Healwell Al Inc

TSX:AIDX

Q3-2025 Earnings Call

[Operator]

Good day, and welcome, everyone, to the HEALWELL AI Third Quarter 2025 Financial Results Conference Call. Today's conference is being recorded. [Operator Instructions] At this time, I would like to turn the conference over to [ Hefton Seni ], Investor Relations.

[Hefton Seni, executive]

Thank you, operator. Joining me on the call today are James Lee, CEO of HEALWELL; 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 yesterday. Listeners are also encouraged to download a copy of our quarterly financial statements and management discussion analysis that was 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 yesterday'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 it's required by law.

We use terms such as gross margin and adjusted EBITDA on this conference 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 using the dial-in number provided in our press release.

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

[James Lee, executive]

Thank you, Hefton. Thank you, everyone, for joining us today. Look, Q3 for was HEALWELL was a very busy period, both in terms of productivity and change. So we're excited to share our progress. Obviously, as you know, in Q2, we completed the acquisition of Orion, and we had a major milestone becoming adjusted EBITDA positive. And as we enter Q3, we set ourselves 2 really simple but clear goals. We want to simplify the business and focus the business to maintain growth and a balance of adjusted EBITDA positivity.

We announced in Q3 and we've completed this week the simplification of HEALWELL, forming a major milestone where we've gone from a conglomerate to a pure-play software service and AI business. And we've seen the strength of the diverse geographic and product mix, allowing us to maintain a positive adjusted EBITDA during the traditional slower Northern Hemisphere summer quarter, which we'll talk about later. These milestones are a critical event for us. They shape our future as a focused and simplified business. We have the resources now to succeed on our journey of creating a globally relevant and leading preventative care AI business.

Now I'd remiss if we didn't thank everyone, like this wouldn't have been possible without the support of our key partner, WELL Health and the hard work both from our Board and our broader team members. So I want to thank everyone for a really busy and productive Q3.

Now Post Q3, the business now is a simplified software and AI business. But looking at our Q3 results, Q3 has been another positive step for us in our journey. Our continued operations achieved revenue of $30.4 million versus $6.7 million in 2024 and adjusted EBITDA of $0.7 million. While we saw a quieter start to the quarter due to the summer period, we ended the quarter strong in our AI and data division, and we see good momentum for the rest of the year and into 2026.

Now in Q3, we announced that we are integrating our AI platform, DARWEN, into our software platform, Amadeus. And this combination with -- in conjunction with our expansion here in the U.S. has begun to show really promising signs, which we'll talk about shortly. We're very early in the adoption cycle of AI tools and health care systems. So having the appropriate resources and becoming increasingly efficient with these resources is really important. So our goal is to maintain that balanced investment and maintaining adjusted EBITDA positivity.

You heard us and you will continue to hear us talk about the word simplify and focus a lot today. As we talk about and shift the strategic focus over the last 6 months in the quarter. But I'd be remiss if we didn't talk about why we've done it. Now AI is a powerful tool. It's in the infancy of its understanding and adoption, but we believe that in health care, it's the most valuable use case that AI is currently able to do. At its heart, it's capable of consuming significant amounts of data looking to signal. But the impact we're seeing in the health care system for what we can do today is undeniable. Our AI engine, DARWEN, can identify hard to find patients using existing clinical data. Now unlike precision medicine when you need new data, we can find signal from existing data. As we've begun to expand DARWEN across the global footprint, we've seen the sheer size of the opportunity to expand materially.

So to achieve our stated goals, which I mentioned before, of investing while maintaining and improving operating margin required us to have a really disciplined and focused business. Now, that let us taking the hard decision to simplify our business and product offering, which you've seen us execute this quarter. We've integrated our AI business. We acquired the balance of Pentavere. We've begun aligning our software businesses. We've expanded in the U.S. and we simplified our business lines and added some resources.

