Well Health CEO sees Canada’s health clinic market as ripe for technological disruption

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With health care systems under intense scrutiny during the pandemic, Vancouver’s Well Health Technologies Corp. has seen massive growth as it invests in digital tools to make care more efficient for clinicians and patients alike.

Well’s share price has risen nearly 350 per cent this year, to $6.98 on the Toronto Stock Exchange at the end of Friday, as the pandemic-dominated period has seen health care practitioners and clinics invest in telehealth and other digital health technologies. What began as a network of yoga studios has turned into a nimble medical-technology company with its sights set on improving how health clinics work.

In the past five weeks alone, Well has launched an app marketplace for clinic owners to find ways to manage aspects of their business such as online booking and workflow automation; announced a US$14-million controlling investment in the U.S. telehealth company Circle Medical, giving the company access to health care markets in 35 states; closed a $23-million private placement led by Hong Kong billionaire Li Ka-shing; and revealed a $70-million bought-deal financing underwritten by Eight Capital and Stifel GMP.

In an interview, Well’s founder and chief executive Hamed Shahbazi said the company wants to take a long-view approach seeking technology that improves health outcomes. “It was not too long ago that we didn’t even know we needed to sanitize our operating tools," he said. "Technology is responsibly for our life expectancies increasing. ... We can’t take it for granted.”

Technology wasn’t really what Mr. Shahbazi had in mind when he first founded the company as a network of yoga studios licensing Deepak Chopra’s eponymous yoga-studio brand in Canada. In 2017, it listed on the TSX Venture Exchange under the name Wellness Lifestyles with a reverse takeover. That same year, PayPal Holdings Inc. bought Mr. Shahbazi’s payment-processing company, Tio Networks Corp., for US$304-million – although PayPal suspended Tio operations several months later after a data breach was found.

Mr. Shahbazi first had no intention of running Wellness Lifestyles day to day, but soon became curious about the state of primary care in Canada. Everything he studied about Canadian health care, he said, “seemed to point at all this fragmentation in the system.”

Technology adoption has been slower here than in other countries. The 2019 Commonwealth Fund International Health Policy Survey of Primary Care Physicians, for example, found that a low percentage of Canadian doctors were able to electronically share information with other clinical providers: Just 22 per cent could share patient clinical summaries, for example, versus 93 per cent in Norway.

Although Canada’s health care system is public, Mr. Shahbazi realized its many privately owned medical clinics could benefit from technology sold at scale – saving their already busy physicians from having to deal with issues such as network security on their own. With Tio sold, Mr. Shahbazi became Wellness Lifestyles’ CEO in May, 2018. The company rebranded as Well Health Technologies two months later, refocusing on primary care.

Mr. Shahbazi is a consolidator at heart and looked up to Canadian software acquisition powerhouses such as Constellation Software Inc. and Enghouse Systems Ltd. as he built up Tio in the previous decade. He’s building Well the same way.

The company now has a network of 20 physical clinics in British Columbia; a new subsidiary to expand its “allied health” holdings, such as sleep, mental-health and physiotherapy clinics; and a network of digital services that the company says serves more than 2,000 clinics and more than 10,000 physicians, largely in B.C. and Ontario. The company now has 266 employees on top of its health care practitioners, who work as independent contractors.

Well’s growing cache of software and partnerships is largely based off of the McMaster University-founded Open Source Clinical Application and Resource (OSCAR) system for electronic medical records. Mr. Shahbazi said he hopes that centralizing much of this software in Well’s new app marketplace, called apps.health, will encourage more medical clinics to invest in digitization.

Laurentian Bank Securities analyst Nick Agostino said the company’s acquisition-heavy approach was wise. “Having both physical and virtual clinics makes a lot of sense to grab hold of patients and capture recurring revenue," he said.

In Canada, Well’s strategy most closely competes with blended virtual-physical health care investments by legacy companies such as Loblaw Cos. Ltd. and the growing health wing of Telus Corp., Mr. Agostino said.

Well jumped from the Venture Exchange to the TSX this past January, and its strategy has since pushed its market capitalization to more than $1-billion – more than triple the value of Tio when it was sold to PayPal.

Analyst Doug Taylor of Canaccord Genuity raised his price target for Well to $8 from $6 last week as the company announced its app marketplace at a moment when investors are already interested in health care technology. “Well stands to benefit from streamlined cross-selling of its growing stable of proprietary health care technology assets and revenue sharing from third-party software,” he wrote in a research note.

The pandemic-driven shift to digital pushed Well’s revenue for the quarter ending June 30 to $10.6-million, up 43 per cent from the year prior. Digital services accounted for $2.3-million of that – a 1,212-per-cent increase from the year earlier, owing to pandemic adoption and Well’s acquisition spree.

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