Good morning and thank you for joining Healwell AI's second quarter 2025 financial results conference call. All participants are in a listen-only mode, and the call is being recorded. After the presentation, there will be an opportunity for analysts to ask questions. To join the question queue, you may press * then 1 on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing * then zero. I will now turn the call over to Hefton Seni, Investor Relations at Healwell. Please go ahead.
Thank you operator. Joining me on the call today are James Lee, CEO of Healwell AI, Dr. Alexander Dobranowski, President of Healwell , and Anthony Lam, Healwell CFO. I trust that everyone has received a copy of our financial results press release that was issued earlier today. Listeners are also encouraged to download a copy of our quarterly financial statements and management discussion and analysis once filed on SEDAR Plus. Please note portions of today's call, other than historical performance, include statements of forward-looking information within the meaning of applicable securities laws. These statements are made under the safe harbor provisions of those laws. Please refer to today's press release and our management discussion and analysis for more details on the company's risk and forward-looking statements. We provide forward-looking statements solely for the purpose of providing information about management's current expectations and plans relating to the future.
We do not undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in our expectations or any change in events, conditions, assumptions, or circumstances on which any such statement is based, except if it is required by law. We use terms such as gross margin and adjusted EBITDA on this call, which are non-IFRS and non-GAAP measures. For more information on how we define these terms, please refer to the definitions set out in our management discussion and analysis. There will be a question and answer session at the end of the call, which will be limited to analysts only. To ask a question, analysts are required to call in to the conference call using the dial-in number provided in our press release. With that, let me turn over the call to James Lee, CEO.
Thank you Hefton . Good day to everyone. I really appreciate you all joining us for our second quarter conference call. On today's call, I'm going to focus on three key topics. Firstly, Q2, obviously the growth momentum and EBITDA profitability. Secondly, as you would have seen, Healwell intends to transition to be a pure play AI software and services business. Finally, I'll touch on our growth, integration, and future global expansion. To begin with, let's start with Q2. Q2 was a breakout quarter for Healwell . We achieved the highest ever quarterly revenue of $40.5 million, reflecting an impressive 645% year-on-year increase. More importantly, we achieved an adjusted EBITDA of $1.9 million, making our first profitable EBITDA quarter since the company was launched in 2023.
This is not just a financial achievement, it signifies a key milestone in our journey to becoming a world-leading AI and data science and healthcare software platform. This quarter, we've seen firsthand the power of our strategy. We've scaled efficiently, we've levered our AI and data science strengths, and we've delivered more importantly, lasting real value to the healthcare system. Our strategy is working, and we're seeing continued momentum across our key business lines. Q2 marked an inflection point for Healwell , both in terms of financial results, but equally the operational rigor and discipline behind them. The standout driver for the quarter was the successful completion of the Orion Health acquisition on April 1. This acquisition had an immediate and material impact for us. It has contributed meaningfully to the top line. Orion Health itself fueled 1,064% growth in our Healwell healthcare software segment.
It is a genuine validation of the strategy we've got to acquire high-quality and accretive value-adding acquisitions. Our growth extends well beyond Orio n. Our core AI business, as you've seen previously, has delivered strong results, reflecting an increase in both the clinical validation and enterprise-grade AI software that we have in the healthcare segment. In the first half of 2025, our AI segment generated over $5 million in revenue. Beyond the numbers, Q2 reflects a fundamental shift in how we're rebuilding Healwell AI. We're actively reshaping the structure of the company, streamlining our focus, realigning around our core strengths, and laying the foundation for long-term international scale and profitability. This transformation is not just strategic, it's structural. We're evolving how we organize, operate, and report in our business to better reflect our focus on AI and healthcare software.
As you'd have seen today, the second topic I want to cover is the reshaping of our identity to a pure-play AI and software company. As we grow, we're aligning down those two key divisions. This strategic realignment is about focus, ensuring every part of the company is contributing to our long-term vision of becoming a pure-play AI and software business. To that end, the Board of Directors has decided to seek strategic alternatives for the company's clinical and patient service business units, with the goal to become a pure-play software business. Recently, the company has signed a number of non-binding LOIs to investigate this effort. Our strategy is clear. We're a preventative healthcare AI company that uses technology to connect and surface complex healthcare data. We provide clinically validated tools to analyze that data to both enhance the efficiency and accuracy of it.
We're embedded in over 70 healthcare systems globally, and we focus on deepening our relationships with those existing customers and also expanding the number of healthcare systems we serve. Finally, I want to talk briefly about our strategy to grow and integrate. We've evolved significantly in the past year, and with our foundation now firmly set, we're entering a new phase of business. Our goal is to be a high-margin software and services company anchored in data science and AI, and continue to extend our reach into the world's largest healthcare systems. To support that vision, we're actively building what we believe will not just be Canada's largest and most important healthcare focused AI platform, but one that is globally relevant. By embedding advanced AI directly into clinical applications, we're creating a unified end-to-end solution that sets us apart.
