Dr. Alissia Valentinis said Telus Health’s foray into primary care was a net benefit to the province, where millions are struggling to access a doctor.Cole Burston/The Globe and Mail
Tucked up on the second floor of Telus’s T-T downtown Toronto tower is what might be one of the telecom giant’s most unusual projects: a doctor’s office.
Up the escalator, through the glass doors, and past a plant-growing green wall are one counselling room and seven examination rooms in which six family physicians see members of the public.
It is also a testing ground for the wide array of other digital health products the company is rolling out. The exam rooms are outfitted with AI tools that listen to appointments and fill out patient records, saving doctors time with paperwork. They are also equipped with desktop cameras so doctors can see patients virtually.
And there‘s more. In the staff break room on one recent morning, medical director Alissia Valentinis pulls out her phone and opens Telus’s MyCare app. In a few taps, she books a virtual appointment with one of the family doctors who works in the office. And she scrolls through the app’s other offerings: virtual counselling, ordering prescriptions through a mail-order pharmacy and even video appointments with a veterinarian.
It’s a wide array of business lines for a division that started with record-keeping software. Over nearly two decades and a steady drumbeat of acquisitions, Telus Health has grown from a small passion project of long-time chief executive officer Darren Entwistle to a multiheaded player with an outsized – if behind the scenes – presence in Canada’s health care system.
But being part of a major publicly traded company and one of Canada’s most well known corporate brands comes with expectations of turning a profit. Those expectations run hard against the realities of a taxpayer-funded health system that has constrained budgets, and where “corporate” can be a dirty word.
That tension is part of the backdrop as Telus executives talk up a partial or complete sale of the health division to pay down debt and reward shareholders. And in recent years the company has been putting more focus on paramedical services, such as workplace wellness programs, that sit outside the public health care system.
As it grows, Telus Health will have to walk a line few publicly traded Canadian companies have gone down before.
As Mr. Entwistle has told it, his father’s death because of a medical error drove him to get into health care. He thought better use of technology could improve the system and drive better outcomes for patients and providers. So while rivals BCE Inc. and Rogers Communications Inc. invested heavily in media and sports, Telus funnelled cash into health and technology.
Telus’s first official foray into health was buying Emergis Inc. for $763-million in 2007. The Montreal-based electronic medical-records (EMR) business, previously owned by BCE, was the first step in a series of roll-ups that have seen Telus become one of three major EMR providers in the country.
At first, the acquisition strategy saw Telus enter adjacent markets, such as pharmacy benefit managers (PBMs), which work with insurers to process electronic prescription-drug claims filed by pharmacies. (Telus is now one of two large PBMs in Canada, which collectively process more than 80 per cent of all drug claims, according to the Canadian Pharmacists Association.)
This first stage of growth saw Telus working alongside the public system for the most part. It depended at least indirectly on taxpayers for revenue: doctor’s offices bought their software from earnings billed to public health plans.
With that can come scrutiny. For example, in 2017 a Toronto Star investigation found that Telus Health had used its software systems to try to steer some patients’ prescriptions to drugs for which it had deals with drugmakers. Ontario then banned the billing procedure that allowed Telus to do that, and the company stopped.
By 2021, the acquisition-heavy strategy had cost more than $3.2-billion over the previous decade, according to then-president of Telus Health, François Gratton.
As time went on, Telus Health shifted its focus from selling to businesses to selling to consumers and employers.
In 2022, Telus Health made its biggest acquisition: LifeWorks Inc. (formerly Morneau Shepell), an employee health and wellness company, for $2.9-billion. In one fell swoop, the addition of LifeWorks doubled the size of Telus Health’s revenue, helping the division finally cross the $1-billion-a-year milestone it had been aiming for.
Telus Health president Navin Arora − who has spent 26 years at Telus in various roles − took over at Health a little more than a year ago. He said an early priority was bringing some clarity to the organization, and he sorted its work into four segments: products for employers (what used to be Lifeworks), “payvider” solutions (such as the EMR and PMB), retirement benefits and brick-and-mortar clinics, of which it has 17 across the country.
Some of those locations offer advanced – and expensive – services, such as a $4,995 package that includes a full-body MRI and a bone-density scan.
The family doctor’s office in downtown Toronto is so far Telus’s only such clinic in Ontario. It opened last summer and currently has 4,600 patients, with a goal of more than 6,000.
