Overall, about one in five Canadians suffer from some kind of chronic pain — blinding headaches, chronic back pain, or pain after a surgical procedure. Yet patients have difficulty getting help because doctors tend to look at chronic pain as a secondary problem.
Fortunately, Pathway Health Corp is committed to helping Canadians struggling with terrible pain.
The Toronto-based company has established a network of nine specialized medical clinics across four provinces in Canada to treat patients with chronic pain. Pathway Health’s Virtual Clinic division also boasts the largest medical cannabis telemedicine network in Canada.
In March 2021, Pathway Health and Colson Capital Corp closed a $13.8 million financing in line with a previously announced proposed reverse take-over of Colson by Pathway. The company expects a relatively tight float when it begins trading in an April/May timeframe.
Proactive sat down with Pathway Health president Wayne Cockburn to discover how the company is offering pain services in major markets in Canada, listing soon on the TSX Venture Exchange, and seeing rapid growth.
Proactive: Pathway Health recently closed an oversubscribed financing for $13.8 million as part of a go-public round. What does Pathway look like as an investment leading up to trading?
Wayne Cockburn: Canaccord Genuity went to market with a brokered deal for Pathway for $10 million earlier this year but because of strong interest in the deal, the size was increased to $13.8 million. We were very pleased with the level of interest in our company and also recognize that there is currently a great deal of attention on the healthcare/telehealth space. With insiders holding more than 60% of Pathway Health shares and another 30% being held by investors who have just invested, we expect a relatively tight float when we begin trading in the April/May timeframe. We have been told by the TSX Venture Exchange that ‘PHC’ has been reserved for us as our trading symbol.
Pathway Health has medical clinics, and owns the largest chronic pain telehealth network in Canada, while eyeing the over-the-counter CBD and medical cannabis health products pharmacy space. Please tell us more about the group’s three business pillars.
The first of the three pillars of our business is our Clinical Services division, where we provide traditional, interdisciplinary chronic pain care through our physician specialists. These services are provided from our physical clinic locations in the provinces of Ontario, Saskatchewan, Manitoba, and Quebec, and we have plans to acquire or open other locations in other major hubs in Canada.
The second pillar is our Virtual Clinic division where among other things, we operate the largest medical cannabis telemedicine network in Canada, serving over 50,000 active patients with our licensed producer partners. Most of our pharmacy collaboration agreements also operate through this business unit, as well as all business initiatives involving our proprietary SPARK software.
The third pillar is our Product division where we currently sell assistive devices to patients suffering from chronic pain. But this is also the unit that will be developing and distributing the proposed Cannabis Health Products to Pathway’s own patient base, in addition to private label and co-branded products with some selected pharmacy retail companies.
How big is the chronic pain market and the scope of opportunity for a company like Pathway?
There are more than 7 million Canadians aged 15, or older that live with chronic pain. That’s one in four for this age group. The government estimates that the total direct and indirect cost of chronic pain is about $40 billion. And there is a shortage of trained pain specialists in Canada and wait times for an initial consultation can be anywhere from one to three years.
The market is very large, and our growth is expected to come through expanding our relationships with primary care physicians, allied health clinicians and medical specialists, as we expand our referral platform. Our organic growth will come from recruiting new physicians to join Pathway and by offering pain services in major underserviced markets in Canada.
Please walk us through the company’s strategic expansion and initiative with pharmacy companies?
Our partnerships with the pharmacy companies are very important to us and we work with them in several ways. For example, included in all our pharmacy agreements is open access to our bilingual, online accredited course, "Cannabis and Patient Care for Pharmacists." Completing this course provides our partners’ pharmacists with the certification they will eventually need to keep their license in good standing with their respective colleges.
A second initiative involves the implementation of our proprietary Medical Cannabis Management System (MCMS) with our pharmacy partners. MCMS is designed to be implemented in retail pharmacies, with the overarching goals of providing access points for medical cannabis care and enabling pharmacists to assess their patients to determine if medical cannabis could be beneficial for their medical condition.
Under the MCMS, patients are connected to a Pathway physician or nurse practitioner for further evaluation through our virtual care network. This service is now being tested in several hundred pharmacy locations before it is rolled out regionally, and then nationally.
Work with our existing Pharmacy partners is proceeding well and we are currently in discussions with other potential partners. Through this initiative alone, Pathway Health could be connected with potentially thousands of community pharmacists, who are trusted gatekeepers for referring products and services to their customers.
The third initiative will involve the development and distribution of proprietary Cannabis Health Products when they are approved by Health Canada. Our goal is to work alongside the pharmacy companies to help them develop products for this new consumer packaged goods category prior to their anticipated approval by Health Canada by the end of 2021.
You have built a national footprint through the roll-up of pain clinics across Canada. How do you intend to keep the momentum in terms of acquiring new patients?
For our physical locations, we have started the process of upgrading each site so that we can expand the number of services we offer to our patients. This will lead to marketing programs aimed at increasing people’s awareness of our clinics and making it easier for them to gain access to the care they need. We will also look at acquiring clinics and patients in specific locations that tie into our national strategy.
For our virtual network, we now provide national coverage to medical cannabis patients through our proprietary network. Our current expansion plans include transactions that could potentially double our existing base of active patients, leveraging our existing infrastructure in a way that would be accretive to the underlying business.
Are you seeing significant coronavirus pandemic tailwinds driving your telemedicine business?
Initially, they felt like headwinds as we had to quickly adopt a new way of delivering pain care, but our patients, physicians, nursing, and support staff all very quickly adapted to the new reality which turned the headwinds into tailwinds. And now, thanks to telemedicine, we can see more patients during the day and in a way that is convenient to all involved. We expect that virtual care will become the standard for care for key parts of our business, and through telemedicine, we see opportunities to not just expand the geographic coverage of our existing services, but also a way to add new services to our mix.
What are some of the growth catalysts for Pathway?
Our growth catalysts will largely come through the work with our pharmacy partners. Each new agreement we sign is a growth catalyst on its own because it potentially adds hundreds of pharmacy locations to our product and service network. Product development agreements with the pharmacy companies could also serve as growth catalysts in that Pathway Health could potentially generate significant product revenue through these arrangements. Finally, any material acquisition we complete that would add thousands of patients to our existing base of patients would also trigger growth in certain parts of the business.
You’ve worked in high finance and have over two decades of healthcare experience. With this interesting, rounded background what do you consider the biggest strength you bring to Pathway?
I think one of my biggest strengths is my ability to surround myself with gifted and trusted people. My background is in mergers and acquisitions in the healthcare space, and I have also been involved with the capital markets for more than three decades. During this time, I have been fortunate enough to work alongside a strong network of business and industry leaders. What I’ve learned from them over the years – and continue to learn – helps support me in my work with Pathway.
Contact the author Uttara Choudhury at uttara@proactiveinvestors.com
Follow her on Twitter: @UttaraProactive