There are very few companies globally that bring both the data science knowledge and healthcare expertise that we can to a single platform. The acquisition of Orion Health has accelerated this. We're moving quickly to integrate the platforms, and so far, the results have exceeded expectations. Orion brings decades of experience in one of the world's most advanced healthcare data infrastructure, along with a global footprint of 70 enterprise customers across 11 countries. Today is a pivotal step in Healwell AI's evolution. We're moving from a collection of strong individual platforms to a unified AI-powered healthcare solution. Today is only the beginning. With that, I'd like to hand over the call to our CFO, Anthony Lam, to walk through Q2 results. Over to you, Anthony.
Thank you James. Before I begin, I'd like to remind everyone that all of the figures I'll be discussing today are in Canadian dollars, and our financial statements are presented in accordance with IFRS, International Financial Reporting Standards. Our second quarter 2025 results are as follows. Healwell achieved quarterly revenues of $40.5 million during Q2 2025, compared to revenue of $5.4 million generated in Q2 of 2024. This is an increase of 645%. Revenue growth in the quarter was primarily driven by the Orion Health acquisition, resulting in a 1,064% year-over-year increase in the company's healthcare software business compared to the prior year. Healwell achieved gross profit of $21.2 million in Q2 2025. This is an increase of 764% compared to $2.5 million during Q2 of 2024.
The increase is due to the acquisitions of Verisource, Mutuo, and Orion , and strong performance in the Khure Health business. Healwell gross margin percentage in Q2 2025 was 52.5%. This compares to 45.2% in Q2 2024. The increase in gross margin percentage is due to the addition of higher margin healthcare software revenue from the Orion Health acquisition. During Q2 2025, Healwell reported positive adjusted EBITDA of $1.9 million, and this compares to adjusted EBITDA loss of $3.7 million in Q2 2024. This marks the company's first quarter of positive adjusted EBITDA, reflecting strong operating leverage and business momentum. This turn around represents a year-over-year improvement of approximately 152% in adjusted EBITDA performance. Healwell also reported $6 million in net loss in Q2 2025, and this compares to a $2.5 million loss in Q2 2024.
Healwell ended the quarter on June 30, 2025, with $19 million in cash, an increase as compared to $9.4 million at the end of Q4 2024. Today, Healwell AI generates revenue across three core segments: one, AI and data science; two, healthcare software; and three, clinical research and patient services. Our AI and data science segment achieved revenue of $2.7 million in Q2 2025, marking an impressive 221% year-over-year growth compared to Q2 2024. This growth was driven by healthy organic growth and the Mutuo acquisition. During Q2, we also had one large AI-related project that bolstered revenues in the quarter, which is not expected to repeat in Q3. The second revenue stream is healthcare software, which generated $30.4 million in revenue for Q2 2025. This is an increase of 1,062% from $2.6 million in the same period last year.
Growth was primarily driven by the acquisition of Orion Health. The third revenue segment of clinical research and patient services generated $7.2 million in revenue, reflecting a 231% increase compared to Q2 2024, driven by our acquisition of BioPharma. With our clinical and patient services segment, we continue to transition BioPharma from preclinical to early-stage and later-stage clinical trials. This transformation is expected to enhance profitability and align the business with higher margin opportunities. However, BioPharma is expected to experience a decline in revenue in the near term through this transition period. Looking forward, the strategic review of polyclinic and BioPharma businesses, this may result in Healwell reducing its reporting segments from three down to two core segments: AI, and healthcare software. With that, I'd like to turn the call over to our President, Dr. Alexander Dobranowski, to walk you through our integration, outlook, and goals for 2024.
Thank you Anthony, very much. and thank you James, and good day everyone. I'd like to begin by discussing the exciting progress we've made with integration and our growth strategy. The integration of Orion Health into our business has been a transformative milestone for Healwell in Q2, enabling us to innovate at this intersection of data interoperability and artificial intelligence. Since the acquisition, we've made significant progress in merging our teams, technologies, and platforms, creating powerful synergies across our healthcare software and AI business units. This methodical integration has already delivered financial contributions, particularly within our healthcare software segment. Looking ahead, as we transition away from clinical and patient services, we expect AI and healthcare software to represent 100% of our total revenue, positioning Healwell as a global leader in healthcare AI.
