyHealth assets itself. Number three, this will be a vendor takeback in the principal amount of $30 million by WELL payable in three $10 million tranches on the third, sixth and nine months following the closing date of the transaction. And it will be repayable in cash, WELL common shares or a combination of both at WELL's discretion. And lastly, there's going to be a 4-year performance-based earn-out of up to $60 million, payable in cash, WELL common shares or a combination of both at WELL's discretion. The performance-based earn-out is driven by maintaining and enhancing the company's profitability. Currently WELL has about $60 million of cash on the balance sheet. With a strong strategic support from the banking partners and the vendors, we are not deploying any cash from treasury for this transaction as we'll be using the new RBC senior credit facilities. We will continue to have a strong balance sheet to execute on additional acquisition opportunities in our current M&A pipeline. I will now turn the call back to Hamed.

Thank you, Eva. Very helpful. Next slide, please. So I've already referred to some of this, but I'll just point at the Google reviews I was just referencing. There have been 1,650 plus Google reviews at an average rating of 4.4, which really goes to show just how well liked and extensive this asset has been in terms of serving patients and really driving value, tangible delivery benefits to patients, which I think is a really tough thing to do. A lot of people talk about it. Trustpilot rating of 4.6, lots of visits to the website, using a lot of these sort of digital patient engagement tools. You'll note that the company has obtained quite a bit of -- quite a few awards and accolades for many years. It's been one of the best managed companies -- Canada's Best Managed Companies for a number of years and Great Place to Work and so on and so forth. So that's not by accident. You don't see these types of growth figures, these types of success and these types of reviews without all that coming together with great management. And so the company is led by Suresh Madan, really remarkable leader. Chief Medical Officer is Marc Freeman. And then you've got a very strong group there as well. Paul, the Chief Cardiology Officer; Dina, the operations leader. Their names should be up there as well. But really, really great leadership and phenomenal group of medical directors, tenured and focused and influential in their business. And this is a business that does have a large exposure to cardiology, but also has exposure to other specialty areas, bone and muscle health, women's health, cancer diagnostics. And what's really, again, quite, I think, special about the asset is just the integrated approach between telehealth, the practitioner consultations and the diagnostic network. So you do have 600-plus health care providers outside of the physicians. So including physicians, you're at 760 plus health care professionals and clinicians supporting over 500,000 patient visits a year. Next slide, please. We've already covered some of this information. I think I'll just point to the growth engine that this business has and the referral network is probably the 2 points that I hadn't covered just yet. Substantial 10,000-plus referral network, 15% in-house referral percentage of revenue. And you have, again, 33 clinics acquired, 25 individual acquisition transactions, but a substantial pipeline of targets available. And the company is very good at what it does. It does a lot of research before it acts. And the multiples that it has been paying has been very reasonable. It's 5 year growth, again, 40% growth, 5-year EBITDA growth of 40% and 5-year organic growth at 15%, which is, again, I know I mentioned this before, but bears remention. Next slide, please. Again, we've talked a little bit about this before. But what separates MyHealth from the pack and this unique performance that they've had is also the embrace of technology and the sophistication in which that they are delivering their services. I'll just say, overall, before diving into this, one of the things that we see out there talking to a lot of clinics and looking at a lot of clinic platforms, one of the first areas that we're exposed to is how they protect their data. And that's not on this slide. But in our early interactions with the business, what we found is that they really took data protection and cybersecurity very seriously. That really piqued our ears because that's, again, a level of sophistication that we only really see with tech-enabled clinics and platforms. And so whether it's the telehealth or the actual patient portals and mobile app development that they've done, again, they have some of their own IP in this regard, but