Vancouver-based clinic network and healthtech company Well Health will spin out and list its Wellstar subsidiary on the TSX Venture Exchange (TSXV) later this year.
The news: Well Health announced on Tuesday that its pure-play software business has entered a deal to combine with a BC-based shell company before applying to list its shares on the TSXV.
The deal will separate Well Health’s primary business, which operates around 270 medical clinics across Canada, from its clinical software tools business. However, Well Health said it expects to remain a “significant long-term controlling shareholder and growing customer” of Wellstar.
The combination of Wellstar and the shell company is expected to close this September, contingent on receiving preliminary approval to list on the TSXV.
From the source: “This transaction is a significant milestone in Well’s strategy to unlock the value of our healthcare technology assets while retaining a meaningful ownership position in one of Canada’s leading digital health platforms,” Well Health chairman and CEO Hamed Shahbazi said in a statement, adding that Wellstar’s stand-alone listing will give it better flexibility, access to growth capital, and investor visibility.
Following the thread: As part of the deal, Wellstar is raising $50 million CAD through a private placement priced at $10 per subscription receipt, which will be converted to shares for backers. Well Health said that the capital will be released to Wellstar once its deal closes to help finance future acquisitions, AI-related innovation, organic growth initiatives, and other corporate uses.
Final thought: Well Health has been working toward this spinoff for nearly two years. In its Q2 2024 earnings call, Shahbazi said that the company was undervalued compared to the sum of its parts and floated the idea of unlocking value by making Wellstar (then Well Provider Solutions) its own, Well Health-controlled public company by early 2025.
While it didn’t happen last year, Well Health spent the time loading Wellstar up with assets and capital in preparation. Wellstar has raised over $100 million across two separate equity financings and earlier this year acquired two Canadian medical billing companies to build out its offerings ahead of the spinout.
Feature image courtesy Well Health.