With Orion's extensive worldwide reach and robust data infrastructure, we are well positioned to expand our AI capabilities and accelerate growth in both existing and new markets. Our current operations strategy is focused on six key areas. One, cost optimization. Earlier this year, we announced a cost optimization program, which has already benefited the company in aligning its operations to this new strategic direction, even prior to the closing of the Orion Health acquisition. The company has now entered a post-closing phase of this cost optimization initiative, in which we are identifying and actioning additional synergies. Two, shared services infrastructure. We have now established a unified corporate-level framework for HR finance, marketing, legal, IT, and cyber, enabling these resources to be leveraged across our entire group of businesses for greater efficiency. Three, consolidation of our healthcare software segment.
We are bringing together Orion Health, Verisource, and Intra-Health into one cohesive healthcare software segment. Orion and Verisource are particularly complementary, creating a stronger platform for innovation and delivery of healthcare data infrastructure capabilities to clients around the globe. Four, tighter integration of AI assets. As you would have seen, subsequent to quarter end, Healwell acquired the remaining portion of Pentavere that it did not previously own, and now with full 100% ownership of Pentavere, we are enhancing our ability to leverage its globally validated capabilities alongside Khure Health to deliver advanced AI-powered solutions that identify at-risk patients and gaps in care delivery, accelerating clinical research and real-world evidence generation. Five, embedding AI into Orion’s global platform, and this is part of the industrial logic of the acquisition of Orion Health.
We are integrating Healwell AI technologies such as clinical search, patient data summarization, patient risk stratification, and real-world evidence generation directly into Orion’s software suite. This allows us to deliver end-to-end AI-powered solutions without requiring customers to replace their existing systems, ensuring adoption at scale. We believe this is a globally unique and competitive advantage of our offering. Beta proof of concepts for AI-enabled clinical search and summarization are currently underway, showcasing the value of our integrated solutions in active customer settings. Leveraging Orion Health’s presence in 11 countries and its established healthcare infrastructure, we are accelerating our global expansion and positioning Healwell to deliver scalable AI-powered healthcare solutions worldwide. We are already seeing strong early demand for our integrated solutions, particularly in the U.S market. To address the unique needs of the U.S.
healthcare system, part of a digital health market projected to reach $695 billion in 2033, we have introduced modular AI tools that support value-based care, population health management, and operational efficiency. As these integrations mature, we expect to unlock meaningful recurring revenue streams across both our AI and healthcare software segments. This combination of advanced AI technologies, a unified software platform, and global market reach provides a strong foundation for sustained profitable growth. I'll now talk about our positive outlook and goals for the remainder of 2025. Looking ahead, and as James has already shared, our goals are clear and aligned with the broader vision of becoming a high-margin AI and SaaS software leader in healthcare. Our revenue and profitability saw substantial growth, reflecting the effectiveness of our strategy and the progress we've made across all business units.
With the support of our cost optimization initiatives and the positive financial contributions from Orion , we are still firmly on track to be adjusted EBITDA positive for the full year in 2025. For our segmented performance, we remain on track to achieve our stated goal of 100% year-over-year revenue growth in our AI and data science segment compared to last year. Our healthcare software segment can experience variability due to fluctuations in professional services revenue. In Q2, professional services revenue was exceptionally strong, driven by certain one-time projects that are expected to be lower in Q3. For the remainder of 2025, we are focused on achieving the following goals: further integration of our core businesses across both the AI and healthcare software business segments, and we're continuing to harmonize our platforms, cross-leverage data, and ensure that our teams work seamlessly together across the globe.
By the end of the year, we expect to see full synergy. Executing on strategic M&A. Our acquisition pipeline includes both AI and healthcare software opportunities, and we are currently in deep discussions with two potential acquisition targets with one executed non-binding LOI. Increasing organic growth. We are ramping up our organic growth efforts by accelerating the adoption of Healwell AI's solutions. Not just with our life sciences partners, but across the entire healthcare ecosystem. We are looking at cross-sell and upsell opportunities between our healthcare software segment and our AI and data science segment. This is core to our strategy. We are already bidding on contracts that combine elements of our healthcare software and AI offerings. Expansion within the WELL Health ecosystem. Our important strategic partnership with WELL Health has proven to be an exceptionally powerful catalyst for growth.
We're working closely with WELL to deepen our integration across their network of clinics and healthcare providers, capitalizing on the Canadian market and global reach. We're leveraging our strong foundation in Canada. We will continue to develop the Buy Canadian initiative, focused on opportunities within the Canadian healthcare market while expanding globally. With WELL Health's support, we're well positioned to drive adoption of our AI solutions and software not only in Canada, but in international markets, particularly in the U.S., Europe, and the Middle East. These goals will guide our efforts as we enter the second half of 2025 with a focus on sustainable, profitable growth. We are confident that we are building something truly transformative here at Healwell . We've made remarkable progress in a short period, and the opportunities ahead of us are immense.
