WELL Health Technologies : Financial Statements (WELL Health Technologies Corp. Conso 2024 12 FS0636558 FS SEDAR)
WELL.TO
Published on 05/03/2025 at 20:55
Expressed in thousands of Canadian dollars
Independent auditor's report
To the Shareholders of WELL Health Technologies Corp.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of WELL Health Technologies Corp. and its subsidiaries (together, the Company) as at December 31, 2024 and 2023, and its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (IFRS Accounting Standards).
What we have audited
The Company's consolidated financial statements comprise:
the consolidated statements of income and comprehensive income for the years ended December 31, 2024 and 2023;
the consolidated statements of financial position as at December 31, 2024 and 2023;
the consolidated statements of changes in equity for the years then ended;
the consolidated statements of cash flows for the years then ended; and
the notes to the consolidated financial statements, comprising material accounting policy information and other explanatory information.
We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the consolidated financial statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada. We have fulfilled our other ethical responsibilities in accordance with these requirements.
PricewaterhouseCoopers LLP
PwC Place, 250 Howe Street, Suite 1400, Vancouver, British Columbia, Canada V6C 3S7
T.: +1 604 806 7000, F.: +1 604 806 7806, Fax to mail: [email protected]
"PwC" refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership.
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the year ended December 31, 2024. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter How our audit addressed the key audit matter
Revenue recognition for patient services at Circle Medical
Refer to note 3 - Material accounting policy information, note 4 - Critical accounting estimates and judgments, note 16 - Deferred revenue and note 23 - Segment reporting to the consolidated financial statements.
For the year ended December 31, 2024, revenue recognized from WELL Health USA Patient and Provider Services - Primary - Circle Medical segment (Circle Medical) was $76.3 million and as at December 31, 2024, deferred revenue for Circle Medical was $53.9 million.
The Company recognizes revenue from contracts with customers by applying the following steps:
identification of the contract, or contracts, with customers;
identification of the performance obligations in the contract;
determination of the transaction price;
allocation of the transaction price to the performance obligations in the contract; and
recognition of revenue when or as the Company satisfies the performance obligations and has the right to payment.
As disclosed by management, during the year ended December 31, 2024, Circle Medical performed certain patient services and collected
Our approach to addressing the matter included the following procedures, among others:
Evaluated how management determined that the revenue for Circle Medical was recognized or deferred by assessing the required revenue recognition criteria, including the Company's right to payment under contracts with payors. This evaluation included the following:
Examined, on a sample basis, key contracts with payors.
Tested on sample basis revenue and deferred revenue transactions by examining claims submitted and cash collected.
Used the work of management's expert in performing the procedures to evaluate judgments made with respect to the right to payment. As a basis for using this work, the competence, capabilities and objectivity of management's expert was evaluated, the work performed was understood and the appropriateness of the work as audit evidence was evaluated. The procedures performed included reviewing the analysis of the relevant statute to support the conclusion related to the right to payment prepared by management's expert, and an evaluation of their findings.
cash of $53.9 million from its customers. The Company determined it was unable to recognize this revenue in 2024 as not all required recognition criteria had been met, instead, Circle Medical has recorded the cash collected of $53.9 million as deferred revenue as at December 31, 2024.
With respect to Circle Medical revenue, significant judgment is required to determine whether the required revenue recognition criteria have been met, including the Company's right to payment under those contracts with payors. For certain patient services relating to Circle Medical, management used an expert to assist with the significant judgment that is required in determining the Company's right to payment under those contracts with payors (management's expert).
We considered this a key audit matter due to the significant judgment by management in assessing whether the required revenue recognition criteria have been met, including the Company's right to payment under contracts with payors. This in turn led to a high degree of auditor judgment and effort in evaluating audit evidence relating to the revenue recognition criteria. Professionals with specialized skill and knowledge assisted us in performing our procedures.
Professionals with specialized skill and knowledge assisted in the evaluation of certain aspects of the right to payment.
Assessed the related disclosures in the consolidated financial statements.
Impairment of goodwill
Refer to note 3 - Material accounting policy information, note 4 - Critical accounting estimates and judgments and note 15 - Intangible assets and Goodwill to the consolidated financial statements.
The Company had goodwill of $565.1 million as at December 31, 2024. The Company assesses whether there has been an impairment in the carrying amount of goodwill at least annually and whenever an indicator of impairment exists. An impairment loss is recognized if the carrying
Our approach to addressing the matter included the following procedures, among others:
Evaluated how management determined the recoverable amounts of the Company's CGUs, or groups of CGUs, which included the following:
Tested the appropriateness of the method used and the mathematical accuracy of the discounted cash flow models.
Tested the reasonableness of average annual revenue growth rates and terminal
amount of a cash generating unit (CGU) or groups of CGUs to which the goodwill relates exceeds its recoverable amount. The recoverable amounts of CGUs or groups of CGUs are determined based on the greater of their fair value less costs of disposal and value in use.
The recoverable amounts of the CGUs or groups of CGUs were determined based on the value-in-use method using discounted cash flow models. The value-in-use method requires management to make certain key assumptions, including significant estimates about average annual revenue growth rates, terminal growth rates and discount rates. The Company did not recognize an impairment loss related to goodwill in 2024 because the recoverable amounts of the Company's CGUs or groups of CGUs, as applicable, exceeded their carrying values.
We considered this a key audit matter due to (i) the significance of the goodwill balance; and (ii) the judgment made by management in determining the recoverable amounts of the CGUs or groups of CGUs, including the use of certain key assumptions. This has resulted in a high degree of subjectivity and audit effort in performing procedures to test these key assumptions.
Professionals with specialized skill and knowledge in the field of valuation assisted us in performing our procedures.
growth rates applied by management in the discounted cash flow models by comparing them to the Board of Directors' approved budget, management's plans and available third party published economic data.
Professionals with specialized skill and knowledge in the field of valuation assisted in testing the reasonableness of the discount rates applied by management based on available data of comparable companies.
Tested the underlying data used in the discounted cash flow models.
Assessed the related disclosures in the consolidated financial statements.
Revenue recognition for anesthesia services
Refer to note 3 - Material accounting policy information, note 4 - Critical accounting estimates and judgments, note 9 - Accounts and other receivables and note 23 - Segment reporting to the consolidated financial statements.
For the year ended December 31, 2024, revenue recognized from WELL Health USA Patient and Provider Services - Specialized - CRH Medical
Our approach to addressing the matter included the following procedures, among others:
Evaluated how management determined the uncollected revenue related to anesthesia services, which included the following:
Evaluated the agreement between Change Healthcare and the Company.
(CRH Medical) was $234.7 million and as at December 31, 2024, accounts receivable for CRH Medical was $100.3 million, of which a significant portion relates to anesthesia services.
As disclosed by management, during the quarter ended December 31, 2024, management was required to update assumptions in its revenue recognition model for anesthesia services to capture (i) increased collection risk for services provided in both 2023 and 2024; (ii) higher claim denials from payors due to missed timely filing deadlines by Change Healthcare due to the cyberattack; and (iii) the impact of the agreement being reached with Change Healthcare on treatment of the advance payments received.
