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

Good afternoon, ladies and gentlemen, and welcome to the WELL Health Technologies Corp Second Quarter 2026 Conference Call. [Operator Instructions] This call is being recorded on Thursday, August 6, 2026. I would now like to turn the conference over to Pardeep Sangha. Please go ahead.

Thank you, operator, and welcome, everyone, to WELL Health's fiscal second quarter financial results conference call for the period ended June 30, 2026. 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. Portion 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. 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's required by law. We may use terms such as adjusted gross profit, adjusted gross margin, adjusted EBITDA, adjusted EBITDA margin, 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. With that, let me turn the call over to Mr. Hamed Shahbazi, Chairman and CEO.

Thank you, Pardeep, and good day, everyone. We appreciate everyone for joining us. Before we get into the quarter, I'd like to step back and highlight what WELL has accomplished over the past several months. This quarter wasn't defined by a single financial result. It was defined by execution across every key pillar of our strategy: expanding our Canadian clinics platform through acquisitions and organic growth, reaching a major profitability milestone ahead of schedule, strengthening our balance sheet, and unlocking additional growth capital for WELLSTAR to accelerate its next phase of growth. Specific highlights are as follows: one, we reached our CAD 100 million adjusted EBITDA run rate milestone for WELL Canada, 3 quarters ahead of schedule and at margins meaningfully ahead of our original expectations. Two, we successfully completed our inaugural CAD 150 million senior unsecured bond offering, strengthening our balance sheet by extending our debt maturity profile to 2031. Three, last week, WELLSTAR completed a CAD 50 million financing, which included both primary and secondary components in conjunction with its planned standalone public listing in September, attracting high-quality institutional investors while positioning the business for its next phase of growth. And four, we completed 2 highly strategic acquisitions, Ontario Imaging Diagnostics and UnionMD, which expand our leadership in Canadian outpatient health care while adding approximately CAD 22 million of annual EBITDA. Taken together, these milestones demonstrate that our strategy is working. We're building a larger, higher quality, better capitalized health care platform, one that is delivering stronger profitability today while creating multiple avenues for future growth. That execution is why we're increasing our 2026 guidance today. Our new 2026 guidance is revenue of CAD 1.58 billion to CAD 1.65 billion compared to previous guidance of CAD 1.55 billion to CAD 1.65 billion. We have raised the bottom end of our guidance and narrowed the range to the upside. For adjusted EBITDA, our new guidance is CAD 185 million to CAD 195 million, up a full CAD 10 million, from CAD 175 million to CAD 185 million. As you can tell, the EBITDA guidance range has been significantly improved versus the revenue guidance range, which speaks to our execution and focus on higher-margin growth opportunities. And now to the quarter itself. Revenue in Q2 was approximately CAD 400 million, up 12% year-over-year. Adjusted EBITDA was CAD 48.1 million, down 3% and adjusted EBITDA attributable to WELL shareholders was CAD 35 million, down about 6%. On a normalized basis, meaning once accounting for the Circle Medical deferred revenues, revenue grew 14% to CAD 395.6 million and adjusted EBITDA grew 8% to CAD 43.3 million, and adjusted shareholder EBITDA grew 4% to CAD 32 million. In terms of the gap between reported and normalized numbers, this quarter, again, we had CAD 9.7 million of deferred revenue in Q2 2025 versus CAD 4.8 million this quarter. That swing, combined with roughly CAD 8.7 million of onetime retro reimbursement revenue in the Canadian Patient Services business in the prior year period, dampened our reporting growth rate even though the underlying business grew much faster. With that context in mind, let's turn to the rest of the financial highlights. Adjusted gross profit was CAD 178.4 million, up 12% year-over-year, with adjusted gross margin improving 10 basis points to 44.6%. Once normalized for deferred revenues, adjusted gross profit was CAD 173.6 million, up 17% with margin expanding 90 basis points to 43.9%. Our margin expansion continues to be driven by the shift in revenue mix towards higher-margin WELLSTAR, diagnostics and executive and longevity Health revenue. Adjusted net income was CAD 11.6 million in Q2 2026. On a normalized basis, adjusted net income was CAD 9.2 million. I'll let Eva walk through the detailed bridge behind these numbers later on the call. But first, I want to spend a moment on June specifically because the shape of the quarter matters as much as the total. We exited Q2 materially stronger than we entered it. June revenue was up 24% year-over-year or up 28% normalized for deferred revenues. June adjusted EBITDA was up 12% reported and up 43% normalized. June adjusted shareholder EBITDA was up 28% reported and up 66% normalized. June was a strong month within the quarter, and that strength flowed through to our margins as well. The positive results in June were also driven by recent acquisitions of OID and Union, as well as improvements in WISP business again in June. That is the exit rate underpinning today's guidance increase and is a clear signal indicator we have of where the Canadian business is heading in the second half. These results reflect a business that continues to compound. Now turning to our operational metrics. WELL's clinic network now includes over 5,000 providers, including more than 1,500 physicians in Canada. Beyond our own clinics, more than 45,000 unique providers are supported by WELLSTAR's technology. Remember, there are only just over 100,000 physicians in the entire country. System-wide, inclusive of Canada and the U.S. and excluding HEALWELL AI, patient visits grew 19% year-over-year to 2 million with 5% organic growth. In Canada, patient visits reached 1.4 million, up 28% year-over-year or 5.6 million visits on an annualized run rate basis. Total care