In closing, I want to reiterate that Healwell AI is a healthcare artificial intelligence company that has proven results and is a leading example of AI being used in production at scale globally. Going forward, Healwell plans to transition into a pure-play SaaS software and services company with a focus on AI and data science. Over the past 22 months, Healwell AI has witnessed tremendous growth as we've grown from a company that was doing $7 million in annual revenue, losing money, to achieving now approximately $160 million annualized revenue run rate in the second quarter and an EBITDA positive business. M&A will continue to play a significant role at Healwell AI going forward with a focus on AI and healthcare software-related tech and opportunities. We believe that we have now the necessary building blocks in place.
The time is now to plant our flag as a leader in healthcare AI, not just in Canada, but from a global perspective. Finally, I'd like to thank the entire team at Healwell AI, particularly also our executive team whose hard work continues to elevate the company to higher levels. I'd like to thank all our investment banking partners, the capital markets community. I would like to thank our Chairman, Hamid Shabazi, and the leadership team at WELL Health. Plus, I'd like to thank our board of directors, and I'd like to thank you all for joining us on this call today. James, Anthony, and I look forward to providing an exciting update next quarter. Now I'll hand it back to the operator.
Thank you. We will now begin the analyst question and answer session. To join the question queue, you may press * then 1 on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press * then 2. And your first question today will come from Daniel Rosenberg with Paradigm Capital. Please go ahead.
Hi, good afternoon. Thanks for taking my question. Congrats on the strong quarter and the acquisition. I guess my first one is around the integration of the acquisition and your go-to-market. I was wondering, now that you're further consolidating your teams, how does that go to market look like, whether you're bidding for RFPs or do you have a direct sales team? Are you looking for pilots? Any color there would be appreciated.
Thanks Daniel, it's James. I guess the answer is a bit of everything. We've got in-motion pilots already in new markets. We've got proof of concepts in markets, and we're responding to many RFPs as a combined unit. What we're finding is that the teams are working really well, and we're seeing opportunities across each of our business lines to combine in RFP responses given the increased capability we have across the group. We're seeing that across each part of our both software and AI businesses.
Good to hear. Thanks for that color. I was also curious around, you spoke about new market. Any specific geographies of interest? I think you highlighted the U.S. as a large opportunity for you. The world's a big place, but just trying to figure out where you're targeting in on.
That's a really good question. I think what we're seeing right now is that AI adoption in the U.S. is picking up pace. As you say, it's a very big market. We've already got pilots working in the U.S., which is exciting. One of the markets that we're seeing opportunity in is the NHS in England, which just announced their new 10-year plan to digitize first their entire healthcare system. W e are only into the early months of that 10-year plan, what it means for us is there's a real opportunity for us to spend a lot of time in that market. It's a very big market. It's 50% bigger than Canada, and it's a lot more complex, which works for us given that we cover a big portion of it currently. As opposed to new markets, we'll be very careful into new environments.
What we're seeing is that there's plenty of opportunity both in the Middle East, Southeast Asia, and in Europe. But what we're trying to do currently is focus on our key markets we have in front of us today to ensure we're delivering for our shareholders first.
Would it be possible to dig a bit deeper on those U.S. modular opportunities? Like any specific areas of healthcare where you're thinking you could apply your technologies into new growth avenues?
Yeah look. Probably all of our products have fit in the U.S. market. We're seeing opportunities with a FHIR-based repository in the U.S. We've got both within our smart identify and our smart search capabilities in the U.S. and through to abstraction layers. The reality is all of our products have fit. I think the focus on value-based care, works in our favor in the short to medium term. The ACO market is a clear opportunity for us as well.
Last for me, just a financial one. You set out some goals for your annual targets. I was wondering on the balance sheet how we could think about if you had any targets in terms of ratios, debt levels, et cetera, that you could share with us, and I'll pass along?
I guess the answer Daniel there, is given the process we're going through with our clinical business right now. We're reviewing all those, what our needs would be without their clinical businesses. We'll have to come back at a later date on that. We've only had those for a few weeks.
Okay, fair enough. Thanks for taking my questions. I'll pass along.
Your next question today will come from Kevin Krishnaratne with Scotiabank. Please go ahead.
Hey there. Good afternoon. Congrats on a nice quarter here. First, I just had a quick clarification. I think you mentioned that your healthcare software business benefited from variability in pro-services. Can you remind us how much of the healthcare software line is PS and what drove that one-time benefit? Is that for a future project and do we see a ramp-up in related software revenue in coming quarters? Does any sort of color there you can talk about on the PS line.
Sure. Look, I think professional services as a broad is sort of a 20%, 24 % range of software revenue across the business. The variability really Kevin, is not so much the amount of work, but actually the delivery cycle. Orion is a really lumpy business. When you hit milestones, you get to recognize the revenue. What we'll see is we'll see some volatility quarter by quarter as to when certain milestones are hit. Whether they're hit at the end of a quarter or the start of the next one is when we get to recognize the revenue while the workload is even across the year. Does that make sense?