Anesthesia service revenues are recognized on completion of anesthesia procedures for each patient and are recognized net of contractual adjustments. Due to such contractual adjustments, the transaction price for these services is considered to be variable.
Significant judgment is involved in determining the estimated anesthesia revenues that will be collected in the future and included in accounts receivable at year-end (the uncollected revenue). Management follows a portfolio approach in estimating the variable consideration based on assumptions related to the historical trend of cash collections from third party payors and contractual adjustments for each payor type.
We considered this a key audit matter due to the significant judgments and assumptions used by management in determining the uncollected revenue for anesthesia services due to the judgment required in estimating cash collections from third party payors and contractual adjustments for each payor type. This in turn resulted in a high degree of auditor judgment, significant audit effort and subjectivity in performing procedures related to
Evaluated the reasonableness of variable consideration by reference to the Company's historical trend of cash collections and contractual adjustments by payor type.
Tested the data used in management's determination of the uncollected revenue, by testing historical cash collections on a sample basis.
Assessed the overall reasonability of the uncollected revenue and related receivable by independently developing other incremental scenarios.
Assessed the related disclosures in the consolidated financial statements.
management's determination of the uncollected revenue.
Management is responsible for the other information. The other information comprises the Management's Discussion and Analysis.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRS Accounting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company's financial reporting process.
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the financial information of the entities or business units within the Company as a basis for forming an opinion on the consolidated financial statements. We are responsible for the direction, supervision and review of the audit work performed for purposes of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditor's report is Robert Coard.
/s/PricewaterhouseCoopers LLP
Chartered Professional Accountants Vancouver, British Columbia
April 14, 2025
Consolidated Statements of Income and Comprehensive Income
(Expressed in thousands of Canadian dollars unless otherwise stated, except share and per share amounts)
Years ended
December 31,
December 31,
2024
2023
$'000
$'000
Revenue (Note 5)
919,688
776,054
Expenses
Cost of sales (excluding depreciation and amortization)
(556,677)
(403,787)
General and administrative (Note 6)
(306,200)
(250,816)
Depreciation and amortization (Notes 14 and 15)
(72,306)
(60,768)
Stock-based compensation (Note 21)
(15,270)
(26,162)
Foreign exchange gain
570
636
Operating income
(30,195)
35,157
Interest income (Note 7)
1,272
763
Interest expense (Note 7)
(37,616)
(33,603)
Time-based earnout expense (Note 8)
(7,458)
(21,412)
Change in fair value of investments (Note 12)
101,484
42,560
Gain on disposal of assets and investments
11,817
1,570
Share of net loss of associates
(4,341)
(378)
Other expenses (Note 9)
(25,971)
(5,160)
Income before income tax
8,992
19,497
Income tax recovery (expense) (Note 20)
20,104
(2,860)
Net income
29,096
16,637
Net income attributable to:
Owners of WELL Health Technologies Corp.
32,609
82
Non-controlling interests
(3,513)
16,555
29,096
16,637
Other comprehensive income:
Items that may be subsequently reclassified to profit or loss:
Exchange difference on translation of foreign operations
42,011
(12,745)
(315)
(509)
Reclassification of fair value loss (gain) on derivative instruments to net
income
315
(315)
Total comprehensive income
71,107
3,068
Total comprehensive income (loss) attributable to:
Owners of WELL Health Technologies Corp.
74,045
(13,325)
Non-controlling interests
(2,938)
16,393
71,107
3,068
Earnings per share attributable to WELL Health Technologies Corp.
Basic
0.13
0.00
Diluted
0.13
0.00
Weighted average number of common shares outstanding
Basic
246,763,835
236,542,932
Diluted
254,651,679
236,542,932
Fair value loss on derivative instruments designated in cash flow hedges
Consolidated Statements of Financial Position
(Expressed in thousands of Canadian dollars unless otherwise stated)
December 31,
2024
December 31,
2023
January 1,
2023
(Reclassified -
Note 3(r))
(Reclassified -
Note 3(r))
As at
$'000
$'000
$'000
Assets
Current
Cash and cash equivalents
131,669
43,423
48,908
Accounts and other receivables (Note 10)
184,505
94,991
78,914
Inventory
2,691
1,180
1,370
Lease receivable (Note 19(b))
879
1,107
568
Prepayments and other assets (Note 11)
26,369
21,487
21,117
Assets held for sale (Note 25)
-
14,208
-
Total current assets
346,113
176,396
150,877
Financial assets at fair value through profit and loss (Note 12)
158,476
56,170
5,636
Investments accounted for using the equity method (Note 13(d))
15,310
4,690
4,369
Lease receivable - non-current (Note 19(b))
1,400
1,852
1,880
Prepayments and other assets - non-current (Note 11)
3,545
4,393
3,177
Deferred tax assets (Note 20(c))
41,588
-
-
Property and equipment (Note 14)
101,762
102,540
82,535
Intangible assets (Note 15)
573,962
555,200
571,267
Goodwill (Note 15)
565,117
508,061
499,290
Total assets
1,807,273
1,409,302
1,319,031
Liabilities and equity
Current
Accounts payable and accrued liabilities
86,583
47,877
50,728
Deferred revenue (Note 16)
59,450
6,648
6,797
Deferred acquisition costs (Note 17(a))
14,585
14,493
18,229
Other liabilities (Note 17(b))
27,982
21,087
17,489
Advances payable (Note 17(c))
165,441
-
-
Loans and borrowings (Note 18(a))
5,534
5,264
2,624
Convertible debentures (Note 18(b))
3,850
3,850
3,850
Lease liability (Note 19(a))
18,651
14,869
9,107
Liabilities associated with assets held for sale (Note 25)
-
1,871
-
Total current liabilities
382,076
115,959
108,824
Deferred revenue - non-current (Note 16)
-
255
403
Deferred acquisition costs - non-current (Note 17(a))
16,354
22,578
20,268
Other liabilities - non-current (Note 17(b))
2,292
3,577
744
Loans and borrowings - non-current (Note 18(a))
284,731
290,337
249,850
Convertible debentures - non-current (Note 18(b))
51,244
45,571
40,829
Redeemable preferred shares (note 18(c))
48,054
-
-
Lease liability - non-current (Note 19(a))
61,079
66,392
52,156
Deferred tax liabilities (Note 20(c))
31,722
18,487
30,706
Total liabilities
877,552
563,156
503,780
Equity
Share capital (Note 21)
784,873
751,550
705,186
Contributed surplus (Note 21)
46,621
54,048
51,765
Accumulated other comprehensive income
67,088
25,652
39,059
Accumulated deficit
(30,975)
(63,584)
(63,666)
Equity attributable to owners of WELL Health Technologies Corp.
867,607
767,666
732,344
Non-controlling interests
62,114
78,480
82,907
Total equity
929,721
846,146
815,251
Total equity and liabilities 1,807,273
1,409,302
1,319,031
Commitments and contingencies (Notes 26, 27(c), and 29) Events after the reporting period (Notes 17(c), 26 and 29)
Approved by the Directors:
"Hamed Shahbazi" "Thomas Liston"
WELL HEALTH TECHNOLOGIES CORP.