So going into the final quarter and the first quarter of 2026, we have 2 primary areas of focus. In Q4, our goal is to complete the integration plans to maximize position and flexibility, allowing us to maintain improved operating margins year-on-year while investing. And in Q1 next year, our goal is to demonstrate commercial validation of AI platform and health care systems outside of life sciences. Maintaining and keeping focus on a well-defined set of goals in the immediate future allows us to remain disciplined so we can demonstrate both value to our customers and to our shareholders.

Finally, I'd like to give a little bit of context about the opportunity in front of us in AI. Now I think it's [ one-off effect ] that the earlier you identify treatment path ensure the great path is identified, the better both the patient outcome and the cost of the system will be. Our AI platform, DARWEN is uniquely placed to help extract meaningful insight from existing unstructured clinical data, allowing us scalable improvements to both.

We've already begun a number of proof points and what we call proof of values to multiple health care systems right across North America with the ability of identifying at-risk patients. Our priority is, obviously, as we mentioned, is to take advantage of the leadership of our field, demonstrate commercial value to the health care systems and to our shareholders.

During Q&A, we'll talk a little bit about the opportunity and where we're looking to deploy and how many of our algorithms. But for now, on behalf of the team, I want to thank you all for your continued support. We look forward to sharing progress over the coming quarters.

Anthony, I'll hand it over to you for the financial results in more detail.

[Anthony Lam, executive]

Thank you, James. Before I begin, I'd like to remind everyone that all of the figures I will be discussing today are in Canadian dollars, and our financial statements are presented in accordance with IFRS International Financial Reporting Standards.

Our third quarter 2025 results are as follows: HEALWELL achieved quarterly revenues of $30.4 million during Q3 2025. This compares to $6.7 million generated during Q3 2024, an increase of 354% Revenue growth in the quarter was primarily driven by the acquisition and integration of Orion Health, along with both organic and inorganic initiatives.

HEALWELL achieved gross profit of $16.5 million during Q3 2025, an increase of 330% compared to $3.8 million in Q3 of 2024. This increase was tied directly to higher revenues in the quarter. HEALWELL achieved gross margin percentage of 54% during Q3 2025. This compares to 57% in Q3 2024.

During Q3 2025, HEALWELL reported positive adjusted EBITDA of $0.7 million compared to an adjusted EBITDA loss of $2.8 million in Q3 of 2024. This marks the company's second consecutive quarter of positive adjusted EBITDA, highlighting continued execution improvements and stronger financial performance.

HEALWELL reported an IFRS net loss from continuing operations of $16 million for Q3 of 2025. This compares to a net loss of $8.7 million in Q3 of 2024. HEALWELL ended the quarter on September 30 with $15.6 million in cash, an increase when compared to $9.4 million at the end of Q4 2024.

Looking at our revenue segments. As of November 1, 2025, following the divestiture of the company's Clinical Research and Patient Services division, HEALWELL now generates revenue across 2 core segments: first, AI and data science; second, health care software. Our AI and data science segment achieved revenue of $2 million in Q3 2025, marking a 79% year-over-year growth compared to Q3 of 2024. The commercial adoption across all of our offerings, including Khure and Pentavere technology, drove strong organic growth in the quarter, reflecting increasing demand for HEALWELL's AI-powered disease identification and clinical insight tools.

The second revenue stream is health care software, which generated $28.4 million in revenue in Q3 2025, an increase of 408% from $5.6 million in the same quarter last year. The acquisitions of Orion Health and VeroSource have been the primary drivers of growth in this segment. With the recent divestiture of noncore assets, HEALWELL is now fully focused on driving growth, innovation and profitability across its 2 high-margin scalable segments, AI data science and health care software.

With that, I'll turn the call over to our President, Alexander Dobranowski, for an update on progress that we made with regards to our AI division.