The physicians work as independent contractors who bill the Ontario Health Insurance Plan and remit a percentage back to Telus to cover rent, support staff and other expenses.
That arrangement means “this is not private health care,” Dr. Valentinis said, because patients do not pay to access services covered by public insurance.
That distinction has gotten the company into hot water before. In late 2022, the B.C. Medical Services Commission filed for an injunction in court against Telus Health for allegedly charging patients a fee to have access to a range of services, some of which were publicly funded. The parties reached a settlement a few months later and Telus Health changed its billing practices to be in compliance with the provincial Medicare Protection Act.
Of course, a reality of Canada’s health care system is that most primary care is publicly funded and privately delivered, often by small businesses owned and operated by health care providers, such as physicians or pharmacists.
Danyaal Raza, a family doctor and health-policy scholar at St. Michael’s Hospital, said there‘s a “chasm” of difference between a clinic that’s owner-operated or one run by a large corporation.
“When you have large, publicly traded or even large privately held corporations who start to run health care, the decisions that influence clinical care are no longer being made by the folks who are involved in delivering those services,” Dr. Raza said.
Dr. Valentinis said Telus Health’s foray into primary care was a net benefit to the province, where millions are struggling to access a doctor. “These patients now not only have access to a family doctor, that means a lot less emergency-room visits,” she said.
Dr. Raza said the problem of accessing a family doctor is very real, but when it comes to corporate-owned clinics: “It’s not the only way to deal with the crisis.”
Like other telecom giants, Telus has a problem: a lot of debt. The company’s long string of acquisitions has contributed to $25-billion in long-term debt. To start paying it down, the company has been looking for assets to sell.
Its first major spinoff was its outsourced customer-service division, Telus International Inc. (doing business as Telus Digital), to the public markets in 2021. The initial public offering, part of a tech boom at the time, was initially lauded as a success, opening at $40 per share.
At the time, Mr. Entwistle said he planned to follow the same blueprint with the company’s other businesses, Telus Health and Telus Agriculture and Consumer Goods.
But those plans were slowed when the prospects for Telus Digital soured during the mid-pandemic tech-stock rout, and have continued to fall on concerns about competition with artificial intelligence and reliance on a few large clients. The share price has since dropped 90 per cent to under $4, wiping out $7.5-billion in shareholder value.
“A lot of investors have been burned on that,” said Cormark Inc. telecom analyst David McFadgen.
But that experience hasn’t stopped the prospect of future spinoffs. In February, Telus formally set goals to reduce its debt by 2027, naming Telus Health among its top prospects for further monetization.
Mr. Arora said Telus is weighing its options. It could sell a minority stake or spin it off in an initial public offering. He said that whatever monetization approach the company takes, Telus “would still retain majority ownership for the foreseeable future.”
Liam Gallagher, analyst at Veritas Investment Research, estimated that the division could be worth between $5-billion and $6-billion, based on information disclosed by the company and LifeWorks before it was acquired.
Telus first reported health financials separately from its other businesses in 2020, when it had $448-million in revenue. Since then, the company’s revenue has quadrupled to $1.7-billion in 2024.
One of the key questions for investors concerned about a Telus Digital repeat is whether that revenue growth was organic or inorganic, Mr. McFadgen said. In other words, whether it was driven by selling to more customers or at higher prices, or whether it was a reflection of the acquisitions making the business larger.
Mr. Arora declined to share specifics, but said that “it’s not as if inorganic is completely overriding organic, or vice versa. It’s a nice mix.”
But he did say the workplace-wellness pillar was seeing rising demand, and is driving double-digit growth in some markets outside of Canada.
Given the tumultuous state of the market, Mr. McFadgen says the company is more likely to sell a portion of the health business to an investor than attempt to raise money through a public offering right away.
Telus has a past record of seeking just that arrangement. In 2016, Telus sold a 35-per-cent stake in Telus Digital to Baring Private Equity Asia, before taking the company public five years later. And just last month, Telus formalized its bid to sell a minority stake in a potential tower subsidiary for an estimated $1-billion.
“We don’t want to rush into anything, but we will look at and consider everything that’s in the best interest of our shareholders and our customers,” Mr. Arora said.
“When the time is right, we‘ll definitely pull that trigger.”