Healwell AI completes Polyclinic divestment to Well

Executive Summary

• Healwell AI Inc. completed a series of strategic transactions with related parties (Well Health Technologies Corp. and subsidiaries) to divest non-core assets and reposition itself as a pure-play digital SaaS, services, and AI business.
• The transactions include the sale of its Polyclinic family medicine group, the sale of its interest in Mutuo Health Solutions, and the formation of a 50/50 clinical research joint venture.
• Healwell expects to receive approximately $9.4 million in cash upon closing, strengthening its balance sheet, while achieving a revenue run rate of approximately $120 million annually, profitable on an adjusted EBITDA basis.

Key Details

• Polyclinic Divestment:
  • Sold the Polyclinic family medicine and specialty group (comprising two clinics and ~40 physicians) to Well Health Clinic Network.
  • Purchase Price: $1.2 million in cash at closing.
  • Earnout: Up to $1.2 million expected to be paid in the first half of 2026.
• Mutuo Health Solutions Divestment:
  • Sold 58.66% interest in Mutuo Health Solutions to Wellstar Technologies.
  • Purchase Price: $8,212,400 in cash (subject to debt and working capital adjustments).
  • Holdback: $615,930 held for four months to cover working capital adjustments and indemnity claims.
  • Assigned Rights: Healwell assigned rights under the unanimous shareholder agreement, warrants to acquire additional shares, and the strategic alliance agreement (including profit-sharing) to Wellstar.
• Clinical Research Joint Venture:
  • Formed a 50/50 limited partnership joint venture with Well Health Technologies.
  • Assets Contributed: Bio Pharma Services Inc. and Canadian Phase Onward Inc. (no longer consolidated under Healwell).
  • Healwell Contribution: Bio Pharma Services and Canadian Phase Onward, receiving 3 million Class A LP units valued at $3 million.
  • Well Contribution: $3 million capital commitment, receiving 3 million Class B LP units.
  • Initial Capital Call: $500,000 made at closing; further calls based on cash needs.
• Financial Impact & Strategy:
  • Total Cash Proceeds: Approximately $9.4 million added to the balance sheet upon closing.
  • Strategic Shift: Transition to a pure-play digital SaaS, services, and AI business focused on large enterprise customers globally.
  • Financial Status: Revenue run rate of approximately $120 million annually; profitable on an adjusted EBITDA basis.
• Governance & Approvals:
  • Transactions were non-arm's-length; a special committee of three independent directors was formed to assess fairness.
  • Fairness Opinion: Received from Doane Grant Thornton LLP, concluding transactions were fair to shareholders.
  • Approvals: Approved by the Board on Oct. 31, 2025; received conditional approval from the Toronto Stock Exchange (TSX).
  • Exemption: Exempt from formal valuation and minority shareholder approval requirements under MI 61-101 as aggregate fair-market value did not exceed 25% of market capitalization.

Notable Quotes

• James Lee, CEO: "These transactions accelerate our evolution into becoming a pure play, high-margin AI and SaaS software and services business focused on large enterprise customers globally. Our strategy is clear: Healwell is a preventative health care AI company that leverages advanced technology to connect and surface complex health care data, providing clinically validated tools that enhance both efficiency and accuracy."
• Sacha Gera, COO: "These transactions will allow us to place greater focus on integrating our industry-leading and third-party-validated AI solutions with our health care software segment and obtain important synergies that will result in margin expansion and organic growth. Across all collaborations, we remain vendor-agnostic and committed to open standards, interoperability and data portability to preserve customer choice and support a competitive ecosystem."