Author: Glen Korstrom

There is a lot going on at the Vancouver-based medical-clinic operator and technology developer Well Health Technologies Corp. (TSX:WELL).

For one thing, its share price plunged 16.7 per cent today, to $4.14, following news it that it would delay filing audited annual financial statements for the fiscal year ended Dec. 31, as well as all management discussion of that year. It released that news after markets closed on Friday.

It said financial statements would be delayed because the U.S. attorney’s office for the Northern District of California is investigating Well Health’s subsidiary Circle Medical Technologies Inc. for its billing practices. 

Well Health said it needs more time to analyze information and determine how that investigation will impact Circle’s financial statements, and by extension Well Health’s overall financial situation. 

It said it expects to be able to file its annual financial statement by April 15. 

Well Health’s share price is up 12.81 per cent compared with one year ago, and is down 43.75 per cent from its all-time high earlier this year. 

Well Health to acquire controlling stake in Healwell AI tomorrow

Separately, the company today said it is pushing ahead with its plan to buy a controlling interest in Toronto-based Healwell AI. That acquisition would be done simultaneous with Healwell AI buying New Zealand-based Orion Health effective tomorrow (April 1). 

The transaction would see Well Health acquiring sufficient Class A and Class B shares in Healwell AI, through various ways, to own, on a fully diluted basis, approximately 29 per cent of Healwell by market cap. Well Health would control Healwell AI because it would own 60 per cent of the company’s voting shares on a fully diluted basis.

That stake in Healwell AI is set to add about $160 million in revenue for Well Health in the next 12 months, Well Health said this morning. 

Well Health and Healwell AI have long been partners. 

BIV reported in July that Well Health was leading a consortium that nabbed $15.3 million in funding for a $44-million project to develop artificial-intelligence (AI) technology that helps doctors save time. Healwell AI was part of that consortium. 

That funding last summer came from the Vancouver-based organization that distributes federal government capital, now known as Digital: Canada’s Global Innovation Cluster, after rebranding from being Digital Technology Supercluster. 

Patient visits hit all-time high in 2024

Some good news for Well Health is that it generated a record of more than 5.7 million patient visits in its most recent fiscal year. Patient visits were up 32 per cent, year-over-year, with organic patient visits up 30 per cent, Well Health said today. 

“Our Canadian clinics, underpinned by our technology-enabled care model, continues to lead the way in driving strong organic growth,” Well Health CEO and founder Hamed Shahbazi said today in a news release.

Shahbazi is likely best known for founding Tio Networks Corp., before selling it to PayPal Holdings Inc. for $304 million in 2017.

Well Heath plans to spin off technology subsidiary

The company’s business model is two-headed, which is why it is planning to split into two, with each entity separately trading on the Toronto Stock Exchange and better able to attract new investors. 

Well Health’s dominant revenue stream is from operating approximately 175 medical clinics in Canada, while the secondary stream comes from selling health and office-management technologies to medical clinics, Shahbazi explained to BIV last year.

“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 September.

The plan is for the Well Health division that runs medical clinics to own a majority stake in the technology company — newly rebranded as Wellstar. That separation and public listing could go ahead in the first half of this year, Shahbazi told BIV in September. 

Shahbazi did not respond to BIV‘s request for an interview this afternoon. 

Well Health topped BIV‘s 2024 Top 100 Fastest-Growing Companies list, 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.

That growth has showed no sign of stopping, as sales have continued to rise throughout 2024. The three-month period up to the end of September was Well Health’s 23nd consecutive quarter of record-breaking revenue. 

One of Well Health’s earlier and biggest investors is Chinese billionaire Li Ka-shing, a man likely best known to many Vancouverites as the guy whose company bought the city’s former Expo 86 site in 1988, for $320 million, to be spread over 15 years. BIV reported in 2019 that Ka-shing had an almost 11-per-cent stake in the company, while his venture capital firm Horizon Ventures owned a seven-per-cent stake. He then added to that stake in 2020. 

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The S&P 500 officially hit correction territory today, led by declines in mega-cap technology companies.

It has been recent downturns in tourism-related businesses, however, that are an ominous sign for how investors expect the sector to perform.