interactions, which we define as patient visits plus technology interactions exceeded 3.1 million in the quarter, up 21% with 11% organic growth. Care interactions are growing faster organically than patient visits, and that tells you that our technology layer is increasingly doing more of the work alongside our clinical platform. Moving on, strong financial and operational results are the output of something more important, the real-world positive impact our platform is delivering for patients and providers every single day. Here are 3 new and updated examples of how we are making an impact to Canadian health care. First one, WELL cardiologists are seeing patients in approximately 2 weeks against the 15.3-week industry average reported by the Fraser Institute. Second, technology enablement at WELL clinics has driven an 80% reduction in no-shows, which means more efficient use of provider time and shorter effective waitlist for everyone else. And in partnership with HEALWELL, we have collected now over 85,000 WELL Trust consents as of June 30, giving patients a consent-first way to participate in research and data-driven care. These are not theoretical efficiencies. They are measured, repeatable improvements at scale, and they are why patients and providers continue to keep choosing WELL. Moving on to our team. I'm very pleased to report that 4 high-caliber leaders joined WELL this quarter to support the next phase of our growth. Derek Clark joined as COO, Chief Operating Officer, bringing over 20 years of health care and digital health leadership from TELUS Health and GE Healthcare to support our next phase of operational execution and scale. Welcome, Derek. Loreto Grimaldi joined as Chief Legal Officer, bringing more than 25 years of legal, governance and M&A leadership, previously at MedAvail Technologies and most recently as CEO of Tricor Automotive Group. Welcome, Loreto. Kaytek Przybylski joined as Chief Digital and Information Officer, bringing more than 25 years of enterprise technology and digital transformation experience, most recently as Chief Digital Officer at Lantern and previously EVP and Chief Data and Technology Officer at LifeWorks, previously known as Morneau Shepell. Welcome, Kaytek. And Dr. Andrew Bond joined as Chief Health Officer and Head of Public Sector. Andrew brings more than 2 decades of clinical and health system leadership, most recently as SVP and Chief Medical Officer at GreenShield. Andrew now leads clinical governance across the WELL Group and is spearheading our public sector strategy, including the OneWELL vision, which I want to talk you through next. Welcome, Andrew. The next few slides lay out the strategic frame, and I will be brief because it has not changed. Canada's health care system is remarkably complex and faces 6 structural pressures: access, provider burnout, chronic disease and acute capacity, fiscal ceiling, aging populations, and data fragmentation. I won't get into the details of all this now, but this slide sizes each of these challenges. Virtually everything you read in the news concentrates in one of those 6. That's the high-level view of where Canadian health care stands today. And I want to show you how WELL is specifically built to address these pressures at once. WELL's vision is to be the operating system underpinning outpatient health care at scale for a more modern health -- Canadian health care system. We are the only integrated example in the country that combines care delivery at scale, the technology to run and continuously improve that delivery and an intelligence layer that turns the resulting data back into better care and better tools for providers, clinics that deliver care, technology that runs it and AI that makes it smarter. Our above-average NPS or Net Promoter Scores are demonstrating that patients appreciate our tech-enabled approach that values their time, and we continue to work hard to improve our offerings every day. And now on to OneWELL. We call the integrated offering across the WELL group of companies OneWELL. In Canada, this consists of over 275 clinics and more than 1,500 physicians delivering 5.6 million annualized visits, including the country's largest diagnostic group at over 85 locations. It is WELLSTAR's technology running intake, scheduling, clinical decision support with a human always in the loop, billing, and cybersecurity for those providers. And it's HEALWELL's clinical AI identifying patients with rare and chronic disease for our clinicians and enterprise life sciences partners. We are built as an interoperable system builder, not a silo builder, which aligns with the Bill S-5, the Connected Care for Canadians Act, now before the House of Commons and with the pan-Canadian interoperability road map that Wellstar and HEALWELL are leading contributors too. OneWELL is about bringing together the best of the WELL Group to support Canadians health care at a time when Canadians supporting Canadians is more important than ever. Turning to our capital structure. On June 15, 2026, we closed WELL's inaugural senior unsecured notes offering. CAD 150 million aggregate principal amount of 6.875% senior unsecured notes due 2031 issued at par and ranking equally with our other senior unsecured indebtedness. The proceeds of the offering will be used to repay our convertible debentures due December 2026 and the balance for general corporate purposes. The oversubscribed offering was led by BMO Capital Markets on behalf of the syndicate of banks. The demand we saw across the syndicate is a meaningful vote of confidence from fixed income investors in the durability of our cash flows and it turns out our maturity profile to 2031. Now let's look at WELL Canada, which includes Canadian clinics, WELLLSTAR and CYBERWELL, but excludes HEALWELL. WELL Canada generated revenue of CAD 176.6 million, up 32% year-over-year or approximately 41%, excluding the prior year's onetime reimbursement lift from the base. As mentioned earlier, this was roughly CAD 8.7 million of onetime retro reimbursement revenue. Adjusted EBITDA was CAD 27.4 million, up 19% on a reported basis or approximately 56%, excluding that same prior year item. Either way you look at it, this is the compounding growth in our Canadian business that underpins today's guidance increase. Canadian clinics, which includes both primary care and diagnostics, generated