Consolidated Statements of Changes in Equity
(Expressed in thousands of Canadian dollars unless otherwise stated, except share amounts)
Attributable to owners of WELL Health Technologies Corp.
Number of
Shares
Share Capital
Contributed
Surplus
Accumulated
Other Comprehensive
Income
Accumulated
Deficit
Total
Non-
controlling Interests
Total Equity
$'000
$'000
$'000
$'000
$'000
$'000
$'000
Balance at December 31, 2023
241,427,825
751,550
54,048
25,652
(63,584)
767,666
78,480
846,146
Stock options exercised (Note 21)
1,615,373
5,136
(1,917)
-
-
3,219
-
3,219
Shares issued for RSUs/PSUs (Note 21)
4,126,905
20,802
(20,802)
-
-
-
-
-
1,767,874
6,899
-
-
-
6,899
-
6,899
Shares issued for settlement of deferred acquisition costs (Note 17(a))
Shares issued for time-based earnout payments
537,563
2,144
-
-
-
2,144
-
2,144
Stock-based compensation (Note 21)
-
-
15,270
-
-
15,270
-
15,270
Normal course issuer bid
(383,600)
(1,658)
-
-
-
(1,658)
-
(1,658)
Non-controlling interests via business combination - - - - - - 10,719 10,719 (Note 24)
Distributions paid to non-controlling interests
-
-
-
-
-
-
(27,661)
(27,661)
Other transactions with non-controlling interests
-
-
22
-
-
22
3,514
3,536
Foreign currency translation of foreign subsidiaries
-
-
-
41,436
-
41,436
575
42,011
Net income for the period
-
-
-
-
32,609
32,609
(3,513)
29,096
Balance at December 31, 2024
249,091,940
784,873
46,621
67,088
(30,975)
867,607
62,114
929,721
Balance at December 31, 2022
231,047,290
705,186
51,765
39,059
(63,666)
732,344
82,907
815,251
Stock options exercised (Note 21)
890,157
1,253
(443)
-
-
810
-
810
Shares issued for RSUs/PSUs (Note 21)
4,259,807
22,793
(22,793)
-
-
-
-
-
2,852,264
12,375
-
-
-
12,375
-
12,375
Shares issued for settlement of deferred acquisition costs (Note 17(a))
Shares issued for settlement of working capital holdbacks
19,770
81
-
-
-
81
-
81
Shares issued for time-based earnout payments
1,013,518
4,096
-
-
-
4,096
-
4,096
1,345,019
5,766
-
-
-
5,766
-
5,766
Shares issued for consideration in business combinations (Note 24)
Stock-based compensation (Note 21) - - 26,162 - - 26,162 - 26,162
Non-controlling interests via business combination (Note 24)
- - - - - - 7,050 7,050
Distributions paid to non-controlling interests
-
-
-
-
-
-
(25,101)
(25,101)
Other transactions with non-controlling interests
-
-
(643)
-
-
(643)
(2,773)
(3,416)
Finalization of 2022 PPA
-
-
-
-
-
-
4
4
Foreign currency translation of foreign subsidiaries
-
-
-
(12,583)
-
(12,583)
(162)
(12,745)
Derivative instruments designated in cash flow hedges
-
-
-
(824)
-
(824)
-
(824)
Net income for the period
-
-
-
-
82
82
16,555
16,637
Balance at December 31, 2023
241,427,825
751,550
54,048
25,652
(63,584)
767,666
78,480
846,146
The accompanying notes are an integral part of these audited annual consolidated financial statements
4
Consolidated Statements of Cash Flows
(Expressed in thousands of Canadian dollars unless otherwise stated)
Years ended
December 31,
December 31,
2024
$'000
2023
$'000
Cash flows provided by/(used in)
Operating activities
Net income for the period
Adjustments to net income for non-cash items:
29,096
16,637
Interest income accretion
(907)
(286)
Interest expense accretion
15,643
13,606
Time-based earnout payments settled via shares
2,144
4,096
Unrealized foreign exchange gain (loss) and others
5,304
(7,000)
Loss on revaluation of deferred acquisition cost liability
3,029
12,469
Change in fair value of investments
(101,484)
(42,560)
Depreciation and amortization (Notes 14 and 15)
72,306
60,768
Gain on disposal of investments
(11,204)
(1,563)
Share of net loss of associates
4,341
378
Stock-based compensation (Note 21)
15,270
26,162
Loss on deferred acquisition cost settled in shares
175
1,172
Non-cash loss included in other expenses
752
3,228
Deferred income taxes
(31,615)
(10,421)
Change in non-cash operating items (Note 28)
6,672
(10,249)
Net cash provided by operating activities
9,522
66,437
Investing activities
Business acquisitions, net of cash acquired (Notes 24 and 28)
(26,903)
(48,862)
Asset acqusitions (Notes 24 and 28)
(10,294)
(17,277)
Net proceeds from disposal of investments (Note 24)
2,390
11,563
Equity and debt investments in associates and others (Note 28)
(73)
(6,641)
Other transactions with non-controlling interests
-
(1,551)
Acquisition of property and equipment and internally generated intangible assets
(16,226)
(8,107)
Settlement of working capital holdbacks
(1,578)
(880)
Settlement of deferred acquisition costs (Note 17(a))
(7,542)
(9,560)
Net cash used in investing activities
(60,226)
(81,315)
Financing activities
Net proceeds from redeemable preferred shares (Note 18(c))
47,645
-
Shares repurchased under NCIB (Note 21)
(1,658)
-
Advances payable (Note 17(c))
165,441
-
Payment of interest on convertible debentures (Note 18(b))
(3,850)
(3,850)
Proceeds from loans and borrowings
46,694
106,864
Repayments of loans and borrowings
(78,056)
(55,509)
Proceeds from stock options exercised
3,219
810
Transactions with non-controlling interests
(27,961)
(25,101)
Lease payments (Note 19(a))
(18,781)
(13,410)
Lease payments received (Note 19(b))
807
824
Net cash provided by financing activities
133,500
10,628
Effects of foreign exchange difference on cash and cash equivalents
4,747
(532)
Cash reclassified from/(to) assets held for sale (Note 25)
703
(703)
Net change in cash
88,246
(5,485)
Cash and cash equivalents - beginning of period
43,423
48,908
Cash and cash equivalents - end of period
131,669
43,423
Cash paid for:
Interest
(26,495)
(23,051)
Income tax
(5,116)
(14,869)
The accompanying notes are an integral part of these audited annual consolidated financial statements
5
WELL Health Technologies Corp. (the "Company") is a practitioner-focused digital healthcare company. WELL's overarching mission is to positively impact health outcomes by leveraging technology to empower healthcare practitioners and their patients globally. The Company was incorporated under the Business Corporations Act of British Columbia on November 23, 2010. The Company's common shares trade on the Toronto Stock Exchange (the "TSX") under the symbol WELL.
The Company's head office is located at Suite 550 - 375 Water Street, Vancouver, BC, V6B 5C6.