[Alexander Dobranowski, executive]

Thank you, Anthony, and thank you, James. I'd like to take a few minutes to highlight some of our progress we have made in Q3 with regards to our AI division. Most notably, in Q3, we achieved full ownership of Pentavere, enabling deeper integration of DARWEN AI with Khure Health for early disease detection and clinical insight generation. In addition, we launched Amadeus AI, integrating DARWEN into Orion Health's Amadeus platform, extending HEALWELL's AI capabilities across global health care systems.

From a peer-reviewed validation perspective, our teams under the leadership of our Chief Medical Officer, Dr. Chris Pettengell and the Co-Founders of Pentavere, Aaron Leibtag and Steve Aviv have now published over 40 peer-reviewed scientific publications, underscoring HEALWELL's leadership in validated and clinically proven AI solutions.

Subsequent to the quarter, as James and Anthony mentioned, we recently announced a 50-50 joint venture with WELL Health to build an AI-driven clinical research platform. By actioning this, we have transitioned HEALWELL into a pure-play AI and SaaS health care company focused on preventative care and early disease detection. Our AI platform powers this JV, automating patient recruitment, trial execution and real-time data insights. Ultimately, now, our strengthened balance sheet and focused operations enable global expansion of HEALWELL's AI commercialization strategy.

From an outlook perspective, we are currently demonstrating continued expansion of proof-of-value AI projects with health care systems across North America. Our ongoing and progressing discussions with global pharmaceutical and research organizations to extend AI-driven real-world evidence and clinical data programs continues to progress, and we are now commercially active with 8 of the top 10 world's largest pharmaceutical companies, and this roster continues to grow.

We also recently announced one of the world's first examples of using AI to generate regulatory-grade real-world data for supporting patient access and advancing the pharmaceutical industry. These types of capabilities are key differentiators of HEALWELL and our artificial intelligence engine, highlighting us as leaders in this section. A key focus for us in 2026 is scaling DARWEN AI commercialization and demonstrating measurable clinical and economic outcomes.

And with that, I'd like to thank everybody today for attending this call, and I'll now hand it back to the operator and move to the Q&A portion. Thank you.

[Operator]

[Operator Instructions] We'll take our first question from Allen Klee at Maxim Group.

[Allen Klee, analyst]

Nice to hear from you guys. Just on what you're doing with Orion and cross-selling opportunities with the rest of your business and how you're thinking about how that can all expand your total addressable market and opportunities?

[James Lee, executive]

Look, and if I've understood the question correctly, what you've asked is how we look and expand the overall market as we integrate through the Orion network. I think what you've seen there is that it's not just the existing customers, the Orion network that we're spanning over. What we've actually found is the broader footprint Orion has and reputation has significantly enhanced the size of that market. So while we thought the original proposition was we would cater to existing customers, actually, the brand recognition in different regions has been really, really favorable.

But if you think about the market opportunity, what it's led us to do is go from just being at the governmental and integration layer levels right down now to the hospital level. We are seeing that the market size from where we can add value is like I'll make up a number, but 10x to 15x larger.

[Allen Klee, analyst]

And then just last question on -- with your AI business, what are the main areas that you're kind of -- you're working on proof of concept, but just in general, in terms of commercializing the business more. Can you talk about kind of what the main initiatives are?

[James Lee, executive]

Sure. And just for the vernacular, we use proof of value because I think the concept and an important distinction is the concept is clearly been proven. What we're demonstrating now is that our deployments are providing value to a health care system. So look, as we look across the opportunity set, the best way to think about it is that if we just take a small subset to get the numbers relevant, if you took the top 100 health care systems in the U.S. and what you have there is a patient identification of where just 100 disease states would mean up to 2 million patients are being either misdiagnosed or underdiagnosed.

And so for us, the opportunity set there is to take just a small subset. So to prove that value that we could take 10 most relevant, whether that's from [ heart valves ] or through oncology, what we're trying to do is take a very small subject to prove value before we take the wider array of products out. But in general, we can find 105 different disease states, and we think just the top 10 would cover about 1/3 of the opportunity. So we're trying to remain disciplined and focused with a smaller subset so we can prove scale first in the North America.