just use of tools. They have extensively used third-party tools, integrated those tools, created a cohesive workflow that has really worked and driven value to their patient population and supported and enabled their practitioners. I think that the work that they've done in their BI has -- and their business intelligence is, again, truly indicative of that sophistication. That was one of the other main findings of ours. The brand that is -- that they operate under with their telemedicine, their telecardiology and their teleradiology brands are MyDoctorNow, CardiologyNow, RadiologyNow. We think this is a very useful extension. We're studying the idea of potentially extending this branding out to other aspects of the WELL ecosystem. So that may be a topic of conversation on this call or later. Next slide, please. We wanted to also shine a bit of a light on WELL's capital allocation results. We are a capital allocator. We live and die by that. We are very disciplined, and we haven't talked a lot about how we've created value. And I think this is another example of how WELL is growing, not just its quantum of business, but growing on a per share basis. I mean this is, I think, often what you miss with a lot of public company CEOs, management teams, Boards. They don't talk a lot about the growth that they're experiencing on a per share basis, which ultimately as a shareholder that is probably one of the only metrics that really matters to you. You increased your revenue. Did you increase it on a per share basis? Because ostensibly and conceivably, you were issuing shares in order to increase your -- the numerator, the revenue or EBITDA, and we always have to consider the denominator. And the per share growth -- the expected run rate per share growth pro forma for MyHealth is 250% plus. And on the EBITDA line, it's 650% plus. So that is pretty remarkable. And if you look at our trailing 12-month per share trajectory, it's nothing short of a picture of beauty. And this is something that you're going to see us tell this story more often because that discipline with which we're allocating capital, all those announcements that you see, they are part of a comprehensive value creation strategy that we really believe we're delivering for shareholders on. And we are going to be very intentional about furthering the story for you. Next slide, please. We talked a lot about capital allocation. Again, we saw this with CRH. We were attracted to CRH because of the discipline and the predictability and just how strong that capital allocation program was. I would really say the same about MyHealth. The difference with MyHealth, I think, has been just how successful they have been to activate organic growth after completing the acquisition. And so If you kind of look at that 7-step scale in the capital allocation program, obviously, you've got your universe of opportunities. And the company negotiates fair multiples of EBITDA. But I think what's really unique about the weighted average acquisition multiple that we found is that on a pre-transaction they're paying 6.1. And then if you measure that, based on the organic growth they're seeing, almost categorically, very quickly after the acquisitions are completed, they're essentially experiencing a 2.4x multiple. These are numbers that you just don't see. And to experience those types of numbers with the -- again, the consistency, predictability that this management team has been able to execute, we think, is nothing short of truly impressive. And what they're doing there is they're implementing a MyHealth protocol. And that is a number of things that they do immediately post acquiring a clinic. And they've already done their research. They already know exactly what they're going to do in terms of the enhancements that they're going to make. The -- and that typically results in them providing a number of additional diagnostic services that weren't there before, and so going into markets and creating more capability, more serviceability of that market. So a lot of market study goes into how MyHealth thinks and operates. And we are really excited about supporting them. And so our view is that we'd like to continue to see MyHealth allocate capital. I think our overall business plan calls for at least $20 million a year over some time. Again, with the kind of track record this management team has seen, we're very happy to get behind them and not only with our balance sheet, but also, obviously, with our technology, IP and portfolio and help them further those gains even more. Next slide, please, which was last slide. So with that, Pardeep, I believe you had received some questions from our analyst community. Do you want to present those questions and we can go through them?