These audited annual consolidated financial statements were approved by the Company's Board of Directors on April 14, 2025.
These audited annual consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board ("IFRS Accounting Standards").
These audited annual consolidated financial statements have been prepared under the historical cost basis except with respect to certain financial instruments which are measured at fair value (Note 27). All financial information in these audited annual consolidated financial statements, except share and per share amounts, is presented in thousands of Canadian dollars.
The preparation of audited annual consolidated financial statements in accordance with IFRS requires management to make judgments, estimates, and assumptions that affect the application of accounting policies and reported amounts of assets, liabilities, revenues and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected. Areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the audited annual consolidated financial statements are disclosed in Note 4.
The significant accounting policies used in the preparation of these audited annual consolidated financial statements are described below.
Basis of consolidation
These audited annual consolidated financial statements include the assets, liabilities and results of operations of the Company and all subsidiaries that are controlled by the Company for the years ended December 31, 2024, and 2023.
Control over a subsidiary exists when the Company is exposed to and has the rights to variable returns of the subsidiary and has the ability to affect those returns through its power over the entity. The existence and effect of voting rights that are currently exercisable or convertible are considered when assessing whether the Company controls another entity. Subsidiaries are consolidated from the date
on which control is transferred to the Company and are deconsolidated from the date control ceases. Intercompany transactions, balances, and unrealized gains/losses on transactions between subsidiaries are eliminated on consolidation.
Business combinations
The Company applies the acquisition method to account for business combinations. Consideration for the acquisition of a subsidiary is measured at fair value and includes assets transferred, equities issued as well as any contingent consideration. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Any non-controlling interests are recognized at the non-controlling interest's proportionate share of the fair value of the net assets acquired. Acquisition related costs are expensed as incurred.
Goodwill is initially measured as the excess of the consideration paid over the fair value of net identifiable assets acquired. If this consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is recognized in the consolidated statement of loss and comprehensive loss.
The Company recognizes contingent consideration relating to its business combinations at fair value at the date the transaction closes and revalues the component of contingent consideration recognized as a liability at each subsequent reporting date and on settlement through earnings. Contingent consideration that will be settled by delivering a fixed number of common shares is classified as equity and not revalued at each subsequent reporting date.
Asset acquisitions are accounted for at cost. The acquisition cost includes directly related acquisition costs and transaction costs. The cost of the acquisition is allocated to the net assets acquired on a relative fair value basis. Contingent consideration, where the arrangement is not a derivative, is recognized when it is probable and estimable. After the initial acquisition accounting, changes in contingent and deferred consideration are recorded as an adjustment to the related asset.
The Company recognizes any non-controlling interest on consolidation at the fair value of the proportionate share of the net assets acquired. When the Company acquires an asset via a step transaction, the Company remeasures and adjusts any previously held interest to fair value.
Foreign currency translation
Functional and presentation currency
The Company's audited annual consolidated financial statements are presented in Canadian dollars.
Each of the Company's subsidiaries determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency. The determination of functional currency is based on the primary economic environment in which an entity operates. The functional currency of an entity reflects the underlying transactions, events and conditions that are relevant to the entity.
The functional currency of Circle Medical Technologies, Inc. ("Circle Medical"), CRH Medical Corporation ("CRH") and WISP Inc. ("WISP") is the US dollar. The functional currency of Intrahealth Australia Limited is the Australian dollar, and the functional currency of Intrahealth New Zealand Limited and Intrahealth Systems Limited ("Intrahealth") is the New Zealand dollar. The functional currency of all other entities in the consolidated group is the Canadian dollar.
Foreign operations translation
Foreign operations that have a functional currency other than the Canadian dollar are translated into the presentation currency as follows:
assets and liabilities are translated at the closing foreign currency rate at the date of that consolidated statement of financial position;
income and expenses are translated at the average exchange rate for that period (unless this is not a reasonable approximation of the rates prevailing on the transaction dates, in which case income and expenses are translated at the exchange rate on the dates of the transactions); and
all resulting foreign currency gains and losses are recognized in other comprehensive income as a foreign currency translation adjustment.
The relevant amount of cumulative foreign currency translation adjustment is reclassified to earnings upon disposition of a foreign operation.
Transactions in foreign currency
Foreign currency transactions for each entity are translated into the relevant functional currency using the exchange rates prevailing at the dates of the transactions (or using the average rate for the period when this is a reasonable approximation). Period end balances of monetary assets and liabilities denominated in currencies other than an entity's functional currency are translated into the entity's functional currency using period end foreign currency rates. Foreign exchange gains and losses resulting from the translation or settlement of monetary assets and liabilities denominated in currencies other than an entity's functional currency are recognized in the consolidated statements of income and comprehensive income.
Cash and cash equivalents
Cash and cash equivalents comprise cash in banks and short-term monetary instruments with initial maturities of three months or less when purchased or which are redeemable at face value on demand.
Financial instruments and hedge accounting
A financial instrument is a contract that gives rise to a financial asset in one entity and a financial liability or equity instrument in another entity. Financial assets, financial liabilities and equity instruments are classified according to the substance of the contractual arrangements and the definitions of these elements under IAS 32 "Financial instruments: Presentation". Financial assets and financial liabilities, including derivatives, are recognized in the consolidated statement of financial position when the Company becomes a party to the contractual provisions of the financial instrument. On initial recognition all financial instruments are recognized at fair value.
Financial instruments are subsequently measured based on their classification as follows:
Financial instruments measured at fair value through the consolidated statement of income ("FVPL");
Financial instruments measured at fair value through other comprehensive income ("FVOCI"); or
Financial instruments measured at amortized cost.
Financial Assets
Financial assets may be classified as FVPL, FVOCI or at amortized cost depending on the entity's business model for managing the financial assets, and the contractual cash flows.
The Company measures financial assets (except for those classified as FVPL) at their fair value plus transaction costs. Transaction costs of financial assets carried at fair value through profit or loss ("FVPL") are expensed in the consolidated statement of income.
Debt instruments
Subsequent measurement of debt instruments depends on the Company's business model for managing the financial asset and the cash flow characteristics of the financial asset. There are three measurement categories into which the Company classifies its debt instruments:
Amortized cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortized cost. Interest income from these financial assets is recognized using the effective interest method. Foreign exchange gains and losses as well as any gain or loss arising on derecognition are recognized in the consolidated statement of income.
FVOCI: Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets' cash flows represent solely payments of principal and interest, are measured at fair value through other comprehensive income ("FVOCI"). Movements in the carrying amount are recorded through other comprehensive income ("OCI"), except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains and losses which are recognized in the consolidated statement of income. When the financial asset is derecognized, the cumulative gain or loss previously recognized in OCI is reclassified from equity to the consolidated statement of income.
FVPL: Assets that do not meet the criteria for amortized cost or FVOCI are measured at FVPL. A gain or loss on a debt investment that is subsequently measured at FVPL is recognized in the consolidated statement of income.