revenue of CAD 151.6 million and adjusted EBITDA of CAD 22.3 million, up from CAD 114.9 million and CAD 18.2 million a year ago. Our primary care adjusted EBITDA margin expanded to 8.6% from 5.2%, reflecting both accretive acquisitions and continued execution of our clinic transformation program. On a trailing basis, Canadian clinic revenue has compounded at a 47% CAGR and adjusted EBITDA at a 44% CAGR. The network has grown from 128 clinics at the start of 2022, to over 275 today. Patient visits in our Canadian clinics network totaled 1.36 million, up 28%. Billable providers reached 2,444, up 26%. Note that these figures include our UnionMD and OID acquisitions, which contribute their full provider count, but only 1 month of visits as they closed in June. Excluding these acquisitions, visits continue to grow faster than the provider count. So visits per billable provider rose to approximately 576 from approximately 584 and from approximately 449, 2 years ago. AI transcription and digital workflows remain a key driver of that productivity gain. Including these acquisitions, visits per billable provider were approximately 557. Zooming out, in a highly burdened health care environment, productivity improvements such as these really matter. Now turning our attention to Canadian clinic M&A activity. In Q2 2026, we had a big quarter and completed 3 transactions, adding 23 clinics and CAD 67.8 million in annual revenue and 117 new providers. Q2's activity mainly reflects the OID and UnionMD acquisitions mentioned previously. Turning to the pipeline. The total WELL Canada pipeline remains strong and including pre-LOI targets represents more than 30 targets engaged, over CAD 340 million in annual revenue and more than 70 clinics. As noted before, our definition of WELL Canada includes Canadian clinics, WELLSTAR, and CYBERWELL, but excludes all of HEALWELL due to its international focus. For WELL Canada, total revenue under LOI or advanced stage represents approximately CAD 193 million across 5 signed LOIs and unsigned LOI opportunities. Combined with the balance sheet flexibility from our new bond offering, this gives us strong visibility into our Canadian growth trajectory through 2026 and beyond. Now turning our attention to WELLSTAR. Last week, we announced that WELLSTAR closed a brokered private placement raising gross proceeds of CAD 50 million in conjunction with its planned standalone listing on the TSX Venture Exchange. The financing was made up of CAD 36.2 million of new treasury subscription receipts and CAD 13.8 million from a secondary offering by an existing shareholder, which was not WELL. It was anchored by a large Canadian bank-owned asset manager together with new institutional investors and existing shareholders and led by TD Securities, RBC Capital Markets and Stifel on behalf of a syndicate of agents. WELLSTAR is expected to begin trading on the TSX Venture Exchange in September of 2026. 2 years ago, you may recall, we said we wanted WELLSTAR to be around CAD 100 million in revenue by the time it went public, and we've achieved that goal. WELLSTAR is expected to generate approximately CAD 95 million in revenue in 2026 at an expected adjusted EBITDA margin of approximately 21% with a 3-year organic revenue growth target of over 20%. A standalone listing gives WELLSTAR enhanced strategic flexibility, greater access to growth capital and increased visibility with investors. Use of proceeds include strategic acquisitions, AI-driven product innovation, organic growth initiatives and general corporate purposes. WELL and WELLSTAR executives as well as WELL Health itself participated in the offering and is expected to remain a majority long-term controlling shareholder and growing customer. And now WELLSTAR's performance. WELLSTAR generated revenue of CAD 23 million, up 37% from CAD 16.8 million 1 year ago. Adjusted EBITDA was CAD 5.8 million, up 32% from CAD 4.4 million. After approximately CAD 193,000 worth of onetime public company costs incurred in preparation for the listing, adjusted EBITDA was CAD 5.6 million, still up 27%, maintaining its Rule of 40 performance. The next topic I'd like to address is our ongoing strategic alternatives processes for our U.S. care delivery assets, CRH Medical, WISP, and Circle Medical. Across the 3 processes, we currently have more than 10 parties engaged at various stages of review, split roughly evenly between strategic acquirers and financial sponsors. While we have active and engaged parties as part of the processes, nothing has changed -- nothing has reached a stage that would warrant disclosure. And consistent with our obligations, we will inform the market promptly when something does. One structural point worth noting, WELL owns 100% of the shares of CRH Medical, whereas we are a controlling shareholder in WISP and Circle Medical with share ownership of just over 50%, 53% in Circle Medical and as well in WISP. Combined with its scale, that is why CRH carries the most weight in our financial profile. Turning briefly to how businesses performed. WISP had a challenging start to the year with losses through the first 5 months, but returned to profitability in June under a sharper focus on margins and cost management. Quarterly revenue was CAD 29.3 million, up from CAD 28 million with an adjusted EBITDA loss of CAD 200,000 against an EBITDA profit of CAD 866,000 for Q2 2026. Note that adjusted EBITDA for the month of June alone was over CAD 1.2 million. Circle Medical's reported revenue of CAD 29.5 million against CAD 34 million year-over-year reflects IFRS 15 deferral timing rather than any change in the business. Normalized, Circle grew modestly, and the team continues to focus on margin improvement, improvement in compliance and adding 4 states by year-end. And CRH Anesthesia together with provider staffing generated combined revenue of CAD 129.6 million, up 5%, with combined adjusted EBITDA of CAD 24.9 million, up 4%. Year-over-year growth was impacted by the Radar staffing business, which experienced some attrition in its customer base. The balance of the staffing business continued to perform well as has the GI-focused services anesthesia business. Overall, the team has done an excellent job continuing to keep the business healthy and growing. With that, let me turn the call over to Eva to walk through the balance of our financial results.