Yes, for sure. Once again, I just want to mention the questions are limited to analysts on this call. We do have a question from David Kwan of TD Securities. David's question is, what does MyHealth's balance sheet look like? Do they have any existing debt? And if so, can you provide details?

Yes. So the $82 million of cash that we have drawn down with Royal Bank and are providing on close is inclusive of the debt that the company carries. So outside of that, the company did not have any debt. And so the line of credit that we have, the committed line of credit that we have is well over $100 million, and then there's an accordion capacity beyond that. And so we have ample room to support the growth of the business.

A follow-up question from David Kwan of TD Securities. Was this a competitive bidding situation? Can you comment on how you landed this opportunity?

The company is supported by -- was represented by Deloitte. And they are professional company and with professional advisers and they undertook a rigorous and professional process. And I believe that involves understanding what's out there in the marketplace. And I'm sure that involved a number of different bids, and we don't have, obviously, too much visibility on exactly what they experienced during that bidding process. But suffice it to say that they held a rigorous process, and we feel fortunate to have been in a position that we are to work with MyHealth.

Question from Colin Healey of Haywood Securities. MyHealth's margins are at 20%, are very strong for a physical clinics operator. What is driving this high margin? Is it the margin -- is the margin advantage largely a function of the sales mix at MyHealth?

I think that the -- you're absolutely right, Colin. It is a unique margin that we're seeing. And I do believe that, that is the case given the mix of primary, secondary and diagnostics. That unique integrated platform is what's generating these types of margins. And we studied that pretty extensively, and we don't see any structural issues with that. We, in fact, think that they could grow from here.

A follow-up from Colin Healey. On the vendor takeback specifically, understanding that it can be repaid in shares or cash, if shares, would those be issued at market? Is there -- or is there some similar embedded premium to the market on those shares?

Yes. So at the 3-, 6- and 9-month points, we have $10 million repayment obligations either in cash or we can convert to a 5-day VWAP market price.

But it is at market price?

Correct. Right.

Gabe Leung, Beacon Securities. MyHealth appears to be a very profitable operations. So I'm curious to find out what initiatives you have going forward to prioritize or drive further revenue and margin expansion? What are the synergies between MyHealth and WELL?

Yes. We're excited about this. I mean WELL and MyHealth already worked together on technology initiatives on multiple fronts. In fact, MyHealth does have usage of our OSCAR platform. They also are leveraging some of the tools in our Insig Health portfolio. And we believe that we can build on this given our substantial portfolio of IP and all the investments that we've made. And we look forward to deepening and furthering those, particularly, I would say, again, anything that's really helping activate better experiences for practitioners given just how many practitioners do work at MyHealth and deliver care.

Follow-on question from Gabe Leung of Beacon Securities. Now that WELL has one of the largest publicly insured outpatient clinic networks in Canada, is there an appetite to broaden your reach in the private pay or enterprise market?

Yes. WELL already plays in this market, albeit not as much. Our recent acquisition of ExecHealth in Ottawa was reflective of this, as was our acquisition of ExcelleMD in Quebec. But yes, it is a smaller business for WELL right now as compared to other segments. This has been a kind of a hotter area. And so we are disciplined in terms of our capital allocation focus. So we think it'd be great to grow in this area. If we find great opportunities, we may engage. We also think that there's other areas that we can grow. whether it's here in Canada, in the U.S. or our ambition is to be a truly international digital health company. And so we are now starting to look at the 4 corners of the world for opportunities for growth.

Next set of questions is from Daniel Rosenberg from Paradigm Capital. First question is are there any technology synergies other than in terms of MyHealth who are already on your EMR platform? What's the plan in terms of integrating technology platforms, telehealth platform, your current offering, Tia Health and VirtualClinic+? Can you elaborate on that?

There are lots of opportunities for us to collaborate given the large base of clinicians and health care professionals at MyHealth. We believe that, that -- it should be our first focus to help them. And so I think, again, we have a range of practitioner empowerment tools and capabilities. A focus for me, I think, is just cardiology platform and because you have an extensive cardiology network and cardiology physicians. And their usage of tools in providing telecardiology services, I think, that could be a very interesting area. We've got some irons in the fire there. But what's great about MyHealth is that they have been tech forward and tech leaning, and they have a team that can engage with us to really catalyze this in a big way. And those conversations will really start to gain speed now as we are now through this important phase of finding a way to bring the companies together. But undoubtedly, with WELL's growing asset base and capabilities base, there will be lots of opportunity out there.

A follow-up question from Daniel Rosenberg. How will MyHealth operate in conjunction with your current other Quebec and Ontario clinics?

So today, MyHealth will operate as its own business unit and will not have connectivity from a governance perspective or operating perspective with those clinics. Meaning that they will not be merged in with the MyHealth asset at this point in time. But again, WELL is constantly thinking of ways to bring the network together and creating one cohesive integrated platform. And so I think over time, certainly, there will be continued intercompany links between all of these different assets. And, again, we think that happens through software and workflow and telehealth type services.