Equity Instruments
Unless an election is made, the Company subsequently measures all equity investments at FVPL. When the Company has elected to present fair value gains and losses on equity investments in OCI, there is no subsequent reclassification of fair value gains and losses to the consolidated statement of income following the derecognition of the investment.
Changes in the fair value of financial assets at FVPL are recognized in the audited annual consolidated statement of income. Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value.
Impairment
The Company uses the expected credit loss model for assessing impairment of financial assets and recognises expected credit losses as loss allowances for assets measured at amortized cost or FVOCI. For accounts receivable, the Company maintains an allowance for doubtful accounts for the estimated expected credit losses resulting from the inability of its customers to make required payments. In determining the allowance, the Company considers factors such as the number of days the account is past due, whether or not the customer continues to receive service, the Company's past collection history and changes in business circumstances.
Financial Liabilities
Financial liabilities are classified as either FVPL or at amortized cost.
FVPL: Financial liabilities carried at FVPL are initially recorded at fair value and transaction costs are expensed in the audited annual consolidated statement of income. Realized and unrealized gains and losses arising from changes in the fair value of the financial liabilities held at FVPL are generally recognized in the audited annual consolidated statement of income in the period in which they arise. This includes contingent consideration in business combinations.
Financial liabilities at amortized cost: Financial liabilities carried at amortized cost are initially recognized at fair value and subsequently carried at amortized cost using the effective interest rate method.
Preferred shares that provide for redemption at the option of the holder that give rise to a contractual obligation to deliver cash or another financial asset, or that may be settled with a variable number of the issuer's own equity instruments, are classified as financial liabilities.
Derivative Financial Instruments and Hedge Accounting
The Company uses derivative financial instruments to manage risk associated with foreign currency rates and interest rates. Derivative financial instruments are initially measured at fair value. When derivative financial instruments are designated in a qualifying hedging relationship and hedge accounting is applied, the effectiveness of the hedges is measured at the end of each reporting period and the effective portion of changes in fair value is recognized in other comprehensive income and any ineffective portion is recognized immediately in net income. For interest rate swaps used to manage risk associated with interest rates, amounts are transferred from accumulated other comprehensive income to interest expense when the underlying transaction affects net income. For foreign forward contracts used to manage risk associated with foreign exchange rates, amounts are transferred from accumulated other comprehensive income to revenue, cost of sales or general and administrative expenses, as appropriate, when the underlying transaction affects net income. For derivative instruments not in a qualifying
hedging relationship, changes in fair value are recognized immediately in net income as either foreign exchange gain (loss) or interest expense, as appropriate.
Compound Financial Instruments
The component parts of compound financial instruments issued by the Company are classified separately as financial liabilities and equity in accordance with the substance of the contractual arrangement. If the conversion feature meets the definition of equity, the fair value of the liability component is estimated at the date of issue of the instrument using the prevailing market interest rate for a similar non-convertible instrument. This amount is recorded as a liability (net of transaction costs) on an amortized cost basis using the effective interest method until extinguished upon conversion or at the instrument's maturity date. The equity component is determined by deducting the amount of the liability component from the fair value of the compound instrument as a whole. This is recognized and included in equity, net of income tax effects, and is not subsequently remeasured. Transaction costs are apportioned between the liability and equity components of the convertible instruments, based on the allocation of proceeds to the financial liability and equity components when the instruments are initially recognized. Interest related to the financial liability component is recognized in the consolidated statement of loss. On conversion, the financial liability is reclassified to equity and no gain or loss is recognized.
If the conversion feature of a convertible instrument issued does not meet the definition of an equity instrument, it is classified as an embedded derivative and measured accordingly. The debt component of the instrument is determined by deducting the fair value of the equity conversion option at inception from the fair value of the consideration received for the instrument as a whole. This amount (the debt component) is recorded as a liability on an amortized cost basis using the effective interest rate method until extinguished upon conversion or at the instrument's maturity date.
Investments in associates and joint ventures
An associate is an entity in which the Company has significant influence, but not control or joint control, over the financial and operating policies. A joint venture is an arrangement in which the Company has joint control, whereby the Company has rights to the net assets of the arrangement, rather than rights to its assets and obligations for its liabilities.
Interests in associates and joint ventures are accounted for using the equity method. They are initially recognized at cost, which includes transaction costs. Subsequent to initial recognition, the Company recognizes its share of the profit or loss and OCI of these entities, until the date on which significant influence or joint control ceases.
Stock-based compensation
The Company maintains stock-based compensation plans whereby employees and consultants may be granted awards in the form of stock options, restricted share units ("RSUs") and performance share units ("PSUs"). Stock-based compensation expense relates to the fair value of the awards being expensed over their respective vesting periods.
Stock options
The fair value of stock options granted is measured using the Black-Scholes option pricing model ("BSM") on the grant date taking into account the terms and conditions upon which the options were granted. The fair value of each tranche of options is recognized as an expense on a straight-line basis over its vesting period. At each financial position reporting date, the amount recognized as an expense is adjusted to reflect the actual number of stock options that are expected to vest.
The BSM requires management to estimate the expected volatility, the term of the equity instrument, the risk-free rate of return over the term, expected dividends, and the number of equity instruments expected to ultimately vest. In estimating expected volatility, the Company considers the historical share price volatility of its common shares.
The fair value of stock options is charged to profit or loss with a corresponding increase in contributed surplus within equity. Previously recognized expenses are not subsequently reversed for options that vest but are not exercised. If and when stock options are ultimately exercised, the applicable amount of contributed surplus is transferred to share capital.
RSUs and PSUs
The fair value of RSUs and PSUs that contain performance conditions is measured based on the closing price of the Company's common shares on the date of grant. The fair value of each tranche of RSUs or PSUs granted is recognized as expense on a straight-line basis over its vesting period. The fair value of RSUs/PSUs is charged to profit or loss with a corresponding increase in contributed surplus within equity. The amount recognized as an expense is based on the estimate of the number of awards expected to vest, which is revised if subsequent information indicates that actual forfeitures are likely to differ from the estimate. Upon vesting of equity settled RSUs/PSUs, the related contributed surplus associated with the RSU/PSU is reclassified into share capital.
Revenue recognition
The Company recognizes revenue from contracts with customers by applying the following steps:
Identification of the contract, or contracts, with customers;
Identification of the performance obligations in the contract;
Determination of the transaction price;
Allocation of the transaction price to the performance obligations in the contract; and
Recognition of revenue when or as the Company satisfies the performance obligations and has the right to payment.
Revenue for each performance obligation is recognized either over time or at a point in time. For performance obligations satisfied over time, revenue is recognized as the services are provided or rateably over the contractual term. Revenue for performance obligations satisfied at a point in time is recognized when control of the item or service transfers to the customer. Determining when a performance obligation has been satisfied requires judgment. The Company believes that the revenue recognition methods described below faithfully depict the transfer of the services and the satisfaction of performance obligations. All revenue is recorded at the amount received or receivable from customers.
See Note 5 for a breakdown of the Company's revenue from contracts with customers. See Note 10 for the Company's balance of accounts receivable, all of which is attributable to revenue generated from contracts with customers. When payments are received from customers in advance of performance obligations being satisfied, amounts are recorded as deferred revenue (Note 16) on the consolidated statement of financial position.