Thank you, Hamed. Good afternoon, everyone. Thank you for joining us today. First, let me walk you through the bridge from our Q2 2025 revenue of CAD 356.7 million to Q2 2026 revenue of CAD 404 million. On the left side of the chart, removing CAD 9.7 million of Circle Medical net deferral impact from Q2 2025, get us to normalized Q2 2025 revenue of CAD 347 million. From there, removing CAD 8.7 million of onetime reimbursement lift from Canadian patient services revenue received in Q2 2025 for services provided in prior quarters shows the net growth of our business consisting of CAD 51.2 million from WELL Canada and CAD 6.1 million from U.S. patient services and other businesses such as HEALWELL and WELL Research, which gets us to normalized Q2 2026 revenue of CAD 395.6 million. On the right side of the chart, including CAD 4.8 million of Circle Medical net deferral impact in Q2 2026 gets us to Q2 2026 revenue of CAD 404 million. WELL Canada's growth of CAD 51.2 million was driven by organic and inorganic growth in our Canadian clinics and WELLSTAR businesses. The adjusted EBITDA bridge follows a similar pattern. This slide shows that the bridge from our Q2 2025 adjusted EBITDA of CAD 49.7 million to Q2 2026 adjusted EBITDA of CAD 48.1 million. On the left side of the chart, excluding CAD 9.7 million of Circle Medical net deferral impact gets us to normalized Q2 2025 adjusted EBITDA of CAD 40.1 million. From there, removing CAD 5.4 million of onetime Canadian patient services revenues reimbursement lift shows a clearer picture of the adjusted EBITDA growth. WELL Canada's adjusted EBITDA increased by approximately CAD 9.8 million, while U.S. patient services adjusted EBITDA increased by CAD 2.8 million compared to Q2 of last year, which gets us to normalized Q2 2026 adjusted EBITDA of CAD 43.3 million. Now on the right side of the chart, including CAD 4.8 million of Circle Medical net deferral impact in Q2 2026, gets us to adjusted EBITDA of CAD 48.1 million in Q2 2026. The underlying net adjusted EBITDA growth of WELL Canada reflects the continued revenue and margin expansion in our Canadian clinics and WELLSTAR businesses. Turning to adjusted net income. This slide shows the bridge from our Q2 2025 adjusted net income of CAD 25.8 million to Q2 2026 adjusted net income of CAD 11.6 million. Similarly, on the left side of the chart, removing Circle Medical net deferral impact of CAD 4.9 million gets us to normalized Q2 2025 adjusted net income of CAD 20.9 million. From there, removing CAD 3.8 million of onetime Canadian patient services revenue reimbursement lift, we had CAD 8.2 million of legal fees and other costs, CAD 3.9 million of higher interest expense, which were partially offset by CAD 3.5 million of favorable nonoperating items and CAD 0.6 million of net growth, which gets us to normalized Q2 2026 adjusted net income of CAD 9.2 million. On the right side of the chart, excluding CAD 2.4 million of Circle Medical net deferral impact in Q2 2026, gets us to adjusted net income of CAD 11.6 million in Q2 2026. Now for clarity, nonoperating items include depreciation expense, foreign exchange gain and loss, gain on disposal of assets and noncontrolling interest or NCI, included in net income. The increase in nonoperating items is partially due to an increase in NCI from recent acquisitions. Legal and other costs includes litigation, settlement and defense costs net of insurance recovery. Now on to free cash flow. Adjusted free cash flow attributable to shareholders was CAD 11.7 million in Q2 2026, in line with Q2 2025. The bridge demonstrates that CAD 2.5 million of higher spend on corporate and WELL Research, CAD 1 million of higher cash interest and CAD 3.6 million of higher capital expenditures, partially offset by CAD 3.3 million of lower cash taxes and CAD 3.8 million of net growth. The capital expenditures increase reflects clinic upgrades and renovation of key clinic and private care facilities. We expect those elevated costs to decline slightly, though maintenance CapEx will run slightly higher given our expanded diagnostic business, and we expect free cash flow conversion to improve as the investment phase normalizes through the second half of the year. Turning to our balance sheet as of June 30, 2026. WELL held cash and cash equivalents of CAD 130.6 million as of June 30, 2026, compared to CAD 133.8 million at December 31, 2025. Total loans and borrowings were CAD 628.7 million as at June 30, 2026, compared to CAD 425.4 million at December 31, 2025, reflecting the drawdown of credit facilities to fund acquisitions during the period ahead of the bond offering Hamed mentioned earlier. We remain in full compliance with all financial covenants across our syndicated credit facilities with JPMorgan in the U.S., RBC and the Bank of Nova Scotia in Canada. During the 6 months ended June 30, 2026, we generated CAD 54.4 million of cash from operating activities, used CAD 176.6 million in investing activities, primarily CAD 152 million on business and asset acquisitions and generated CAD 118.3 million from financing activities, primarily from the net credit facility proceeds ahead of the bond offering. We have renewed our normal course issuer bid program in May 2026, repurchasing a total of 162,600 shares in Q2 2026, and we expect to continue our NCIB program through the balance of 2026 as permitted. With the bond proceeds earmarked to repay the convertible debentures maturing in December 2026, and continued capacity under our credit facilities, we are very well positioned to continue funding growth in Canadian clinics and WELLSTAR. That concludes my financial update, and I will now turn the call back over to Hamed.