Christian Sgro from Eight Capital. I think this one is perhaps towards Eva. Just, Eva, if you can just reiterate the amount of cash you have currently on hand? And what is the total amount of undrawn access to credit facilities? I guess there's -- I guess he's referring to, you've got the CRH, JPMorgan and you've -- now you've also gotten a new one, RBC.

Sure. Yes. So as I mentioned earlier, we have about $60 million cash on the balance sheet. And with the COH of USD 300 million credit facility, we've only used a portion. So there's still plenty of room there. And then with the new -- upon closing of the MyHealth transaction, we'll have, again, another new facility. So we will have plenty of room undrawn from the credit facility as well as our cash on the balance sheet.

A follow-up question from Christian Sgro, Eight Capital. If you can comment about the previous ownership of MyHealth. Does management have a large percentage ownership? What is your certainty of completion of the deal? Are the shares locked up, for instance?

Yes. So management had material ownership, but they didn't dominate the cap table. We have a very high certainty of completion, given our research in the process of getting approval on the licenses. There's a change in control process that one must follow in order to convert the -- or convey the ownership to the new change in control in terms of those government licenses. As far as incentives and shares for management, we feel that we've established a very strong incentive model. We have a multiyear earn-out. We have significant incentives as part of our long-term incentive plan to keep the management incentivized and focused for many years. And we think we are true partnering with management here and look forward to their success.

The next set of question is from Doug Taylor from Canaccord. First question, what is the expected time line to be able to begin integrating WELL's digital tools and software into the MyHealth asset after closing?

Yes. Like I mentioned, it is already happening. It has already happened to some degree. We already have connectivity between a number of WELL technologies and tools. Our EMR group and our digital apps group are currently providing technology, and we already have MyHealth as sort of a customer, if you will. But this is an area that I think we will definitely deepen and further our collaboration.

A follow-up question from Doug Taylor. This is probably -- it looks like an Eva type question. Can you outline the key terms of the new bank debt facility?

Yes. The -- it's a very good interest rate that's similar to rates as the JPMorgan facility. And so the terms of the credit facilities are consistent with similar syndicated credit arrangement. And there will be more details to be announced about this new senior debt in the coming days.

Okay. Next set of questions, Nick Agostino of Laurentian Bank. First question. With the base effects, primarily in BC and Ontario, what are other high priority provinces to establish a clinic base? Looking out a couple of years, what other -- where are the areas that you're targeting across Canada for additional clinics, what provinces?

We'd like to be across the country. We think that it's really important that WELL evolved into a truly national offering. We're a national offering today given sort of we're at both ends of the country and the most -- a couple of the most populous -- 3 of the most populous provinces. But we'd love to be Canada's health care company. And so that is a goal for us, but we will always favor larger metro areas because we find that the business model doesn't work as well in a super rural environment. And we think that that's really the opportunity for telehealth with some exceptions. We don't really establish a goal number of clinics. This is something that we -- over time, I think you've probably heard us before, say, we don't know if it's over 100 or what have you. I think it remains to be seen really purely because of our discipline. If we can grow our clinical population at the values that -- and the capital allocation principles that we see, we would love to do that, especially because what we've seen thus far and we're very proud of this is that we have been able to allocate capital to clinics. We have been able to tech enable them, and we have been able to see substantial improvements in not only revenue, but particularly EBITDA. Our EBITDA growth in our BC clinics has been really remarkable. And our team there, Michael, Jeremy, the whole operating team there has just done a phenomenal job. And we continue to see improvements all the time. And so we're very encouraged at this business model. If you remember kind of where WELL started, the whole idea was to create the clinic of tomorrow. And we really have been executing on this and standardizing and just being very disciplined in our approach. So this is a long way to say that this is not a business model that we're going to shy away from. And what we've seen -- I mean, a lot of people are going out and looking at much more expensive assets that have platform technologies with practitioners and patients. What a lot of people don't realize about clinics is that they bring those same practitioners and patients. And so I think what you're seeing with WELL is taking what we think is a fairly clever approach with respect to making investments in platform technologies but also other investments at different multiples, much lower multiples to acquire those various subjects from a patient and practitioner perspective.

Next question, a follow-up, again, from Nick Agostino, Laurentian Bank. Can the corporate WELL entity borrow against any of the subsidiary backed loans at CRH and MyHealth?

