Healwell Al Inc

TSX:AIDX

Q2-2025 Earnings Call

[Operator]

Good morning, and thank you for joining Healwell AI's Second Quarter 2025 Financial Results Conference Call. [Operator Instructions] I will now turn the call over to Hefton Seni, Investor Relations at Healwell. Please go ahead.

[Hefton Seni, executive]

Joining me on the call today are James Lee, CEO of Healwell; Dr. Dr. Alexander Dobranowski, President of Healwell; and Anthony Lam, Healwell's 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+.

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 to our management discussion and analysis for more details on the company's risks 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 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. and the conference call using the number provided in our press release.

And with that, let me turn over the call to James Lee, CEO.

[James Lee, executive]

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 3 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. And 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 our highest ever quarterly revenue of $40.5 million, reflecting an impressive 645% year-on-year increase. More importantly, we achieved 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 area 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 Healthcare acquisition on April 1. This acquisition had an immediate and material impact for us. It's contributed meaningfully to the top line.

Orion itself fueled 1,064% growth in our Healwell Healthcare Software segment, and it's a genuine validation of the strategy we've got to acquire high-quality and accretive value-adding acquisitions. But our growth extends well beyond Orion. 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 '25, our AI segment generated $5 million of revenue. But beyond the numbers, Q2 reflects a fundamental shift in how we're rebuilding healthcare at Healwell. 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, structural. We're evolving how we organize, operate and report on our business to better reflect our focus on AI and healthcare software.

As you would 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 2 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. And to that end, the Board of Directors have 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 signed a number of nonbinding 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're focused on deepening our relationships with those existing customers and also expanding the number of healthcare systems we serve.

Now finally, I want to talk briefly about our strategy to grow and integrate. We have 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 are 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 Healthcare 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's evolution. We're moving from a collection of strong individual platforms to a unified AI-powered healthcare solution and today is only the beginning.

And with that, I'd like to hand over the call to our CFO, Anthony Lam, to walk through our Q2 results. Over to you, Anthony.

[Anthony Lam, executive]

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 '25 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 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 2025 -- 2024, sorry. The increase is due to the acquisitions of Verosource, Mutuo and Orion and strong performance in the Khure business. Healwell's 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 acquisition.

During Q2 2025, Healwell reported positive adjusted EBITDA of $1.9 million, and this compares to an 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 turnaround represents a year-over-year improvement of approximately 152% in adjusted EBITDA performance. Healwell also reported $6 million in net loss in Q2 '25, and this compares to $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 generates revenue across 3 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 of 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 3 down to 2 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 2021.

[Dr. Alexander Dobranowski, executive]

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 have 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 6 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, Verosource and IntraHealth into one cohesive healthcare software segment. Orion and Verosource 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'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 USD 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 foundational -- 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 onetime projects that are expected to be lower in Q3. Now 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 2 potential acquisition targets with executed nonbinding LOI.

Increasing organic growth. We are ramping up our organic growth efforts by accelerating the adoption of Healwell's AI 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 by 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 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 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 going forward with a focus on AI and healthcare software-related tuck-in 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, 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'd like to thank our Chairman, Hamed Shahbazi 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.

[Operator]

[Operator Instructions] And your first question today will come from Daniel Rosenberg with Paradigm Capital.

[Daniel Rosenberg, analyst]

Congrats on the strong quarter and 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.

[James Lee, executive]

It's James. I guess the answer is a bit of everything. We've got InMotion 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 an RFP responses given the increased capability we have across the group. And so we're seeing that across each part of our both software and AI businesses.

[Daniel Rosenberg, analyst]

I was also curious around -- you spoke about new markets. Any specific geographies of interest? I think you highlighted the U.S. as a large opportunity for you. So the world is a big place, but just trying to figure out where you're targeting in on.

[James Lee, executive]

It'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. But as you say, it's a very big market. So 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 just announced a new 10-year plan to digitize first their entire healthcare system. Now while that is a -- we're 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 Middle East, Southeast Asia and 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.

[Daniel Rosenberg, analyst]

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?

[James Lee, executive]

Yes. Look, there are probably -- all of our products have fit in the U.S. market. So we're seeing opportunities with the file-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 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. And so the ACO market is a clear opportunity for us as well.

[Daniel Rosenberg, analyst]

Last for me, just a financial one. You set out some goals for the 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 the line.

[James Lee, executive]

Look, I guess the answer, Daniel, that is given the process we're going through with our clinical business right now, we're reviewing all those what our needs to be without the clinical businesses. So we'll have to come back at a later date on that. We've only had those for a few weeks.