[Operator]

We'll move next to Michael Freeman at Raymond James.

[Michael Freeman, analyst]

Congratulations on the quarter and all the action. I wonder if -- first, congratulations on the launch of Amadeus AI. I'm glad to see this being deployed through the Orion network. I wonder if you could describe some of the traction you're seeing, some of the reasons why your customers might be adopting this. And then I wonder if you could describe, I guess, preview for us, a product road map of where you're going to further leverage your internal AI capabilities through the organization.

[James Lee, executive]

Yes, great question. I guess let's start with the reasons. So we'll just use one example. And so the example we like to use as we go through it. So if we've got 105 disease states, what does that actually mean? The one that we try and use is the cardiovascular. So Alex, do you want to give a rundown, obviously, we presented that recently of the one project we're running through in the U.S. right now.

[Alexander Dobranowski, executive]

Yes, sure. We would love to. And Michael, thanks very much for the question. So I think one capability that, of course, we kind of anchor around the mission of the company, right, is early disease detection, okay? So -- and what does that mean now practically deployed, right, within a health system or a public sector partner?

Well, one example is our capability to be able to screen patient populations and find these at-risk patients and effectively produce a list that then physicians can go and take action on. And one particular example we're working on is there's a number of patients that have worsening heart disease, and they're great candidates for having a heart valve to be replaced. So we're able to identify these patients that are fully reimbursable that should be on track to have this intervention. They're effectively patients that have fallen to the wayside. And we're able to identify them, get those lists to the physician, the physicians can then take action. And then it leads to a number of interesting outcomes.

Number one, of course, the patient is on the right and appropriate care pathway. But number two, this is also a revenue-generating initiative for the hospital system. So that's kind of one clear example of us working very focused in one area, which is in cardiology. And then there's, of course, a host of other areas and domains where we have expertise to be able to execute against this.

[James Lee, executive]

Thanks, Alex. Well, I think it's that definition in the U.S. that the American market sees it as a revenue opportunity as opposed to a outcome you see in Commonwealth countries, which has been both not surprising, but really encouraging about the adoption rate in the U.S.

[Michael Freeman, analyst]

Okay. And I wonder, in that cardiology example, it appears that the health care system is your customer, where there might be -- there also may be an opportunity with the specific heart valve companies like working with in Edwards, and which resembles the approach perhaps that you're taking with the life sciences companies linking up with Cure Health. Can you describe the reason -- I guess, the rationale for pursuing health care systems versus working directly with life sciences companies in this way?

[James Lee, executive]

Yes. Look, I guess there's a bunch of stuff in that. I'd start from the basis they're not mutually exclusive. So we can do both. It's the same data with the same signal. The second thing I'd say is that it depends where the data sources, right? And so if you're using a hospital's data rather than our data, the hospital is using the componentry of what they already have for their own benefit, and we're enabling that and giving them insight. They may not wish other people to have that access to that data. But more importantly, we think about it as 2 flywheels. And so what I mean by that is that the flywheel we have in Canada of identifying patients and working with life sciences creates more opportunities and more disease states and knowledge to then go to a health care system and say, there are other ways we can use this data. And what we're finding is you can do both.

So yes, we can maintain our work with our life science customers. But in different regions, the health care system, what you got to remember is the core component of what we put together, why Orion and HEALWELL made so much sense because their business is health care systems as opposed to life sciences businesses. But the adoption of AI within health care systems will be at a different rate than it will be in life sciences. So we see them as not mutually exclusive, but we actually see them as complementary, Michael.

[Michael Freeman, analyst]

Okay. All right. And last very quickly. We just -- from last quarter to this quarter, we saw health care software revenue step down marginally. Can you explain this step down and perhaps let us -- get us your thinking on when we expect that segment revenue to turn around and begin growth?