Eva, do you want to take that one?

Yes. So definitely, there's features that will allow a drawdown of some of the CRH debt and -- or any other cash balance pass on to us.

Okay. Passing on to the next analyst here. We've got David Newman from Desjardins. His first question, between MyHealth, CRH, ExcelleMD and other recent clinical deals, the mix has skewed towards bricks and mortar. Please talk about how this can be rebalanced toward health care IT organically or through future M&A?

Yes. No, I know David keeps a very close eye on our weighting. We believe -- and I think it's a great point. We believe MyHealth to be a strong tech-enabled assets. So we don't really see it purely as a clinical asset. And I think that's what was really remarkable about what they've done, especially the 75% -- the fact that 75% of the consultations are occurring through telehealth and given the IP portfolio that they do have. And we really believe MyHealth to be reflective of the way that health care is going to be delivered in the future, not just here in Canada but in most industrialized countries of the 40 countries that have modern medical systems. And notwithstanding that, the company is always looking at pure digital assets. And they tend to be at various stages of maturity and various valuation profiles. And again, as a disciplined capital allocator, sometimes it's a bit more difficult to find those that really make sense to buy. But we think we are making some good progress against some of those, and I'm sure you're going to continue to see some strong transactional opportunities with us, as you saw with the recent acquisition of Intrahealth's Profile.

That's great. Second question from David Newman, Desjardins. As MyHealth will operate as a separate unit under WELL, would MyHealth current and future locations be rebranded into WELL or would they keep the MyHealth brand name? How about the other sub-brands, RadiologyNow, CardiologyNow, et cetera?

For the foreseeable future, we see branding to be the same. We think that MyHealth has done a great job with their branding, and we really like the sort of the whole now extension, in first timeliness, delivering for patients. We think that, again, it -- there's a tangible benefit for the patient and draws improved patient outcomes. And I think there's probably a very decent chance that you'll see that type of brand thinking progress through other parts of WELL. We think that, that makes a ton of sense. But these are just beginning conversations. We'll see. We have a portfolio of brands across the enterprise that are quite strong. We just launched YourCare, which is a personal medical record system that is integrated with Apple Health Records that empowers patients to pull their -- be empowered with their health data from clinics and be able to be engaged in their health journey. This is something that needs to be -- occur within an opt-in experience with the clinic owners as well as the physicians themselves. We do think that that's a big part of the future, this move to patient-centric health care. So we do believe MyHealth will also benefit from that. We haven't even started those conversations in terms of, again, would Apple Health Records make a ton of sense here. I don't see why not. But the beauty of WELL is that we don't make those decisions for MyHealth. MyHealth management team would make those decisions, and we would provide them with a lot of support and consideration.

A follow-up question from David Newman. Are future clinic acquisitions in Ontario to be conducted through MyHealth or through WELL? And moreover, now that you have built a network in BC, Quebec and Ontario through MyHealth, would future provincial expansion be through acquisitions like this?

We'd love to make further acquisitions through MyHealth. Again, when you have a team that performs as well as MyHealth, I think it makes a lot of sense. But again, we -- as I just mentioned a few seconds ago, we don't tell our operators how to operate. And so there may be assets that the WELL corporate development team believes provides shareholder value and strategic value. And if the MyHealth team believes that, that is a good fit for them, then that's something that we'll work on together. Unquestionably, over time, there will be more and more cohesion between the various clinical elements in the country, whether it's brand, whether it's, again, workflow, whether it's the -- essentially, the collective benefit of all those practitioners working in unison as part of providing timely care for Canadians through telehealth and otherwise. But I think what's really exciting about WELL is this comprehensive clicks-and-mortar approach, this omni-channel, multichannel capability that we have, which really reflects how service delivery is now happening and will happen for the foreseeable future.

Yes. That's great. Next question from Scott Fletcher, CIBC Capital Markets. His first question is, can you provide some information on mechanics of shares being issued at a premium to the market price? Are the treasury shares offered directly to MyHealth shareholders? And maybe if you can just comment on whether the 9.6 million share number is fixed or if the $94 million in stock or some -- what part of that is fixed?