[Operator]

And your next question today will come from Kevin Krishnaratne with Scotiabank.

[Kevin Krishnaratne, analyst]

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 like how much of the healthcare software line is PS and sort of what drove that onetime benefit? Is that for a future project? And do we see a ramp-up in related software revenue in coming quarters? Just any sort of color there you can talk about on the PS line.

[James Lee, executive]

Sure. Look, I think professional services as a broad is sort of a 20%, 24% range of software revenue across the business. And that the variability really, Kevin, is not so much the amount of work, but actually the delivery cycle. Orion is a really lumpy business. And so when you hit milestones, you get to recognize the revenue. And so what we'll see is we'll see some volatility quarter-by-quarter as to when certain milestones are hit, whether they hit at the end of the 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?

[Kevin Krishnaratne, analyst]

It does. And just to help us just understand the profile of this quarter, then you did talk there are some onetime projects. Any way to quantify that for the quarter?

[James Lee, executive]

Look, I think the reality is that 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.

[Kevin Krishnaratne, analyst]

That's helpful because the next question I had is just, I understand that 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 quarters, years, what's like a good level? Like what do you think -- you talked about your near-term targets for the year. Like can you just remind us again what you've kind of got contemplated for the organic growth and sort of how that is -- what's the algorithm for that growth, pricing, new logos, expansion? Just any color there on the organic growth for healthcare software.

[James Lee, executive]

Yes. Look, Kevin, as we're putting the business together, you need to give us a bit of time to come back with a cleaner number on that. But what I'll tell you is about the drivers of that growth. So there are 3 key drivers, obviously, new logos. So 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. And the third is the size of each of those contracts per application. And so as we think about the key drivers of the business, we see 3 key factors. Are we growing the number of logos? Are we growing the number of deployments per logo? And are we growing the number of -- 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.

[Kevin Krishnaratne, analyst]

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 some of the products you have, you believe are unique in market. And so when you think about those RFPs and the value prop 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 then looking at a switch and you're running into an RFP there. Can you just talk about what you're seeing out there and what these bids really -- what you're actually bidding on? And again, you talked about the uniqueness of your products. I'm just really curious to think about how well you are positioned against the other competing products out there.

[James Lee, executive]

Yes. Look, again, look, excellent question and a really complex answer. So I'll try to be simple. But look, what we've seen is yes to all is the real answer. So 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 this platform. So as you can imagine, as we're seeing AI being required, they need new infrastructure. And so each part of our business have got deep pools of sort of RFPs and the way we could sort of think about it is that a new installation is probably 1x PSG, 1x recurring revenue for a population of less than $5 million, but those numbers scale up materially post that.

[Operator]

And your next question today will come from Gianluca Tucci with Haywood Securities.

[Gianluca Tucci, analyst]

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? And 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 to 12 months?

[James Lee, executive]

The answer to that is no. There have been no cross-sells that's too early. The business has only been going 3 months and the RFP process from RFPs are closed implementation, as you can imagine, is well longer than a 3-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. So 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 win. But there'll be -- some 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. So 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?

[Anthony Lam, executive]

No, James, I think you touched on the salient points. I'll just add, Gianluca, right, like we've seen steady growth, right, from an AI perspective on the size of the initiatives and contracts, right, with our life sciences partners. So that's moving in a very productive direction. And we're anticipating, right, in coming quarters, us to be able to highlight some of these proof of concepts, right, that we're working on right now, which is, of course, harnessing our software footprint.

[Gianluca Tucci, analyst]

That's great color. And just secondly, on the plan to divest your clinical research business, could you speak at a high level perhaps to the immediate margin benefit that would have? And what do you think your overall consolidated margins can scale to, excluding the CRO business going forward?

[James Lee, executive]

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. And I think the reality is the shape of what we do within the various LOIs means that it's a longer conversation for all the time. Is there anything you want to add to that, Anthony?

[Anthony Lam, executive]

Yes, James. I think, look, as you can see right now, our AI and software businesses are in the high 60s in terms of margin. We're seeing mid- to high 50s in our software business. So we're going to be in that range based on mix. We're going to see some really good software-like performance in our margins. But, 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.

[Operator]

And your next question today will come from Brian Kinstlinger with Alliance Global Partners.

[Brian Kinstlinger, analyst]

I apologize I was mute. I realize your guidance suggests a doubling of revenue for AI and data science this year, but it's based on relatively small numbers. So 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 2 to 3 to 4x the size it is today?