Shares for airlines, hotels and online travel companies have declined by more than the broader market since the S&P 500 last hit an all-time closing high, on Feb. 19.

Canada’s Toronto Stock Exchange, buoyed by metals and energy, has only fallen 5.55 per cent, to 24,203.23, since Feb. 19, so it is far from being in correction territory.

B.C.’s tourism entrepreneurs are also grappling with gauges of consumer confidence that show an apprehensive public wary to spend in the face of on-again-off-again tariffs from U.S. President Donald Trump.

The decline in tourist visits has already started.

Statistics Canada Monday released preliminary data showing 4.1 million international visitors arrived in Canada in February, down 10.9 per cent from February 2024.

This is the first year-over-year decline in visitors for a month in almost four years – since March 2021, when the comparable month in 2020 included the final weeks of pre-pandemic travel.

Stock market investors seem to think tourism is set to suffer.

The S&P 500 last hit an all-time closing high on Feb. 19, at 6,144.15. It then officially notched a correction, or at least a 10-per-cent decline, this afternoon, with a 5,521.52 close – down 10.13 per cent from that recent high.

Airlines’ share prices have been crushed since Feb. 19, with downturns sharper than the broader market.

Air Canada’s (TSX:AC) shares fared better than most competitors, falling 12.95 per cent, to $15.19.

Delta Air Lines Inc. (NYSE:DAL) shares plunged 32.47 per cent, to $43.92, while American Airlines Group Inc. (NYSE:AAL) shares fell 33.31 per cent, to US$10.67, and United Airlines Holdings Inc. (NYSE:UAL) shares fell 34.37 per cent, to US$69.90.

The world’s largest hotel company, Marriott International (NYSE:MAR) since Feb. 19 has seen its shares decline 17.48 per cent, to US$237.29.

Online booking companies have similarly sunk by far more than the broader market.

Booking Holdings Inc. (NYSE:BKNG) shares fell 15.95 per cent, to US$4,295.40 while Expedia Group Inc. (NYSE:EXPE) shares fell 23.92 per cent, to US$157.11.

Business confidence in general is low, and Trump’s on-again-off-again tariffs are causing entrepreneurs to be uncertain about making large capital expenses, or to hire more staff.

Worse, the friction felt in the tariff war has unleashed animosity, at least in Canada, toward Americans. Booing the U.S. national anthem at sporting events has become somewhat common, and reciprocal booing of the Canadian anthem in the U.S. has happened many times.

That resentment could dampen Americans’ enthusiasm for visiting Canada. 

“An anthem booing contest will solve nothing,” Destination Vancouver CEO Royce Chwin told BIV after his March 11 address to the Greater Vancouver Board of Trade.

“We have to remember what unites this country. That message cannot be lost. We’re the biggest trading partners. We’re allies. We’re each other’s biggest customers.”

Destination Canada’s Vancouver-based CEO Marsha Walden told BIV that while much remains uncertain, she knows that people love to travel, and they love Vancouver.

“We’re looking at multiple scenarios: everything from there being a minor disruption to there being a very, very severe disruption,” she said. “Generally, what we find is that consumers’ desire for travel is a very strong urge. We see it prevail against all manner of things, including the pandemic, when travel came roaring back the minute people had the opportunity.”

One upshot Walden said she sees is that a harsh trade war could weaken the Canadian dollar, and encourage more budget conscious travellers. That lower dollar, and the current Buy Canadian trend, could also encourage more visits from travellers in other provinces.

By and large, however, Walden said that most international visitors do not check currency rates before coming to Canada, or at least do not make the currency’s value a determinant of whether they will visit.

This is, however, a good time for governments to take notice of how valuable tourism is for the economy and to take steps to protect it.

She lamented that governments have been focused on increasing housing supply more than on increasing hotel development.

“Allowing mixed-use designations in cities will also encourage a combination of capital uses that we think will include hotels,” she said.

Walden praised Vancouver city council for taking steps to encourage hotels but said more could be done.

“It’s all municipalities that have not necessarily prioritized tourism development needs versus other needs,” she said.

Vancouver consistently has the highest hotel-room prices in Canada, although it was the only major city in 2024 to see a year-over-year decline in hotel occupancy, according to a new Avison Young report.

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