Thank you, Eva. Now on to our outlook. I gave you the guidance numbers at the top of the presentation, so I won't repeat them here. But as we discussed, especially on the EBITDA side of things, they represent a healthy increase in expectations. What I do want to add here are 2 new markers for how we're thinking about growth ahead. Now that the CAD 100 million WELL Canada milestone is behind us. First, WELL Canada is targeting a run rate of over CAD 1 billion in revenue by the end of 2028, both inclusive of organic growth and acquisitions. Secondly, WELL Clinics on its own is targeting a run rate of over CAD 100 million in adjusted EBITDA by the end of this year, 2026. Also, WELLSTAR, as I mentioned earlier, is expected to begin trading on the TSX Venture Exchange in September. So our capital allocation logic remains unchanged. Canadian clinics remains the primary destination for incremental WELL parent company capital, which is also the central rationale behind the WELLSTAR listing now underway. To close off our presentation today, Q2 delivered a Canadian business that reached its CAD 100 million EBITDA milestone 3 quarters early, an inaugural bond offering that turns out our balance sheet, a fully funded WELLSTAR listing weeks away. That is why we raised our guidance today. And I'd really like to thank our Board of Directors, our leadership teams and support staff across the world and across all our operating subsidiaries and above all, our health care practitioners, and frontline workers who make a difference in the lives of our patients every day. Thanks also to you, our retail and institutional shareholders and analysts for your continued support. Operator, we'll now open the call for questions.