It does. Just to help us understand the profile of this quarter, you did talk there are some one-time projects. Any way to quantify that for the quarter?
I think the reality is that what works about this quarter specifically, but they're in the single million dollar movements between quarter by quarter. They're not tens of millions of dollars to give you context.
Got it. Now that's helpful because the next question I had is just, you know, I understand that, you know the way you're running your business is you've got your healthcare software business, the HIE business, and you'll be cross-selling AI and data products that you'll book in your AI and data bucket. But if I just turn back to thinking about the healthcare software business and sort of organic growth over the next coming, you know, quarter years. What's like a good level? What do you think, you know, you talked about your near-term targets for the year. Can you just remind us again what you've kind of got contemplated for the organic growth and sort of how that is, you know, what's the algorithm for that growth? Pricing, new logos, expansion, just any color there on the organic growth for the healthcare software?
Yeah, look Kevin, as we're putting the business together, you'll need to give us a bit of time to come out with a cleaner number on that. But what I'll tell you is about the drivers of that growth. There are three key drivers. Obviously, new logos. We're seeing a clear desire to increase the number of logos we have across the platform. The second is the number of applications we have per logo. The third is the size of each of those contracts per application. As we think about the key drivers of the business, we see three key factors. Are we growing the number of logos? Are we growing the number of deployments per logo? Are we growing the value of those deployments? But as we start integrating those business lines, they're all going to have different measures.
So we want to come back with a really clear sense to give people what the business should look like longer forward and how you should think about modeling it going forward.
That's super helpful, James. Maybe just the last one, then. You did talk about a couple of things. You're responding to RFPs now with your good and combined go-to-market team. You talked about, you know, some of the products you have, you believe are unique in market. When you think about, you know, those RFPs and the value prop that you're, you know, that you're showing on these RFPs, is that for new logos or are these sort of hospital networks in various states and provinces that are kind of up for renewal with their existing provider and they're looking to switch and you're running into an RFP there? Can you just talk about, you know, what you're seeing out there and what these bids really, you know, what you're actually bidding on? Just, and again, you talked about the uniqueness of your products.
I'm just really curious to think about how you are, how well you are positioned against the other competing products out there.
Yeah, look again. Excellent question and a really complex answer. I'll try to be simple. What we've seen is each, you say yes to all is the real answer. What we've seen is our existing customers, now that they're asking to see what our AI capabilities are, have asked us for RFPs on certain products. That works both across our AI topics, but also going into things like patient identification, which are used in population health management. The scale of those opportunities is enormous. The reality is that as you get close to value-based care, the value of those contracts can be material. We're also seeing opportunity with new logos as the world tries to digitize its platform. So as you can imagine, as we're seeing AI being required, they need new infrastructure. And so each part of our business has got deep pools of sort of RFPs.
The way we sort of think about it is that a new installation is probably one times PSG, one times recurring revenue for a population of less than 5 million. Those numbers scale up materially post that.
Gotcha. Thanks a lot James. I'll pass the line. Appreciate it.
Your next question today will come from Gianluca Tucci with Haywood Securities. Please go ahead.
Hi, good afternoon team. Congrats on a nice quarter. If I could just ask on the early days of cross-selling, your AI bucket for the first half is up over 200%. Does that include any early cross-sell deals that have closed? As a follow-up, could you speak to the average deal size in your AI pipeline and how that's been trending over the last, call it 6- 12 months?
Look, excellent question Gianluca. The answer to that is no. There have been no cross-sells. That's too early. The business has only been going three months, and the RFP process from RFPs are closed to implementation, as you can imagine, it's well longer than a three-month process. So you'll see that benefit coming into the market either late this year or early next. What I would suggest is that what we've seen is the size of our contracts over the last 12 months have been increasing on a consistent basis as we add more data to them. The RFP opportunities we see today range by population size. I won't give a number today, but I think it's fair to say that the opportunity for some of these are across very large populations, which would be material contracts if they won. There'll be lots of them. The larger ones will be long-dated.
Our focus currently is actually getting them embedded and installed and then installing more features as we go along. Rather than take a long time to get something in market, we're very focused on getting a proof of concept going to prove value and then increase our share of wallet as we move into the customer. Is there anything you want to add to that, Anthony or Alex?
No James, I think you touched on the salient points. I'll just add, Gianluca, right? We've seen steady growth from an AI perspective on the size of the initiatives and contracts with our life sciences partners. That's moving in a very productive direction. We're anticipating in coming quarters, us to be able to highlight some of these proof of concepts that we're working on right now, which is, of course, you know harnessing our software footprint.