[James Lee, executive]

Yes. Good question. I think, look, professional services, there are 2 things going there. Obviously, it's not a straight line. It's a lumpy business. So you'll have one quarter will be up, one quarter will be down depending on deliverables. What I would say is that the growth comes in is not a linear line. It will come in like every time a new customer comes is significant, but it's not a week. And so professional services quarter-by-quarter will be lumpy. This quarter, we were working through obviously Northern American summer. So customers being ready to take product as a core component of professional service revenue and hitting key milestones. So look, I don't want to give the impression that it's a straight line professional services. There will be some quarters. Obviously, Q2 was a positive quarter. It was above expectations.

In terms of growth, you should expect that some years, that business will grow at 5% and the other years it will grow much higher rate than that depending on whether -- when new customers land because when you win a new customer, professional services revenue comes in before recurring. And that can be a 1-year lag before we implement into the recurring from professional service revenue. So our focus in '26 is clearly driving our AI and data science revenue, which is probably more linear.

[Operator]

We'll go next to [indiscernible] at Canaccord Genuity.

[Unknown Analyst]

Congratulations on the quarter and recently announced divestments. So my first question is on the Middle East partnership that you recently announced through an MOU with Lean Business Services. Would you be able to tell us more about your plans in this region and what this opportunity entails?

[James Lee, executive]

Yes. Look, Lean has been a wonderful partner for the business as it is before. Look, I think what we see with Lean is that they've built real capability in the region and over the top of our existing products. So the opportunity set for us is taking what they've already built across our platform globally, and then within the region for them to be a reseller of what we've built in their environment. That will open up materially new markets that we don't have access to in sales capacity within the Gulf. And our global footprint of taking some of their products is material as well. So we see it as one of the few win-wins you can have in health care where it's noncompetitive. We look at the region the relationships, the expertise they have to expand, and we obviously have the global reach within our network.

[Unknown Analyst]

That sounds pretty exciting. And then maybe a follow-up on HEALWELL's appetite for additional M&A. So following your recent meetings with several potential targets from the U.K., as you mentioned, and what does your pipeline look like? And given the recent divestments, do you think you're in a better position to resume M&A activity?

[James Lee, executive]

Look, M&A activity has been a core component, being good allocators of capital for HEALWELL. We're maintaining a deep pipe of various stages across all parts of the market. The reality is that we're looking currently at tuck-ins, as we said, the key focus for us in the next 6 months is remain disciplined and focused, but not give up the pipeline. So what I mean by that is the deals that we're looking at will take longer than 3 months to consummate, but we don't want to distract the team from what the opportunity set is improving value.

I'm sure everyone on this call is looking forward to when we can show the clinical validation and commercial validation across the Orion network. And we're very, very focused on demonstrating that. So what I think you can expect is that M&As will be a core component of the business. But for the next quarter or 2, we need to demonstrate the organic and commercial validation of what we're doing, not just the clinical validation.

[Unknown Analyst]

Sounds great. Certainly, I'm looking forward to hear more good news from you guys.

[Operator]

We'll take our next question from Rob Goff at Ventum.

[Rob Goff, analyst]

Congrats on all the efforts and successes within the quarter.

[James Lee, executive]

Thanks, Rob. It's been a busy quarter, but the teams did really well. So it's exciting to be here.

[Rob Goff, analyst]

Very good. And looking forward, can you discuss the current POVs outstanding? And how would you measure the success or performance of expanding that pipeline of POVs in the first quarter?

[James Lee, executive]

Well, I think Alex did a great job of explaining one of those POVs. What we're doing is -- but I'll talk about sort of how it works. We take a small portion of their data to prove the value that we're talking about. So rather than give them a list on all of their patients, we give them a list of what they can deal with in the next quarter. And so it's -- what we're building in the -- particularly in the U.S. is a rinse and repeat model, so we can go and take the same algorithm to a different non-competitive health care system. And so given the sheer size of the U.S., what we're trying to do is focus on a small set of subsets of our capability, demonstrate it at scale and then land and expand.