Yes. So I think what we did is we indicated on today that of the purchase price, $94 million of consideration is being paid for stock at $9.80 based on -- and so today, that infers 9.6 million shares. We do have -- as we mentioned in our press release, we do have an agreement with MyHealth shareholders that if there's a fluctuation or volatility in the stock between now and close, there will be an adjustment made to those numbers of shares. So if the stock price from here increases, there will be fewer shares awarded to the MyHealth shareholders. If the stock price from here decreases, there will be more shares issued. So it's really that $94 million that's from a consideration perspective with that inverse correlation between number of shares and stock price fluctuation between signing and close. It sounds more complicated than it is.

A second question from Scott Fletcher. If you can comment about the M&A program at MyHealth. The M&A program focus more on primary care clinics, or specialty or diagnostic clinic assets.

I think it's quite broad in what the team is looking at, which I think it should be. Any good M&A program is, scope is wide. But I think if you look at what they really executed on and they've been hyper-focused and very effective in specialty care and diagnostic arena.

Great. Next set of question from Rob Goff at Echelon. Will there be a hold period against the WELL shares to be issued?

There isn't a statutory hold period, but there is a resale restriction pursuant to our agreement -- our share purchase agreement, which we believe protects WELL shareholders from a sudden decision to sell a higher number of shares, given the liquidity of the company and given the agreements dynamics. We feel very comfortable with that.

Okay. Next question from Rob Goff. This might be an Eva one. What can we assume as gross profit margins for the MyHealth business?

Yes. We're looking at about the growth trajectory. We're looking at about -- around 60%.

So that's 60% right? 60%?

Yes.

Coming into the -- almost the end of the hour here, we've got enough room just time just to squeeze in last couple of questions from Kris Thompson of PI Financial. Kris has asked. Can you provide more color on MyHealth's revenue in terms of what is resilience on public insured revenue? Are the diagnostic tests typically covered by provincial health plan and therefore public insured?

Yes. So definitely, what's really unique about MyHealth, again, you don't typically see these types of EBITDA margins in public health. But -- and so it's great to be able to say that this -- MyHealth is essentially an asset that lives in the single-payer system and does rely on public funding. And that is, I think, a really fantastic aspect of it. There's no to two tier health care conversations or concerns here. While these are private clinics, they're effectively almost entirely trafficking in the single-payer system.

Second question from Kris Thompson. Can you provide any color on the seasonality of MyHealth business?

We did not see too much seasonality apart from what we've seen at WELL, which tends to be a bit of lightness in the summer months. But MyHealth business tends to be, I think, fairly consistent on a full year basis. I don't know, Eva, anything that you could add there?

Yes. Yes, I think that's what we've been seeing and that's what we were being told by the vendors.

On MyHealth, I guess you saw a lot of resiliency in the COVID era as well.

Yes. I mean, obviously, the -- much like any asset that was told they could not operate or provide services for a period of time during the initial lockdowns, their revenue was affected. But once those lockdowns -- those initial ones were off, the recovery was almost immediate. And the asset has demonstrated tremendous resilience, which, again, we think is probably why we're getting so well supported by the banking community here. And let me just take a minute to mention that. Between the Canadian banks that supported us as part of the JPMorgan syndicate and Royal Bank, Canada's largest bank, I think, still, leading this one here for us and the syndicate involved, we can say that pretty much every major Canadian bank is now involved with WELL in some way, shape or form with really, really strong terms for WELL. And so, first of all, we thank those banks for supporting us, but we're also -- not but -- and we're just so excited to continue to grow with them and really appreciate the support that we're getting. And we think this is reflective of the really strong businesses that we're involved with.

That's all the time we have today. Hamed if you can close off?

Again, we'd like to really thank you for joining today. It's just been great to speak with you. We're -- couldn't be more thrilled to announce this tremendous acquisition with Suresh and the team and really look forward to a smooth close and continuing to create value. And again, we want to thank you, shareholders, for being there for us and grateful for your involvement and interest in WELL. Thank you very much.