The Company generates its revenue from the following sources: Patient Services revenue
Patient services revenue is derived from (a) the provision of patient services, (b) the provision of anesthesia services, (c) the provision of recruiting services for placement of healthcare professionals
(d) ligator product sales, and (e) executive health patient memberships.
Patient services revenue is revenue earned at a single point in time and is generated through the Company's medical clinics and virtual platforms and consists of both non-insured and insured services. In Canada, public insured services refer to revenue generated for providing publicly accessible healthcare services that are reimbursed by the Canadian provincial health authorities. For services not covered by government reimbursement, amounts are charged directly to patients and/or third parties. In the U.S., revenue relates to services billed to third-party payors based on third-party payor agreements, as well as to patients who have health insurance, but are also financially responsible for some or all of the services in the form of co-pays, co-insurance or deductibles. Patients who do not have health insurance are required to pay for their services in full. The Company's performance obligations for clinical services are satisfied when services are rendered. For public insured services and most services paid for by patients, cash is typically collected within one month of the appointment visit. For service paid for by third-party payors, cash is typically collected within six months of the appointment visit.
For patient services provided in the U.S. and charged to third-party payors or patients, the Company recognizes revenue net of provisions for contractual adjustments from third-party payors and patients. The Company has certain agreements with third-party payors that provide for reimbursement at amounts different from the Company's standard billing rates. The differences between the estimated reimbursement rates and the standard billing rates are accounted for as contractual adjustments, which are deducted from gross revenue to arrive at patient services revenue. The Company estimates implicit contractual adjustments based on the Company's historical collection experience with classes of patients or procedures performed using a portfolio approach as a practical expedient to account for patient contracts as collective groups rather than individually. The financial statement impacts of using this practical expedient are not materially different from an individual contract approach. Subsequent changes to the estimate of the transaction price (determined on a portfolio basis when applicable) are generally recorded as adjustments to revenue in the period of the change.
Revenue is also generated from patient visits to its platforms or websites to have access to the Company's professional provider network of medical practitioners and to purchase product or services through the websites. Revenue is generated mainly on a per-telehealth visit basis. Revenue is recognized when the performance obligation is satisfied, which occurs when the patients have access to the medical practitioners via the Company's telehealth platform, as consultation services are provided, or when products are delivered. The Company also generates subscription revenue from
medical practitioners' access to the Company's telehealth platform to service their patients. Revenue is recognized over the period of time the medical practitioners have access to the platform.
Anesthesia service revenues are derived from anesthesia procedures performed under CRH professional services agreements. The fees for such services are billed either to a third-party payor, Medicare or Medicaid or other government insurers, or to the patient. The Company recognizes anesthesia service revenues, net of contractual adjustments, which are estimated based on the historical trend of cash collections and contractual adjustments. There is significant judgment involved in determining the estimated revenues that will be collected in the future due to the judgment required in estimating the amounts that third party payors will pay for services based on past collections. The transaction price is variable; variable consideration relates to contractual allowances, credit provisions and other discounts. IFRS 15 "Revenue from Contracts with Customers" requires management to estimate the transaction price, including any implicit concessions from the credit approval process. The Company adopted a portfolio approach to estimate variable consideration transaction price by payor type (patient, government and/or insurer) and the specifics of the services being provided. These portfolios share characteristics such that the results of applying a portfolio approach are not materially different than if the standard was applied to individual patient contracts. Revenue is recognized upon completion of the related services.
Recruiting revenue consists primarily of fees earned from the temporary and permanent placement of healthcare professionals. Revenue is recognized over time as control of these services is transferred to the customers and in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services. The Company recognizes the majority of its revenue at the contractual amount that the Company has the right to invoice for services completed to date based on hours worked. In providing services, the Company controls the selection of providers fulfilling temporary and permanent placements. Additionally, the Company bears the risk for any services not fully paid for by customers. As such, the Company has recognized revenue on a gross basis.
Ligator product sales revenue is recognized at the time the product is shipped, which is when title passes to the customer, and when all significant contractual obligations have been satisfied, collection is probable, and the amount of revenue can be estimated reliably. Product sales contracts generally contain a single distinct performance obligation, but multiple performance obligations may exist when multiple product types are ordered by a physician in a contract. The transaction price for product sales is fixed and no variable consideration exists. Contract consideration is allocated to each distinct performance obligation in the contract based upon available stand-alone selling prices obtained from historical sales transactions for each product. Shipping services performed after control has passed to the customer, if any, are separate performance obligations, but are determined to be nominal.
Executive health patient membership revenue from private and corporate clients is recognized rateably over the contractual term of membership.
SaaS and Technology Services revenue
SaaS and Technology services revenue is derived from the provision of (a) Electronic Medical Records ("EMR") services, (b) cybersecurity consulting services, hardware, and software licenses, (c) billing-as-a-service ("BaaS") revenue, and (d) Software-as-a-service ("SaaS") revenue.
EMR services revenue is revenue earned over a period of time and is generated by providing support, hosting, and related services to clinics across Canada that use the OSCAR, Juno, and Profile (Intrahealth) and Cerebrum (AwareMD) EMR systems. EMR services revenue is typically for terms ranging from monthly to annually and is prepaid by customers in advance of the Company rendering the service. The Company's EMR service arrangements are non-cancelable and do not contain refund-type provisions. The Company's performance obligations for digital services are satisfied as services are rendered over the term of the service arrangement. Cash is typically collected upfront prior to services being rendered.
Cybersecurity services revenue is generated primarily from:
consulting services which consist of assessing a customer's cybersecurity vulnerabilities. The Company recognizes revenue when the vulnerability report is delivered to the customer. Consulting services revenue also includes revenue from security support services, incident response services, and is generally recognized over the time period the services are delivered;
hardware sales which are recognized when control has passed to the customer, which is usually upon delivery of the product to the customer; and
software license sales and software support are assessed on a case-by-case basis to determine if the transaction contains a single or multiple performance obligations and if the Company is acting as the principal or as an agent. If the Company determines it is acting as the principal, the Company records revenue on a gross basis. If the Company determines it is acting as an agent, the Company records revenue on a net basis.
BaaS revenue is generated on a recurring basis, typically via a monthly subscription fee from providing outsourcing billing services to physicians. The Company recognizes revenue from the related services over the period during which the contract covers as this is consistent with the period during which the performance obligation is completed.
SaaS revenue is mainly derived from licenses to our EMR-integrated patient engagement tools and digital applications.
Research and Development
Research costs are expensed in the period incurred. Development costs are capitalized and recorded as an intangible asset when certain criteria are met, most notably when the intangible asset is identifiable and controlled by the Company, technical feasibility of completing the asset has been established, and it is considered probable that the Company will generate future economic benefits from the asset created upon completion of development. The costs capitalized include directly attributable salaries and benefits, consulting costs and overhead expenditures. All other development costs are expensed in the period incurred.