Now what we're seeing is that there are multiple different uses. So we're not looking at just like hospital systems. We're looking across med tech businesses, government entities, regulators, pharmacies. So what we're trying to do is demonstrate the breadth of different health care systems that we can integrate with not just -- and I use health care systems as vernacular to anything outside life sciences. The core components, the insight that we can get from that clinical data, whether that's used by health care systems, life sciences, hospitals, insurers is the same insight. It's just got multiple use cases.

[Rob Goff, analyst]

Okay. And perhaps it's simplistic, but in terms of tracking it, is something where you could say you currently have 5 proof of values and you're looking to add another 5 in the first quarter or anything to track the momentum there?

[James Lee, executive]

Yes. No, in first quarter, we'll come through how we think about those numbers. But I think the numbers you had there, we're doing more than those. What we're trying to do is be very disciplined this quarter to ensure they're successful. And then we'll start tracking out both the scale of where we're going in the different markets. But our initial approach is to try and have one in each region and one in each product. And so there's well north of 5. But you'll see us talk about those numbers in early 2026.

[Rob Goff, analyst]

Very good. And one last question, if I may. Could you discuss your RFP pipeline? Is it an active market at this time?

[James Lee, executive]

Look, yes, the RFP pipeline is actually quite active. What we're finding is that there's multiple RFPs for all of our products in most regions. AI-enabled platforms are now becoming part of the RFP process. We're starting to see in Europe, in particular, the RFPs, including other common use cases, including how you integrate with life sciences. I think health care systems are becoming a lot more open to what they do with their own data. And so our experience of working in life sciences in North America is a real value outside the rest of the world. Yes, 2025, we saw an election cycle, both in Canada and the U.K., which slowed down adoption. But what we're seeing now is that the RFPs are back on right across the business. In fact, every part of our business has got a significant pipeline of RFPs. Obviously, what I would say in health care systems, they are long-dated, big processes, big dollar values.

[Operator]

Our next question comes from Brian Kinstlinger at Alliance Global Partners.

[Brian Kinstlinger, analyst]

So as adoption of your AI increases, and I know you're targeting 50% plus annual growth or more, how should we think about the mix of professional services versus subscriptions in that one segment?

[James Lee, executive]

Look, that's a really good interesting question, something you'll see us define more clearly in forward quarters. I think professional services in our AI business probably looks more reoccurring. And so it's not as professional services like it is in software. And so often we find in life sciences that it is a multiyear relationship, not a one-off PSG. So I think we're going to -- we've obviously taken the feedback on that from the investor and analyst community that we need to do a better job of describing that what is PSG and software is not PSG and AI and data science.

[Brian Kinstlinger, analyst]

But the sequential reduction in professional services, that was a one-off project, yes, excluding the divestiture.

[James Lee, executive]

Now are we talking now in AI and data science?

[Brian Kinstlinger, analyst]

We are, yes.

[James Lee, executive]

Yes. No. So Northern Hemisphere quarter, the summer is you're going to see seasonality. We definitely see in life sciences, holidays being taken. And that's why we saw the ramp-up in September, significant ramp-up in September versus July and August.

[Brian Kinstlinger, analyst]

That's helpful. My last question is, as we look at the subscriptions revenue piece of AI, I know pharma and life sciences makes up the majority of that. Are there any hospital systems or clinics or anyone else taking outside of life sciences that are paying for subscriptions yet?

[James Lee, executive]

We do work with all of them. I think the reality is that they're de minimis in the scheme of things currently, the life science is the bulk of them, that you'll start to see that revenue be recognized and grow materially as we go into 2026.

[Operator]

We'll go next to Daniel Rosenberg Paradigm.

[Daniel Rosenberg, analyst]

My first one just comes around the proof of value that you spoke of. I was just curious how easy or hard is it to go to market with these proof-of-value concepts? Do you find it's early adopters? Or is it more broadly than that? People are curious to explore the capabilities of the AI.

