WELL Health to buy MyHealth in deal that will create Canada’s largest network of private-sector medical clinics

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WELL Health Technologies Corp. is spending $206 million to acquire Toronto-based MyHealth Centres in a deal that will create the largest private-sector-owned network of medical clinics in Canada.

Vancouver-based WELL Health owns an extensive network of medical clinics through Western Canada, but Monday’s purchase of MyHealth Centres expands its network with 77 additional clinics, including 48 in Ontario and 7 in Quebec. MyHealth Centres also operates a sizeable tele-health presence in Canada’s most populous province.

WELL Health chairman and CEO Hamed Shahbazi said that roughly 75 per cent of MyHealth’s consultations were being done via tele-health, a growing area in tech that allows patients to consult with doctors remotely, which is part of the reason his company took interest in the acquisition target.

“It’s a very tech-leaning and sophisticated company,” he said, adding that it allows his company to expand its business through “bricks and clicks,” meaning physical locations while also growing its tech platform.

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“We believe this is the largest specialty tele-health network in Canada,” Shahbazi said of WELL Health following the acquisition.

The deal is being financed through a combination of WELL Health shares and debt. WELL Health shares have risen 158 per cent during the past year, closing at $7.17 on Friday on the Toronto Stock Exchange.

The acquisition will turn WELL Health into a company that takes in about $400 million in revenue per year, and earns $100 million on an operating basis, enough,  Shahbazi said, to consider a listing on a major U.S. stock exchange.

It’s the second-largest deal in WELL Health’s corporate history, following a US$369-million acquisition in February this year of U.S.-focused CRH Medical Corp. That deal was partly financed through a $295-million equity financing that included Hong Kong-based billionaire Li Ka-shing.

“We still have an appetite to continue to grow,” Shahbazi said when asked whether there could be more deals in store for WELL Health.

He said the company is targeting a U.S. listing in the fourth quarter of the year as U.S. tele-health companies are currently trading at higher earnings multiples than their Canadian peers.

Those U.S.-based companies include Teladoc Health, American Well Corp. and Livongo Health Inc., all of which jumped over the past year as the COVID-19 pandemic forced more doctors’ visits online as stay-at-home orders kept people from meeting face-to-face during the outbreak.

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Shahbazi said the pandemic accelerated the adoption of tele-health across North America, but he said the trend towards online tools in the medical profession has been growing for years and is expected to continue as the pandemic wanes.

“You really can’t do everything online,” Shahbazi said, noting that while some consultations can be done remotely, there are frequently times when a doctor needs to physically examine the patient.

Still, he said that many experts predict there will continue to be a demand for remote doctor’s visits and the tele-health industry will continue to grow.

“The leading experts say we’re going to land globally at around 50/50 after the pandemic between bricks and clicks,” he said, with the expectation that remote visits become more and more common over time.

Harvard Medical School estimated in 2020 that 76 per cent of hospitals in the U.S. use tele-health programs, up from 35 per cent 10 years ago. The services are used for functions such as monitoring elderly adults at home, recording measurements like weight, food intake and heart rates or ordering prescription refills.

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