B.C.'s fastest-growing company by revenue just made another acquisition.
Well Health Technologies Corp. (TSX:WELL) is paying Jack Nathan Medical Corp. (TSX=V:JNH) $5 million to buy its Canadian clinic assets, the companies announced this morning.
The deal also involves Walmart forgiving $15 million in Jack Nathan Medical debt, Jack Nathan Medical's vice-chairman Mike Marchelletta confirmed to BIV in a phone interview.
Well Health CEO Hamed Shahbazi stressed to BIV in an interview this afternoon that his firm is not involved in the debt forgiveness and that the deal's value to his company is $5 million.
The pact needs to be approved by regulators but it would see Well Health get a network of 16 clinics, which generated more than $10 million in revenue in the past 12 months. It also includes Well Health getting 62 licensee clinics that generate approximately $2.2 million in annual revenue. Those clinics would become the model for Well Health's new affiliate-clinic business stream, according to Shahbazi.
He plans to rebrand the Jack Nathan Medical clinics as Well Health.
Well Health also acquires Jack Nathan Medical's rights to operate medical clinics in Walmart Canada stores, creating a platform to expand its network within Walmart Canada's footprint of more than 400 Canadian locations. No commitment has yet been made to open a specific number of clinics in Walmart stores, he said.
The 16 Jack Nathan Medical clinics operate in 13 Canadian cities so they would further bolster Well Health's status as the largest medical-clinic operator across Canada.
Shahbazi told BIV this summer that since he founded Well Health about eight years ago the company has made more than 80 acquisitions.
Those acquisitions and organic revenue growth helped Well Health top BIV's Top 100 Fastest-Growing Companies in B.C. list this year, registering a whopping 2,265.2-per-cent revenue growth between 2019 and 2023. In its 2023 fiscal year, the company generated $776,054,000 in revenue, up from $32,810,782 in 2019.
Jack Nathan Medical plans to continue to own and operate its Mexican business and operations, including 155 corporately owned and operated clinics in Walmart locations in Mexico, five Mexican clinics inside Walmart distribution centres that serve Walmart workers and one multidisciplinary clinic in Mexico.
Shahbazi told BIV this summer that Well Health anticipated generating between $970 million and $990 million in revenue this fiscal year.
He reiterated today that revenue guidance for the year is "close to a billion dollars," and said that the Jack Nathan Medical transaction would not notably change that figure.
Fuelling sales growth are two distinct revenue streams. The dominant one comes from operating approximately 175 medical clinics in Canada, while the secondary stream comes from selling health and office-management technologies to medical clinics.
“About 90 per cent of our overall revenue comes from providing care to patients, and about 10 per cent, or probably less than 10 per cent now, comes from actual technology revenue,” he said in the summer.
“We really want to grow both of those.”
He said in the summer that he planned to split Well Health into two entities. That would enable investors to buy shares solely in the technology side of the business, which is a significantly different venture than providing patient care in medical clinics.
The plan is for the Well Health division that runs medical clinics to own a majority stake in the technology company—dubbed Well Provider Solutions—which could go public in the first half of 2025, according to Shahbazi.
If this restructuring proceeds, the result would be that investors in Well Health would be primarily exposed to the medical-clinic business, with about 10 per cent of their investment exposed to the technology company.
He said today that he had no update on the initiative to split into two companies but that the company will report its quarterly earnings on Nov. 7.