[Operator Instructions] David Kwan with TD Cowen.

I was wondering, Hamed, if you could talk about WELLSTAR and particularly the nice pickup that we've seen in e-referral volumes in the first half of this year. Where is that volume growth coming from? And how do you see the growth kind of over the next year or 2?

Yes. Generally speaking, we had a fairly significant win this past year with in Ontario. As you may remember or be aware, there was a very significant procurement effort that essentially shortlisted despite us sort of piloting before, shortlisted essentially 3 vendors that were presented to all regions across the province. And all of the regions ended up going with Ocean. And that was a very significant event for Ocean and really, I think, demonstrated the quality of the product and engagement that it has. And so, we continue to see e-referral growth really everywhere, but obviously, that big win in Ontario was a big step function gain for us. And look, we continue to see lots of opportunities for Ocean to win. I mean if you look at where Ocean has now won, we have key contracts from British Columbia through to Ontario through to Nova Scotia and others. And we're seeing a lot of -- also growth and interest from other provinces. So I think it's a great story, and it's one that we're going to be tracking closely for investors.

I was just wondering whether there was anything in BC. Obviously, you announced that. I think it's a couple of years -- 1.5 years maybe 2 years ago, how that -- how the ramp is going in BC?

Yes. The BC business continues to grow. I will say it is definitely smaller still than places like Ontario, which have gone through significant pilots and have been at it for much longer. So these programs do take a little bit of time because you really need to get the originating physicians and the physicians being referred to all on the program and that there's a little bit of lead time associated with that, and we're making progress every day, and we're excited about the future of BC as well.

I appreciate it. Maybe just one last one. There hasn't been much talk on clinic absorptions compared to, say, a couple of years ago when you were a lot more active on that front. Are you finding fewer clinic absorption opportunities in the market today? And can you maybe talk about what mix they would account for in the pipeline?

