HEALWELL AI Closes the $25.5M Equity Tranche of Its Upsized Bought Deal Financing

Rhea-AI Summary

HEALWELL AI has completed the equity tranche of its upsized $55 million bought deal financing, raising gross proceeds of $25.5 million through the issuance of 12,737,500 subscription receipts at $2.00 per receipt. Each subscription receipt will convert into one Subordinate Voting Share and half a warrant, with whole warrants exercisable at $2.50 for 36 months.

The proceeds will fund the acquisition of Orion Health Holdings . The funds are held in escrow pending satisfaction of release conditions, primarily the completion of the Orion Health acquisition. The company expects to complete the convertible debenture portion of the financing around January 28, 2025.

Company insiders participated in the financing with 550,000 subscription receipts, representing approximately 4% of the equity tranche proceeds. If release conditions aren't met by June 30, 2025, the subscription receipts will be cancelled and funds returned to holders.

Positive

• Secured $25.5M in equity financing through subscription receipts
• Strong institutional support with Eight Capital and Scotia Capital as lead underwriters
• 36-month warrants provide potential additional capital at $2.50 exercise price
• Insider participation demonstrates management confidence with 4% of equity tranche

Negative

• Funds locked in escrow pending acquisition completion
• Risk of funds return if acquisition conditions not met by June 30, 2025
• Potential dilution from conversion of subscription receipts and warrants

• HEALWELL has completed the equity tranche of its previously announced upsized $55 million bought deal financing, raising gross proceeds of $25.5M.
• The proceeds of the financing will be used to fund the previously announced acquisition of New Zealand based Orion Health.
• The balance of the bought deal financing consists of the convertible debenture portion of the offering, which the Company is now targeting to complete on or about January 28, 2025.

Toronto, Ontario--(Newsfile Corp. - January 21, 2025) - HEALWELL AI Inc. (TSX: AIDX) (OTCQX: HWAIF) ("HEALWELL" or the "Company"), a healthcare artificial intelligence company focused on preventative care, is pleased to announce that it has completed the first tranche (the "Initial Closing") of its previously announced $55 million bought deal private placement financing (the "Offering"), co-led by Eight Capital and Scotia Capital Inc., as lead underwriters and joint bookrunners, together with a syndicate of underwriters (the "Underwriters"), raising aggregate gross proceeds of approximately $25.5 million. The proceeds, less a portion of the fees and expenses of the underwriters (the "Underwriters"), have been deposited in escrow pending the satisfaction of certain release conditions, including that all conditions precedent to the acquisition by the Company of Orion Health Holdings Limited (the "Acquisition") have been met (the "Release Conditions").

The Company is continuing to work with the Underwriters of the Offering on the convertible debenture portion of the financing, which the Company is now targeting to complete on or about January 28, 2025.

Details of the Subscription Receipts Financing

The Company has issued a total of 12,737,500 subscription receipts of the Company (the "Subscription Receipts") at a price of $2.00 per Subscription Receipt, for total gross proceeds of $25,475,000. Each Subscription Receipt will entitle the holder thereof to receive, upon satisfaction of the Release Conditions and for no additional consideration, one unit of the Company consisting of one Class A Subordinate Voting Share (a "Subordinate Voting Share") and one-half of one Subordinate Voting Share purchase warrant, with each whole warrant (a "Warrant") exercisable at a price of $2.50 for a period of 36 months following the closing of the Offering.

The gross proceeds of the Initial Closing, less 50% of the Underwriters' cash commission and certain expenses of the Underwriters, have been deposited in escrow until the satisfaction of the Release Conditions. In the event that the Release Conditions have not been satisfied prior to 5:00 p.m. (Vancouver Time) on June 30, 2025, or the Company advises the Underwriters or announces to the public that it does not intend to satisfy the Release Conditions or that the Acquisition transaction has been terminated, the aggregate issue price of the Subscription Receipts (plus any interest earned thereon) shall be returned to the applicable holders of the Subscription Receipts, and such Subscription Receipts shall be automatically cancelled and be of no further force and effect.

On completion of the Initial Closing, the Company also issued to the Underwriters a total of 453,750 warrants for Subordinate Voting Shares with a three-year term and an exercise price of $2.08/share as partial compensation for their services.

Certain insiders of the Company (the "Participating Insiders") participated in the Initial Closing for an aggregate of 550,000 Subscription Receipts (which may result in the issuance of up to 825,000 Subordinate Voting Shares), representing approximately 4% of the gross proceeds raised in the Initial Closing and 2% of the gross proceeds expected to be raised by the entire Offering. Such participation is considered a related party transaction within the meaning of Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions ("MI 61-101"). In completing the Initial Closing, the Company relied on the applicable exemptions from the formal valuation and minority security holder approval requirements available under Sections 5.5(a) and 5.7(1)(a) of MI 61-101, respectively, on the basis that neither the fair market value of the subject matter of, nor the fair market value of the consideration for, the Initial Closing, insofar as it involves the Participating Insiders, exceeds 25% of the Company's market capitalization calculated in accordance with MI 61-101. The Initial Closing was approved by the Company's board of directors, with any Participating Insiders declaring their interest and recusing themselves from voting and deliberations on its approval. The Company did not file a material change report 21 days prior to the closing as the details relating to the participation of the Participating Insiders were not settled until shortly prior to the closing. Further information regarding the Initial Closing will be provided in a material change report to be filed by the Company.

Gardiner Roberts LLP acted as counsel for the Company and Wildeboer Dellelce LLP acted as counsel for the Underwriters in connection with the Offering.