Okay, that's great color. Thank you guys. Just secondly, on the plan to divest your clinical research business, could you speak at a higher level, perhaps, to the immediate margin benefit that would have? Where do you think your overall consolidated margins can scale to excluding the CRO business going forward?
Look, the reality is that we're in very early discussions on that now, and we're only doing that work as we're speaking. So we'll have to come back to you on that. I think the reality is the shape of what we do within the various LOIs means that it's a longer conversation for another time. Is there anything you want to add to that Anthony?
Yes James. I think, look, as you can see right now, our AI and software businesses are in the high 60% in terms of margins. We're seeing mid to high 50% in our software business. So you know, we're going to be in that range, based on mix. We're going to see some really good, you know, software-like performance in our margins. But I mean, we are going to be focusing on that. And you can expect us to be in that high 50% to low 60% range as a result.
Okay, great color. Thank you guys.
Thanks Gianluca.
Your next question today will come from Brian Kinstlinger with Alliance Global Partners. Please go ahead. Brian, your line may be muted. It's open on our end.
Sorry about that. I apologize. I was on mute. Thanks for taking my question. I realize your guidance suggests a doubling of revenue for AI and data science this year, but it's based on relatively small numbers. My question would be, what are the gating factors to exponential growth from here where you are in the first half of the year? Is it new customer adoption, greater usage from existing customers, more diseases? I guess maybe what drives this to be two to three to four times the size it is today?
Yeah again, excellent question. I think I'll go back to what we talked to Kevin about. There are three ways that we think about growing sort of a J curve in our AI revenue. Firstly is the number of deployments we have, so the number of logos or users we have using that, and that's been increasing year on year. The number of studies they all run as a business, and then the value of those studies. Our focus is to grow both the first and the second and the third. And so as those occur, what we're seeing is that revenue growth can be maintained. Excitingly, the value within life sciences is one element, but as we open up the healthcare systems, we're finding the contracting healthcare systems are across a much larger basis. And so the value of those contracts can be materially higher.
And so what we're seeing there is that as we go into bigger organizations, the value of the contracts can change at the same time. So You'll see us in the future report on all those three measures as we put the business together. We've got some work to do to then start articulating what's coming, what is a cross-sell and what is a new opportunity. As we define a healthcare system, we've got both life sciences partners and we've got healthcare systems in that mix as well. As we talk in the future date, there'll be other healthcare adjacent customers that join that mix.
Of those three, which are the biggest near-term challenge to get you over that hump to getting to scale? Is it new logos moving forward? Is it new logos taking on more volume per se? What right now is the one piece of the three that you think the company needs to work most on?
As you can imagine, I'd like all three. The reality is we're putting focus and energy into all three components. You know, the healthcare sales process is a very different sales process to the life sciences one. What we find is they don't cannibalize each other trying to do both. Getting cleaner access and wider access to data via the Orion Health portfolio globally is a key focus again, but it's a different team. What I would say to you is that we've focused on trying to grow all three because we know that they help each other and it becomes a very virtuous cycle rather than trying to focus on one. To answer your question more directly, I think the most immediate growth curves will come from the healthcare systems, but given the outside nature of those contracts.
Okay. One last question from me. You talked about integrating the AI into Orion Health software. I'm curious how you monetize that. Is it customers opt in and then you get paid for volume? They'll just get optionality to use that and license it? Just take me through how when AI is integrated, how that gets monetized in the total contract value.
Yeah, good question. The reality is there are a few responses. Like a healthcare system will have a process of how they want to deploy AI. There's a wide range of what customers are looking for at different components. We've seen opportunities in healthcare systems wanting to deploy patient identification tools. We're seeing customers wanting to deploy smart summary or smart search tools. And so what we're seeing is they have to go through a procurement process. The advantage we have is because we're already embedded as a trusted partner, the procurement process with us is a very short-dated process rather than going externally. So as we take our products and demonstrate them to each of our customers, we're finding that they've got immediate interest in taking one of those products to go talk to the teams who are procuring.
Now, from a. It won't just be a free update if that's what you're asking. They'll have to go through an RFP process to acquire it because it's a deployment on top of, not a deployment with it.
Great. Thank you.
Your next question today will come from Rob Goff with Ventum. Please go ahead.
Thank you very much, and congratulations on the quarter.
Thank you Rob.
I realize it's not really how you're looking at the company right now, but given the relative scale of Orion Health, might we look at this as what was known as Orion Health is a double-digit growth vehicle or platform upon which you are adding incremental revenue synergies, upon which you are layering on the higher growth of the AI-related events? Would that be a fair characterization?