[James Lee, executive]

Yes. Again, excellent question. I think I'll go back to what we talked to Kevin about. There are 3 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. Then the number of studies they will run as a business and then the value of those studies. And so our focus is to grow both the first and the second and the third. And so as those occur, what we've seen 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 much larger bases. 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 3 measures as we put the business together. We've got some work to do to then start articulating what's coming -- what is the cross-sell and what is a new opportunity because as we define a health care system, we've got both life sciences partners and we've got healthcare systems in that mix as well. And as we talk in future dates, there'll be other healthcare adjacent customers that join that mix.

[Brian Kinstlinger, analyst]

And of those 3, 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? I mean what right now is the one piece of the 3 that you think the company needs to work most on?

[James Lee, executive]

As you can imagine, I'd like all 3. And so the reality is we're putting focus and energy into all 3 components. The healthcare sales process is a very different sales process to life sciences one. And so what we're finding is they don't cannibalize each other trying to do both. Getting cleaner access and wider access to data by the RM footprint globally is a key focus again, but it's a different team. So what I would say to you is that we're focused on trying to grow all 3 because we know that they help each other and it becomes a very virtuous cycle rather than trying to focus on one. But to answer your question more directly, I think the most immediate growth curves will come from healthcare systems given the outsized nature of those contracts.

[Brian Kinstlinger, analyst]

Okay. One last question for me. You talked about integrating the AI into Orion software. I'm curious how you monetize that. Is it customers opt in and then you'll 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.

[James Lee, executive]

The reality is there are fee responses like a healthcare system will have a process of how they want to deploy AI, and there's a wide range of what customers are looking for at different components. So we've seen opportunities in healthcare systems wanted to deploy patient identification tools. We're seeing customers wanting to deploy smart summary or smart search tools. And so what we've seen 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 we've got immediate interest in taking one of those products to go talk to the teams about procuring. And now from a -- so 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 because it's a deployment on top of, not the deployment with it.

[Operator]

And your next question today will come from Rob Goff with Ventum.

[Rob Goff, analyst]

Congratulations on the quarter. I realize it's not really how you're looking at the company right now. But given the relative scale of Orion, might we look at this as what was known as Orion is a double-digit growth vehicle or platform upon which you are adding incremental revenue synergies upon which you were layering on the higher growth of the AI-related events. Would that be a fair characterization?

[James Lee, executive]

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. So if you think about the connecting layer that is Orion and Verosource 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. So I think that's the best way if you think about it as a stack as those 3 things go together. Does that answer your question?

[Rob Goff, analyst]

Yes, it does. And with respect to the RFPs, are you part of -- do you have partnerships in pursuing these RFPs? Or are they generally stand-alone applications that you are submitting?

[James Lee, executive]

There's no single answer to that. For large new countries that you're part of the consortium, for some of them, the partnerships are internal, i.e., so one of our -- 2 of our software businesses will be combining as a single entity to put into that. And some of them are just pure AI deployments at the top of their current componentry. So there would be no need to put in an infrastructure layer.

[Operator]

Your next question today will come from Michael Freeman with Raymond James.

[Michael Freeman, analyst]

Congratulations on the quarter. I'm really glad to see Orion in here. I wonder if you 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? And what does that full ownership enable? Like does this afford you more freedom to pursue certain things.

[James Lee, executive]

Excellent question. The reality is the Pentavere acquisition was always a core component of what the team wanted to achieve. And the timing was purely because the need to scale. So 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. And so integrating the platforms across some of what Verosource have, what Khure have and Pentavere into a single business unit became paramount to ensure that we get better margins. So rather than having individual deployments, we would have a single deployment as a back end to increase the margin and scalability of the product set because when businesses go through extreme growth, you don't get that right early, you can give away margin long term. So that was a core component of the why now. And what it gives us now is the ability to scale the business as we -- after we put it together.

[Michael Freeman, analyst]

And on a -- I guess, a similar note, but maybe an opposite note, you mentioned a divestment here of the patient services and CRO businesses. And 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 -- as you look at the business going forward, are there other assets under the Healwell umbrella that may not align with the long-term vision of the company or maybe the core ethos of the company, may be redundant?

[James Lee, executive]

Look, I think AI company has to evaluate their assets 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. And so as we think about the right thing for both those businesses, their customers and the right thing for Healwell, it isn't to confuse ourselves and our energies on 2 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. But we also have items on balance sheet like our holding in xAI, which probably becomes noncore.

[Operator]

And your next question today will come from George Ulybyshev with Clarus Securities.

[George Ulybyshev, analyst]

Congratulations on a good quarter. My first question is on Orion and Core AI revenue, and you guys kind of touched on that. But 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?