Yes. Great observation, David. Yes, we're definitely not doing as many, and that has a lot to do with just the bandwidth of our clinic transformation team. Look, you can see the activity associated with our clinic acquisitions is quite extensive. And so we just have to be very thoughtful and choosy about where we want to allocate those resources. We will probably now put our attention more on -- in areas like absorptions just because we've spent quite a bit of capital this year, especially capping our capital allocation activity with OID and Union. So you'll probably see some more. But keep in mind that the absorptions also take just a lot more time and energy than your standard clinic. And so we're now seeing really substantial EBITDA gains. So we have to -- just like our capital, our clinic transformation time is limited, and we have to think about that as prudent allocators of that time and expertise. So we're just trying to think about it a lot more strategically.

Daniel Rosenberg with Paradigm Capital.

My first one comes on the M&A process. I appreciate you segmenting some of the LOI in the pipeline versus total pipeline. I was wondering if you could speak to how you're thinking about M&A through the different divisions that you have, whether it be allocating capital, allocating resources or otherwise, how are you splitting the resources you have?

Yes. No, it's a great question. And look, you'll notice that particularly this month and really all this year, we've been allocating capital in higher-margin areas. That is very, very intentional Overall, I would say that the majority of our EBITDA in Canadian clinics does come from diagnostic imaging and our -- what was legacy or MyHealth platform that we really built on top of. We really like that business. We think that's a business that particularly performs well in an increasingly AI disruptive world. It is one of the rare areas where AI actually helps augment your capability and helps you deliver care more quickly. And it's not an area where we think that there's any kind of friction or any kind of autonomous service delivery. And I'm talking about many years downstream. The margins are strong and because of AI enhancements, we think the throughput will be higher. So we continue to really like that business. If you look at our UnionMD acquisition, that one has a lot to do with procedural health, different processes and procedures, pain injections, light kind of surgical like aesthetic treatments, dermatological procedures. These are the types of things, non-aesthetic Botox uses that are addressing various different health elements. These are higher-margin types of areas that we like quite a bit. Our e-referral business, for example, is one that in Alberta, you may remember the acquisition of our e-referral asset in the previous quarter, that's performing very well right now. And so, I would say that the benefit of being this far into our M&A program now is we have a much better understanding of all the different niche areas. And we can see -- we have excellent view and understanding of their margin profiles, their growth profiles. And we -- as we centralize and think about our capital allocation, we're very choosy as to where we put that capital. And so, the longevity and executive health areas, for example, have also really performed nicely for us. But a lot of the public clinics also continue to perform better well for us. But I would say that we're much more choosy about which of those public clinics to take on, because the margins are more challenging than some of the private alternatives. Hopefully, that gives you a little bit of perspective. But yes, we tend to favor higher-margin areas where kind of the juice is worth the squeeze from a clinic transformation perspective as well.

Appreciate that. Kind of adjacent, last question for me. Just along the lines of allocating the capital, you had a couple of larger acquisitions in the quarter. And I'm wondering how you're thinking about debt levels, that balance. Obviously, there's a growth opportunity with M&A. But in the near term, there's also debt levels and repayments and the recent debt instrument that you secured. So just any commentary on where you're comfortable with the balance sheet being relative to the growth opportunities you have? And I'll pass the line.

Yes. No, it's a great point. Well, look, as we improve EBITDA generation or organic growth, we will see more EBITDA returns, that will have a natural kind of force to push down our leverage ratio and we'll put that capital back to work. And this is where my commentary about kind of doing lower-end clinics comes in. We may now traffic in some of those lower-end clinics in order to -- which are much more capital efficient for us. They take a little bit more time. But we're through kind of, I would say, for now, some of these bigger purchase ticket items. And look, as the divestiture processes come to maturity, there will be additional capital that we'll put to work there. But I mean for bigger ticket items, but you'll continue to see, I think, a good diet of bolt-ons occur even notwithstanding that. So I would say, look, we probably go back to a more normalized M&A rhythm, but we'll keep the bigger ticket items warm as we bring forth nondilutive capital to help us tackle those bigger items.

Justin Keywood with Stifel.

Nice to see the results. On the new CAD 1 billion WELL Canada goal by 2028, that's quite the expansion from the current CAD 700 million run rate. I assume there's some operating leverage potential if that goal is reached. What type of margin profile should we expect?