I'm not going to comment on the numbers you threw out in terms of growth phases, but I think the way to think about it is broadly right that we're connecting the base layer of software. You think about the connecting layer that is Orion Health and Verisource and IntraHealth, and then we surface that data through the software, and then we provide analytical tools across the top of that through our AI capabilities. I think that's the best way if you think about it as a stack, as those three things go together. Does that answer your question?
Yes, it does. Thank you. Dan, with respect to the RFPs, are you part of, do you have partnerships in pursuing these RFPs, or are they generally standalone applications that you are submitting?
There's no single answer to that. For large new countries, you're part of a consortium. For some of them, the partnerships are internal, i.e., one of our two software businesses will be combining as a single entity to put into that. Some of them are just pure AI deployments over the top of their current componentry. There would be no need to put in an infrastructure layer.
Very good. Thank you, and good luck.
Thank you, sir.
Your next question today will come from Michael Freeman with Raymond James. Please go ahead.
Hi, everybody. Congratulations on the quarter. I'm really glad to see Orion hold in here. I wonder if we could talk about Pentavere. I see that you've acquired the remaining balance of equity there. I wonder why was now the right time to exercise that option? What does that full ownership enable? Does this afford you more freedom to pursue certain things?
Excellent question. The reality is the Pentavere acquisition was always a core component of what the team wanted to achieve. The timing was purely because of the need to scale. What we were finding is that the Pentavere team had so many different opportunities, and the more that we were bringing to them within the Orion stack meant that we needed to provide more services right across the board. Integrating the platforms across some of what Verisource have, what Khure have, and Pentavere into a single business unit became paramount to ensure that we get better margins. Rather than having individual deployments, we would have a single deployment as a backend to increase the margin and scalability of the product set. You know, because when businesses go through extreme growth, you don't get that right early. You can give away margin long term.
That was a core component of the why now. What it gives us now is the ability to scale the business as we put it together.
Okay, thank you very much for that. On a, I guess, a similar note, but maybe an opposite note, you mentioned a divestment here of the patient services and CRO businesses. Its margins appear to be, I guess, business-wide margins appear to be a core motivating factor there. I wonder if there, are there other assets, you know, as you look at the business going forward, are there other assets under the Healwell AI umbrella that may not align with the long-term vision of the company or maybe the core ethos of the company, maybe redundant?
Look, I think any company has to evaluate their asset set at all times against value, right? I think that's a core component of focusing on return on invested capital for investors. What I would say now is that we've got a lot on our plate. The focus point is not so much that our clinical businesses are low margin. It's more that there's a really large opportunity in front of them, and they need attention and investment. As we think about the right thing for both those businesses, their customers, and the right thing for Healwell AI, it isn't to confuse ourselves and our energies on two different, very different topics. I think currently our software businesses are more likely to acquire new assets, and our AI businesses acquire new skills rather than to exit them.
We also have items on balance sheet like our hold i n xAI, which will probably become non-core.
All right, that's great. Thank you very much. Congrats, and I'll talk to you next quarter.
Your next question today will come from George Ulybyshev with Clarus Securities. Please go ahead.
Hi guys, congrats on a good quarter and thanks for taking questions. My first question is on Orion and core AI revenue, and you guys kind of touched on that. Now that you guys have expanded your reach to roughly an additional 150 million lives with the acquisition, how quickly and to what extent can you guys leverage this new access to data to generate core AI revenue from life science companies?
The reality is that it's not about speed, it's about ethics. What we need to do is go through the process at each end to ensure that with the same rigor we take within Canada, we can apply globally. We're investing in each of those markets currently now with our customers to ensure that speed is not foregone in the element of getting the right transparency and approvals from both the governmental levels and from the customer levels. Right now we're focused on doing it properly rather than doing it quickly.
Okay, understood. Thanks, James. You guys also mentioned having identified several M&A opportunities. Can you share what areas of work or capabilities you are prioritizing with those deals? How far are you with the process for those?
I won't comment on how far we enter those processes purely because they're further targets that would give them a different approach of what we're thinking. In terms of the types of capabilities, what we're looking for are new capabilities in data science so that we can either open up new avenues, as you talked about, for data access or new geographies where we don't have capability. What we want to be is quite holistic in terms of the AI offerings we bring to customers. We've got a broader suite of offerings, including efficiency tools within the market, including new diseases and new states, and new geographies for our identification processes. Alex and the team have done a really good job over the last year. We have a long list of targets, and we've looked at many, but we're very disciplined in what we want to do.
We don't want to distract ourselves from an opportunity we have in front of us to do M&A, but if we can do M&A that accelerates, then we'll discuss it. Anything you want to add to that, Alex?
No, I think that's good, James. I'll just add that there's a number of exciting opportunities, particularly now in the healthcare landscape, and now that our footprint has expanded substantially, right? We're looking at opportunities in different jurisdictions. Thanks, George.
Great. That's it from you guys. Thank you.