Government Assistance and Investment Tax Credits
Government assistance includes government grants and investment tax credits and is recognized when there is reasonable assurance that the Company will comply with the relevant conditions and that the government assistance will be received. Government assistance that meets the recognition criteria and
that relates to current expenses is recorded as a reduction of the related expenses in general and administration expenses. Government assistance that meets the recognition criteria and that relates to the acquisition of an asset is recorded as a reduction of the cost of the related asset.
Provisions and contingent liabilities
Provisions are recognized when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and the amount can be reliably estimated. Provisions are measured at the best estimate of the present value of the expenditures expected to be required to settle the obligation. Where the effect of discounting is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability.
Contingent liabilities are liabilities of uncertain timing or amount and are not recognized until the Company has a present obligation as a result of a past event, it is probable that the Company will experience an outflow of resources embodying economic benefits to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The Company discloses contingent liabilities unless the possibility of an outflow of resources in settlement is remote.
Income taxes
Income tax is comprised of current and deferred tax. Income tax is recognized in the audited annual consolidated statement of income and comprehensive income except to the extent that it relates to items recognized directly in other comprehensive income or directly in equity.
Current tax is the expected tax payable or receivable on the taxable income or loss for the period, using tax rates enacted or substantively enacted, at the end of the reporting period, and any adjustment to tax payable in respect of previous years.
Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously.
In general, deferred tax is recognized in respect of deferred tax consequences attributable to unused tax loss carry-forwards, unused tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be utilized. However, the following temporary differences do not result in deferred tax assets or liabilities:
the initial recognition of assets or liabilities, not arising in a business combination, that do not affect accounting or taxable profit;
goodwill; and
investments in subsidiaries, branches and associates, and interests in joint arrangements where the timing of reversal of the temporary differences can be controlled and reversal in the foreseeable future is not probable.
Deferred income tax assets and liabilities are presented as non-current and are determined on a undiscounted basis.
Share capital
Common shares are classified as equity. Costs directly attributable to the issuance of shares are recognized as a deduction from equity. Share issuance costs consist of legal and other costs relating to raising capital. Share capital issued for non-monetary consideration is recorded at an amount based on the fair value of the services provided.
Earnings per share
Basic earnings per share is computed by dividing the net income available to common shareholders by the weighted average number of common shares issued and outstanding during the period. Diluted earnings per share is computed by adjusting basic earnings per share for the effects of all potentially dilutive stock options, warrants and similar instruments. The Company uses the treasury stock method to compute the dilutive effect of stock options, warrants, and similar instruments unless they are anti-dilutive. Under this method, the dilutive effect on earnings per share is recognized on the use of the proceeds that could be obtained upon exercise of stock options, warrants, and similar instruments. It assumes that the proceeds would be used to purchase common shares at the average market price during the period.
Property and equipment
Property and equipment are measured at cost, less accumulated depreciation and impairment losses. Cost includes any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Depreciation expense is calculated using the straight-line method to allocate the cost of the assets net of residual values over their estimated useful lives as follows:
Computer equipment 3 years
Furniture and fixtures 5 years
Medical equipment 5 - 15 years
Right-of-use assets Term of the right of use plus renewal options
Leasehold improvements Term of lease plus renewal options, or 20 years
Intangible assets
The Company's intangible assets arise from business combinations and asset acquisitions and consist of customer relationships (including professional services agreements), brands, technology, licenses, and goodwill. Intangible assets with finite lives are amortized on a straight-line basis over their estimated useful lives and are measured at cost less accumulated amortization and accumulated impairment losses.
Intangible assets other than goodwill are amortized over the following periods:
Customer relationships 10 - 15 years
Brands 10 years
Technology 5 - 13 years
Licenses Indefinite
Goodwill is measured at cost less accumulated impairment losses.
Goodwill and intangible assets with indefinite lives are tested for impairment at least annually. Goodwill, intangible assets with indefinite or finite lives, property and equipment are also tested for impairment whenever events or changes in circumstances indicate that the asset's carrying amount may be less than its recoverable amount.
For impairment testing, non-financial assets that do not generate independent cash flows are grouped together into cash-generating units (CGUs), which represent the level at which largely independent cash flows are generated. Goodwill is allocated to CGUs or groups of CGUs based on the level at which it is monitored for internal reporting purposes.
An impairment loss is recognized in earnings to the extent that the carrying value of an asset, CGU or group of CGUs exceeds its estimated recoverable amount. The recoverable amount of an asset, CGU or group of CGUs is the greater of its value in use and its fair value less cost to sell. Value in use is calculated as the present value of the estimated future cash flows discounted at appropriate discount rates.
An impairment loss relating to a specific asset reduces the carrying value of the asset. An impairment loss relating to a CGU or group of CGUs first reduces the carrying value of the goodwill allocated to the CGU or group of CGUs, then reduces the carrying value of the other assets of the CGU or group of CGUs on a pro-rata basis. An impairment loss in respect of goodwill is not reversed. A previously recognized impairment loss relating to other non-financial assets is assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss related to nonfinancial assets other than goodwill is reversed if there is a subsequent increase in recoverable amount, but only to the extent of the carrying value that would have been determined, net of depreciation or amortization, if no impairment had been recognized.
Leases
At the inception of a lease contract, the Company assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys that right of control of the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether: (i) the contract involves the use of an identified asset; (ii) the Company has the right to obtain substantially all of the economic benefits from the use of the asset throughout the period, and; (iii) the Company has the right to direct the use of the asset.
Leases - the Company as a lessee
The Company recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.
The Company presents right-of-use assets in property and equipment. The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term plus expected renewal options which are available to the Company. The estimated useful lives of right-of-use assets are determined on the same basis as those of property and equipment. In addition, the right-of-use asset is reduced by impairment losses, if any identified, and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company's incremental borrowing rate. Generally, the Company uses its incremental borrowing rate as the discount rate for leases.
Lease payments included in the measurement of the lease liability are comprised of: (i) fixed payments;
(ii) variable lease payments that depend on an index rate, initially measured using the index as at the commencement date; (iii) amounts expected to be payable under a residual value guarantee; (iv) the exercise price under purchase option that the Company is reasonably certain to exercise; (v) lease payments in an optional renewal period if the Company is reasonably certain to exercise an extension option, and (vi) penalties for early termination of a lease unless the Company is reasonably certain not to terminate early.
The lease liability is measured at amortized cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Company's estimate of the amount expected to be payable under a residual value guarantee, or if the Company changes its assessment of whether it will exercise a purchase, extension or termination option. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero. The Company elects, as a practical expedient, not to separate out non-lease components from lease components of a lease, and account for them as a single lease component.
The Company recognizes a depreciation charge for right-of-use assets and interest expense on lease liabilities in the consolidated statement of income.
On the audited annual consolidated statement of cash flows, the Company includes repayments of the principal portion of the lease liabilities under financing activities. Lease payments for short-term leases, lease payment for leases of low-value assets that are not included in the measurement of the lease liability are classified as cash flows from operating activities.
Subleases - the Company as a lessor
In classifying a sublease, the Company classifies the sublease as a finance lease, or an operating lease as follows:
If the head lease is a short-term lease, the sublease is classified as an operating lease.