[James Lee, executive]

Look, I would say the adoption cycle in North America is faster. It's not just early adopters. I think the reality is that it's a new segment in the U.S., helping burdened and profit struggling entities find patients where they can generate revenue and give better patient outcomes is something that hasn't really existed over there. So I think what we're actually seeing is that it's not just the early adopters, but actually people with large bases. It means the conversations are swiftly with CFOs, not just with medical offices.

So what I would suggest is that what we're seeing in the U.S. because of the profit-centric nature of that health care system is that the adoption cycle to get to procurement is faster. Procurement and legal is still a slow process. It's weeks and months, not days, but I would say that we are at the very front line of what AI experimentation has been happening in the U.S. I mean a lot of what is workflow tools and our tools are very different to that.

[Daniel Rosenberg, analyst]

And then you mentioned some -- the time it takes to go through procurement and legal. So how do you think about the sales cycle? And then perhaps as you think about competitors trying to go to the market, is there an advantage you have there just based on Orion's history, the Pentavere research you have out there? How helpful is that getting you through the door?

[James Lee, executive]

Look, immensely helpful. I mean, at the end of the day, what you need in any market is cut through. So we have an established brand that's been there 20, 30 years. We're not a start-up. We have clinically validation -- clinical validation on multiple disease states. We're not picking on one thing with one department. We can talk across most components of health care. And so we are peer-reviewed published, and I think the number grows every day, but from my understand, it's well over 50x now, I think 45x, 3 months ago. So we're publishing on a regular basis, new disease states.

And I think even our validation we've got with life sciences, we work with the largest life sciences companies in the world. So I think that validation component and reputation is vastly important because privacy and security is a core competency in the U.S. you're using health care data. So as we walk along in a, what I would say, sea of AI, I think we really stand out. It's very hard to find anything that's been clinically validated and peer reviewed published as often as we have. And certainly, it's very hard finding with the long-term reputation that Orion has had. So going back to the industrial logic of the 2 acquisitions, Pentavere and Orion, we are seeing market fit and why that works in the U.S. right now. But I use U.S. loosely, like I think North America is probably is a better phrase than just the U.S.

[Daniel Rosenberg, analyst]

Good to hear. Last one for me, if I may. It sounds like early disease detection, we're obviously in the very early days of AI, very early days of proof of concepts and showing -- commercializing it. But it sounds like it can expand dramatically. I'm just wondering how do you think about that balance of taking one concept, growing it, scaling it versus expanding into other verticals and the cost and resources to do that.

[James Lee, executive]

Yes. Look, we've taken the approach of "crawl, walk, run" as Sacha, our COO, will talk about. So what we've gone into is make sure that the foundations of how we get the data out and how we put into our algorithms is scalable and repeatable. And so a lot of the work at the moment from the team and make sure the technology is deployed on the ground. So our core part of this is going to the U.S. is the data can't leave the U.S. So we have to deploy a team there. But once we've got the infrastructure right and we know what disease states, it's actually a relatively fast follow-on of the next step. Once the pipes are in, if you think about it, of how we get the data out, we know what to look for and set DARWEN over. We just need to tune it.

So it's the same clinical data we're pulling out and it's just different insights we're drawing from it. So when you think about the model, the model was new health care systems, there is a deployment of getting the data into DARWEN. But once you're in there, then expanding it over 1 disease state to 10 to eventually 105, that stage is a much faster and easier deployment cycle than a new customer. And so our focus today is to go wide and then go deeper.

[Operator]

We'll move next to Justin Keywood at Stifel.

[Justin Keywood, analyst]

Nice to see the results. On the MOU with Lean Business Services in Saudi Arabia announced last week, are we able to quantify that opportunity? I know historically, Orion has been very active in the Middle East. And how should we monitor that opportunity going forward? And any indication of the potential TAM or size?