[James Lee, executive]

The reality is that it's not about speed, it's about ethics. So what we need to do is go through the process at each end to ensure that the same rigor we take within Canada, we can apply globally. And so we're investing in each of those markets currently now with our customers to ensure that speed is not forgone in the element of getting the right transparency and approvals there from both the governmental levels and from the customer levels. So right now, we're focused on doing it properly rather than do it quickly.

[George Ulybyshev, analyst]

And then you guys also mentioned having identified several tuck-in M&A opportunities. Can you share what areas of -- or capabilities you are prioritizing with those deals? And how far are you with the process for those?

[James Lee, executive]

I won't comment on the how far are we into those processes purely because that for the targets that would give them a different approach of what we're thinking. But 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 then new geographies for our identification processes. But Alex and the team have done a really good job over the last year and 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?

[Dr. Alexander Dobranowski, executive]

No, I think that's good, James. I'll just add that there's a number of exciting opportunities, right, particularly now in the healthcare landscape and now that our footprint has expanded substantially. right? So we're looking at opportunities in different jurisdictions.

[Operator]

And your next question today will come from Justin Keywood with Stifel GMP.

[Justin Keywood, analyst]

Nice to see the financial inflection. I'm not sure if I missed it, but on the divestiture of the CRO business in PolyClinic, any indication on the potential proceeds or range of value and timing on when one or both those divestitures could occur?

[James Lee, executive]

Look, we haven't provided that given there are a number of LOIs from different parties. We are being very mindful and be careful with what we say there, but we will update the market in the 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.

[Justin Keywood, analyst]

We look forward to that. And then on the synergies and the sharing of WELL Resources, are you able just to provide some additional details on the areas within the business that could benefit from that larger platform?

[James Lee, executive]

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. So what we're finding with WELL is that, as you'd expect, is a wonderful partner. We've got the world is our Wester. 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 and 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 fast decision. So we're going through all of those discussions right now. First process was getting the Healwell componentry done. So it's a single onetime integration into the -- we family as opposed to multiple integrations. But just even things like systems, we're finding that there's lovely commonality there. And certainly, the capabilities they have with their executive function to lean in on areas where we won't need to hire for has been really well received.

[Justin Keywood, analyst]

Certainly seems like lots of opportunity for efficiency.

[Operator]

And your next question today will come from Gabriel Leung with Beacon Securities.

[Gabriel Leung, analyst]

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?

[James Lee, executive]

Anthony, do you want to cover that one off?

[Anthony Lam, executive]

Yes, Gabe, I'd say that the backlog that we have today is similar to where we were as we brought on Orion. The details around that right now, we're still better understanding because a big portion of that is coming from the Orion acquisition. So I would say more to come as we dig through some of those details and before I actually give you firm guidance on that.

[Gabriel Leung, analyst]

Fair enough. And then I think you might have covered this, James. But in terms of how should we be thinking about a software sale versus a professional dollar sale? How many professional dollars should we expect from any given sort of deployment?

[James Lee, executive]

Again, there's no good answer to that. They range quite -- from sometimes there's 3x as much professional services as they are recurring to the 1:1 ratio in time. The reality is that professional services covers both new implementations, upgrades, new feature development. So 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. And part of it, again, is as we get more detail from the businesses to combine them is to provide more clarity to the market as to each of those individual drivers. But to give you an instance, some of them is the embedded resource within professional services within a business unit, which therefore is more recurring in nature than professional services. Does that make sense? So one of our goals is to provide more transparency to the market of each of those components in time, but that will take us as we put them together to take it apart and reorchestrate how we explain that.

[Gabriel Leung, analyst]

And 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 some -- perhaps some additional small cuts to the current expense base?

[James Lee, executive]

Yes. 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 1/3 of employees, for instance. So there will be some a large element there of working on what would we 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. And so we're very fixated on the margin per se from revenue to cost as opposed to just the underlying cost. But as a key focus point, removing costs on a stand-alone basis today, if we're doing so efficiently and not impacting the deployment of our current customers is a real focus.

[Gabriel Leung, analyst]

Appreciate the feedback and congrats on the progress.

[Operator]

That concludes the question-and-answer session. I will now turn the call back to James Lee for any closing remarks.

[James Lee, executive]

Thank you all for joining us. 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 3 months. I wanted to say a big thank you to Alex and Hamed for helping with the transition. Alex and I are working really well, and I would count them 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. So thank you for joining us. Keep safe and look forward to keeping in touch.

[Operator]

This brings to a close today's conference call. You may now disconnect your lines. Thank you for participating and have a pleasant day.