Otherwise, the sublease shall be classified by reference to the right-of-use asset arising from the head lease, rather than by reference to the underlying asset.
Adoption of accounting standards
On January 1, 2024, the Company retrospectively adopted "Classification of Liabilities as Current or Non-Current (Amendments to IAS 1)" and "Non-current Liabilities with Covenants (Amendments to IAS 1)". The amendments clarify the requirements for classifying liabilities as current or non-current, specifically to introduce certain requirements related to the determination of the existence of a right at the end of a reporting period to defer settlement of a liability for at least twelve months after the reporting period. The amendments also specify that if a right to defer settlement of a liability for at least twelve months is subject to an entity complying with covenants after the reporting period, then those covenants would not affect the classification of the liability as current or non-current at the reporting date. The amendments also require entities to provide additional disclosures for liabilities classified as non-current and subject to covenants within twelve months of the reporting date. The adoption of the amendments resulted in the Company reclassifying revolving loans subject to covenants under its syndicated credit facility with the Royal Bank of Canada (net of deferred financing costs) of $36,994 as of December 31, 2023 and $27,679 as of January 1, 2023 from current liabilities to non-current liabilities on its consolidated statements of financial position (Note 18(a)).
The IASB issued the following new accounting standards or amendments that will become effective on future dates.
IFRS 9 and IFRS 7 Amendments
On May 30, 2024, the IASB issued amendments to IFRS 9, "Financial Instruments" and IFRS 7, "Financial Instruments: Disclosures". The amendments clarify the timing of recognition and derecognition for a financial asset or financial liability, including clarifying that a financial liability is derecognized on the settlement date. In addition to these clarifications, the amendments introduce an accounting policy choice to derecognize financial liabilities settled using an electronic payment system before the settlement date, if specific conditions are met. Also included in the amendments, are clarifications regarding the classification of financial assets, including those with features linked to environmental, social and corporate governance. Under the amendments, additional disclosures are required for financial instruments with contingent features and investments in equity instruments classified at fair value through other comprehensive income. These amendments are effective for annual reporting periods beginning on or after January 1, 2026. Early adoption is permitted, with an option to early adopt only the amendments to the classification of financial assets. The Company is assessing the impacts of the IFRS 9 and IFRS 7 amendments on its audited annual consolidated financial statements.
IFRS 18
On April 9, 2024, the IASB issued IFRS 18 "Presentation and Disclosures in Financial Statements". The objective of the new standard is to set out requirements for the presentation and disclosure of information in general purpose financial statements to help ensure they provide relevant information that faithfully represents an entity's assets, liabilities, equity, income and expenses. The new standard is effective for reporting periods beginning on or after January 1, 2027. The Company is assessing the impacts of IFRS 18 on its audited annual consolidated financial statements.
The Company makes estimates and assumptions and applies judgments in the application of its accounting policies when preparing the consolidated financial statements. The resulting accounting estimates will, by definition, rarely equal the related actual results. The accounting policies subject to judgments and estimation uncertainty that the Company believes have a significant risk of causing a material adjustment to the carrying values of assets and liabilities within the next financial year are summarized as follows:
Revenue recognition
Estimates are required in the determination of the timing and amount of anesthesia service revenues and certain patient services revenues and the recoverability of the related accounts receivable. The Company recognizes anesthesia service revenues and certain patient services revenues net of contractual adjustments and implicit price concessions, which are estimated based on the historical trend of cash collections and contractual adjustments. For certain patient services relating to the Company's subsidiary Circle Medical, management used an expert to assist with the significant judgement that is required in determining the Company's right to payment under those contracts with payors.
Impairment testing of goodwill and other intangible assets
The Company tests at least annually whether goodwill and indefinite lived intangibles have suffered any impairment, in accordance with the requirements of IAS 36, "Impairment of Assets". The recoverable amounts of cash-generating units (CGUs) or groups of CGUs are determined based on the greater of their fair value less costs of disposal and value in use. These calculations, which include a discounted cash flow model, require the use of estimates.
For the purposes of impairment testing, assets are grouped into CGUs that have been identified as being the smallest identifiable group of assets that generate cash inflows that are independent of cash inflows of other assets or groups of assets. The determination of these CGUs and the allocation of goodwill to CGUs or groups of CGUs is based on management's judgment with regards to organizational structure, shared resources and infrastructure, geographical proximity, product type and other relevant factors.
Value in use calculations require management to make certain assumptions, including significant estimates about forecasted revenue levels and growth rates, operating margins, and discount rates. In arriving at its forecasts, the Company considered historical performance, current industry trends, and market opportunities.
Investment in subsidiaries and associates
When accounting for its investments in other entities, the Company must determine which entities it controls and over which entities it has significant influence. Control over a subsidiary exists when the Company is exposed to and has the rights to variable returns of the subsidiary and has the ability to affect those returns through its power over the entity. Significant influence exists when the Company has the power to participate in the financial and operating policy decisions of an entity but does not control or jointly control those policies. The Company applies considerable judgment when evaluating the relevant interests, rights, relationships, and other relevant factors to determine whether it controls another entity or has significant influence over another entity. Such judgments include determining what constitutes the relevant activities of an entity and how they are directed, determining whether potential voting rights are substantive rights, and assessing the impact of any financial or operational dependencies, shared or common key management personnel or any special relationships that suggest that the Company may have more than a passive interest in the other entity.
Business combinations
On the completion of business acquisitions, management's judgment is required to estimate the fair value of purchase consideration and to identify and estimate the fair values of assets, liabilities, and non-controlling interests. The determination of the fair value of assets and liabilities acquired is based on management's estimates using the excess earnings method and relief from royalty method to value intangible assets using discounted cash flow models. Significant assumptions include revenue growth rates, customer attrition and discount rates.
Recognition of contingent consideration
In certain acquisitions, the purchase consideration transferred by the Company may include contingent consideration which is subject to the acquired business achieving certain performance targets. At the date of acquisition and at each subsequent reporting period, the Company estimates the future performance of acquired businesses, which are subject to contingent consideration, in order to assess the probability that the acquired business will achieve its performance targets and thus earn its contingent consideration. Any change in the fair value of the contingent consideration classified as either a deferred acquisition cost liability at the date of acquisition or as a time-based earnout recognized as expense over time during the post-acquisition requisite service period is included in net income or loss in the period that the change is determined. Changes in fair value arise as a result of various factors, including the estimated probability of the acquired business achieving its earnings targets.
Initial recognition of right-of-use assets, lease receivable and liability
The preparation of audited annual consolidated financial statements requires that the Company's management makes assumptions and estimates on the classification of leases and the right-of-use assets. When assessing the classification of a lease agreement, certain estimates and assumptions need to be made and applied, which include, but are not limited to, the determination of the expected lease term and minimum lease payments, implicit borrowing rate, the assessment of the likelihood of exercising renewal options, annual inflation factor and estimation of the fair value of the lease property at lease commencement.
Disclaimer
WELL Health Technologies Corp. published this content on May 03, 2025, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on May 04, 2025 at 00:54 UTC.