Your next question today will come from Justin Keywood with Stifel GMP. Please go ahead.
Good afternoon. Thanks for taking my call. Nice to see the financial inflection. I'm not sure if I missed it, but on the divestiture of the CRO business and polyclinic, any indication on the potential proceeds or range of value and timing on when one or both those divestitures could occur?
Look, we haven't provided that given there are a number of LOIs from different parties. We are being very mindful to be careful of what we say there, but we will update the market in an appropriate time. What I would suggest is that the board is motivated to get the businesses focused on running the business, not run a long-dated process. We're conscious that these processes can be impactful for both staff and customers, so we want to be quick with our process.
Great. I look forward to that. On the synergies and the sharing of WELL resources, are you able to provide some additional details on the areas within the business that could benefit from that larger platform?
Look, the reality is WELL is a wonderful partner, and we've got and have been really supportive of accessing what we need. We're already seeing benefits across procurement. We're talking about things like property, the access they have to systems and platforms. What we're finding with WELL is that, as you'd expect, is a wonderful partner. We've got the world is our oyster. It's a phrase we'd use in New Zealand. I don't know if that is familiar as much as it is in Canada, but the reality is we're going through that now with a lens of what is the best interest for both parties. How can we get the right types of synergies? How do we get that connected in WELL ? Because, again, we want to make a good decision that allows us to scale as opposed to a fast decision.
We're going through all of those discussions right now. The first process was getting the Healwell AI componentry done, so it's a single one-time integration into the WELL family as opposed to multiple integrations. Just even things like systems, we're finding that there's lovely commonality there. Certainly, the capability they have with their executive function to lean in on areas where we won't need to hire for has been really well received.
Absolutely. Certainly seems like lots of opportunity for efficiency. Thanks for taking my call.
Your next question today will come from Gabriel Leung with Beacon Securities. Please go ahead.
Thanks for taking my questions. Just a couple of quick follow-ups. Just curious if you're able to provide a backlog figure for your professional services business, and if you can just talk about the duration of that backlog.
Anthony, do you want to cover that one off?
Yeah, Gabe, I'd say that the backlog that we have today is similar to where we were, you know, as we brought on Orion Health. The details around that right now, we're still better understanding because a big portion of that is coming from the Orion Health acquisition. I would say more to come as we dig through some of those details and before I actually give you firm guidance on that.
Okay, fair enough. I think you might have covered this, James, but in terms of how should we be thinking about, you know, a software sale versus a professional dollar sale? You know, how many professional dollars should we expect from any given sort of deployment?
Again, there's no good answer to that. They range quite, you know, from sometimes there's three times as much professional services as there are occurring to there's a one-to-one ratio in time. The reality is the professional services covers both new implementations, upgrades, new feature development. I don't think I would look at the professional services as a whole, as a single number. I think there are multiple ways to look at that number. Part of it, again, is as we get more detail from the businesses to combine them, to provide more clarity to the market as to each of those individual drivers. To give you an instance, some of them are their embedded resource within professional services within a business unit, which therefore is more recurring in nature than professional services, if that makes sense.
So one of their goals is to provide more transparency to the market of each of those components in time, but that'll take us, as we put them together, to take it apart and re-orchestrate how we explain that.
Gotcha. That was super helpful. Actually, just one last question. I just continue to move through the integration and try to generate more synergies. How should we be thinking about the operating expense base using Q2 as the baseline? Is it really more about leveraging what you have now to grow your revenues, or should we anticipate perhaps some additional small cuts to the current expense base?
Yeah, look, that's a really good question. I think once we take out the clinical businesses, we'll get a better handle on what further synergies we can take out across the business. As an integrated platform, our clinical platforms cover about a third of employees, for instance. There'll be a large element there of working out what we would need to support a smaller business. How do we integrate those? My comment would be that I'd focus more on margin because as we grow, we will need to be growing our cost base as we grow globally as well. We're very fixated on the margin per se relative from revenue to cost as opposed to just the underlying cost. As a key focus point, removing costs on a standalone basis today, if we're doing so efficiently and not impacting the deployment of our current customers, is a real focus.
Gotcha. No, I appreciate the feedback, and congrats on the progress.
This concludes the question and answer session. I will now turn the call back to James Lee for any closing remarks.
Thank you all for joining us. You know what I would encourage is, I really appreciate the people that have reached out to meet us and spend time with us over my first three months. I wanted to say a big thank you to Alex and Hamid for helping with the transition. Alex and I are working really well, and I would count him as a close friend now. So I've really enjoyed the early days with the Healwell journey. I'm looking forward to having more of these and in time having more in person. Thank you for joining us. Keep safe and look forward to keeping in touch.
This brings to a close today's conference call. You may now disconnect your lines. Thank you for participating and have a pleasant day.