[James Lee, executive]

Yes. Look, obviously, it's early days in any MOU. But what I would suggest is, yes, there has been success in the Middle East, but I think the Middle East is a much bigger market. And as health care systems grow, the wonderful thing that the Middle East has and why Lean is such a great partner is there are regions where we don't have people on the ground. And so working with them to deploy some of our platforms in either the Middle East or even if they take it to Africa, the regions that we're not focused on currently.

And so the reality is what is a wonderful partnership because what it brings to us is that we focus on our core markets where we've got expertise, people on the ground, talking Europe, North America, Asia. But in the areas where we don't have capacity, we don't have to give up on those. And so Lean is a wonderful partner in that thing that it's a conjunct, if you like to think about it, and bring parts of the market that we're not currently servicing.

[Justin Keywood, analyst]

Interesting. Absolutely. And then just on the growth in the quarter, obviously, a big step-up. Is there any indication of the organic expansion?

[James Lee, executive]

Yes. Look, the short answer is that, obviously, AI is predominantly organic expansion and growth. And I appreciate your comment that much of our software growth has been the Orion and VeroSource acquisitions. The reality is in the sector is that between Q2 and Q3, the professional services number was flat to down. And so the organic growth was, therefore, very low between the quarters. I think you will continue to see that PSG being volatile, as I said before, and that will come in a lumpy stage. The nature of the contracts is they are very large, but long dated. And so it won't be a straight-line quarter-by-quarter growth.

[Operator]

Next, we'll move to Gianluca Tucci at Haywood Securities.

[Gianluca Tucci, analyst]

Just one question here. Could you perhaps update us on how you're seeing cost synergies play out across the entities post Orion acquisition?

[James Lee, executive]

And, [ Lam ], why don't I leave that to you.

[Anthony Lam, executive]

Yes, absolutely. Great question, Gianluca. Since the acquisition, we've been really ramping up our work with the team at Orion. And we've got, as you can appreciate, a mature experienced team there and looking at the best of all our business units, and we're finding that there's some really good synergies that we will realize. It will take a little more time for us to see that. We'll see that benefit as we get into the 2026 fiscal year, but we're certainly seeing a lot of benefit to having the large team there that has the experience we need across the organization. And so those synergies will be realized. It just -- it will be something that we'll see in 2026.

[Gianluca Tucci, analyst]

Okay. And if I could just ask follow-up question on the sales cycle process. As you work through these POCs or POVs, James, are you seeing more eagerness from clients who have a better understanding of the technology just given the state of AI globally today?

[James Lee, executive]

I'll sort of paraphrase that a little bit. But the -- particularly in the U.S., the understanding and willingness to deploy AI is very high. Some of our health care systems have got 50-plus projects that have been [ tried them ] in any quarter. So there's definitely an understanding that to improve profitability, they need to use AI a lot. And there are a lot of different products. What I would suggest is that most of the workflow products that they've seen currently to reduce that burden. You've probably all seen charts that the administrative burden of health care is way outstrip the cost of health care from a clinical point of view, particularly in the U.S. So they're trying to solve that burden. And where we're coming in a different space because of the willingness to look at AI is that we're in a very narrow field of -- by the way, we can find revenue. You can focus on your cost through the other providers, but we are a different type of AI solution for you. And that has a real cut through.

[Operator]

And that concludes our Q&A session. I will now turn the conference back over to James Lee for closing remarks.

[James Lee, executive]

Look, I just want to thank everyone. I really appreciate the engagement. Look, Q3 was a big quarter for us. I think I read a research report saying it was surgical amputation, which I thought was a lovely way to phrase it that we've gone through the business. We've looked at what we need to sharpen our business. And going into the end of the year and next year, we're really excited about what we're seeing. I think we're looking forward to talking to you early next year about these proof of values and showing commercial validation. But thank you for everyone's support to the team. Thank you for your hard work and throughout to the Board and to our shareholders, we appreciate all the support. All the best.

[Operator]

And this concludes today's conference call. Thank you for your participation. You may now disconnect.