Dr. Alexander Dobranowski
Chief Executive Officer
HEALWELL AI Inc.

About HEALWELL

HEALWELL is a healthcare artificial intelligence company focused on preventative care. Its mission is to improve healthcare and save lives through early identification and detection of disease. Using its own proprietary technology, the Company is developing and commercializing advanced clinical decision support systems that can help healthcare providers detect rare and chronic diseases, improve efficiency of their practice and ultimately help improve patient health outcomes. HEALWELL is executing a strategy centered around developing and acquiring technology and clinical sciences capabilities that complement the Company's road map. HEALWELL is publicly traded on the Toronto Stock Exchange under the symbol "AIDX" and on the OTC Exchange under the symbol "HWAIF". To learn more about HEALWELL, please visit https://healwell.ai/.

About ORION HEALTH

Orion Health is a global healthcare technology company focused on reimagining healthcare for all. Orion Health is leading the change in digital health with health and care organizations to improve the wellbeing of every individual with our world leading Unified Healthcare Platform. Made up of a Virtuoso digital front door, Amadeus digital care record, and Orchestral health intelligence platform - each underpinned by extensive health and social data sets, machine learning, and 30 years of innovation focused purely on improving global well-being. www.orionhealth.com.

Forward-Looking Statements

Certain statements in this press release, constitute "forward-looking information" and "forward looking statements" (collectively, "forward looking statements") within the meaning of applicable Canadian securities laws and are based on assumptions, expectations, estimates and projections as of the date of this press release. Forward-looking statements in this press release include statements with respect to, among other things, the intended uses of the proceeds of the Initial Closing, the anticipated timing of completion of the balance of the Offering, the pending acquisition by the Company of Orion Health and the potential future satisfaction or non-satisfaction of the Release Conditions. Forward-looking statements are often, but not always, identified by words or phrases such as "continuing to", "expect", "anticipate", or variations of such words and phrases or statements that certain future conditions, actions, events or results "will", "may", "could", "would", "should", "might" or "can" be taken, occur or be achieved, or the negative of any of these terms . Forward-looking statements are necessarily based upon management's perceptions of historical trends, current conditions and expected future developments, as well as a number of specific factors and assumptions that, while considered reasonable by HEALWELL as of the date of such statements, are outside of HEALWELL's control and are inherently subject to significant business, economic and competitive uncertainties and contingencies which could result in the forward-looking statements ultimately being entirely or partially incorrect or untrue. Forward looking statements contained in this press release are based on various assumptions, including, but not limited to, the following: the parties' ability to satisfy any conditions precedent to completion of the Acquisition and the balance of the Offering, including receipt of all shareholder, regulatory and TSX approvals; HEALWELL's ability to complete the Acquisition and the balance of the Offering or to complete them on the terms described above; HEALWELL's ability to continue to access sources of debt and equity financing and the terms on which such financing may be provided; HEALWELL's ability to integrate the acquired businesses, products and services with its own; the stability of general economic and market conditions; HEALWELL's ability to comply with applicable laws and regulations; HEALWELL's continued compliance with third party intellectual property rights; and that the risk factors noted below, collectively, do not have a material impact on HEALWELL's business, operations, revenues and/or results. By their nature, forward-looking statements are subject to inherent risks and uncertainties that may be general or specific and which give rise to the possibility that expectations, forecasts, predictions, projections, or conclusions will not prove to be accurate, that assumptions may not be correct, and that objectives, strategic goals and priorities will not be achieved.

Known and unknown risk factors, many of which are beyond the control of HEALWELL, could cause the actual results of HEALWELL to differ materially from the results, performance, achievements, or developments expressed or implied by such forward-looking statements. Such risk factors include but are not limited to those factors which are discussed under the section entitled "Risk Factors" in HEALWELL's most recent annual information form dated April 1, 2024, which is available under HEALWELL's SEDAR+ profile at www.sedarplus.com. The risk factors are not intended to represent a complete list of the factors that could affect HEALWELL and the reader is cautioned to consider these and other factors, uncertainties and potential events carefully and not to put undue reliance on forward-looking statements. There can be no assurance that forward looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Forward-looking statements are provided for the purpose of providing information about management's expectations and plans relating to the future. HEALWELL disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, or to explain any material difference between subsequent actual events and such forward-looking statements, except to the extent required by applicable law. All of the forward-looking statements contained in this press release are qualified by these cautionary statements.

For more information:

Pardeep S. Sangha
Investor Relations, HEALWELL AI Inc.
Phone: 604-572-6392
ir@healwell.ai

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/237934

FAQ

How much did HEALWELL AI (HWAIF) raise in its equity financing tranche?

HEALWELL AI raised gross proceeds of $25.5 million through the equity tranche of its bought deal financing by issuing subscription receipts at $2.00 per receipt.

What is the exercise price and term for HWAIF's new warrants?

The warrants have an exercise price of $2.50 and are exercisable for a period of 36 months following the closing of the offering.

When will HEALWELL AI (HWAIF) complete the convertible debenture portion of the financing?

HEALWELL AI is targeting to complete the convertible debenture portion of the financing on or about January 28, 2025.

What happens to HWAIF subscription receipts if release conditions aren't met by June 30, 2025?

If release conditions aren't met by June 30, 2025, the subscription receipts will be cancelled and the funds will be returned to the holders with any earned interest.

How much insider participation was there in HWAIF's equity financing?

Insiders participated with 550,000 subscription receipts, representing approximately 4% of the equity tranche proceeds.