As Canada’s healthcare system struggles to keep up with ever growing demands, two companies better known for other things continue to find opportunity by filling in gaps in the system.
Telus Corp. (TSX: T) and Loblaw Co. Ltd. (TSX: L) are building on strategies that own clinics and wellness centres. They also offer telehealth services and sell software to help doctors manage medical records and patients connect with doctors and pharmacists.
A third company, Well Health Technologies Inc. (TSX: WELL) is a much smaller and more focused player which has gone from a standing start in 2018 to become the largest owner of out-patient clinics in Canada. Like Telus, it sells a software suite for doctors and dentists which helps it integrate its acquisitions.
Here’s a closer look at Telus and Loblaw:
Loblaw Cos. Ltd. (TSX: L) Recent close $54.89.
Background: Loblaw is Canada’s largest grocer with $61 billion in annual sales. About a third of the revenue, or $20 billion, now comes from healthcare-related investments. This includes the Shoppers Drug Mart chain, which it acquired in 2014, and 300 clinics owned through Lifemark Health Group.
Lifemark was acquired in 2022 for $845 million and offer physiotherapy and rehab services, occupational and massage therapy, and mental health services.
Discussion: Loblaw continues to sharpen its healthcare focus, adding 140 walk-in clinics to existing Shoppers Drug Mart stores in 2025 and renovating 300 more stores which already have pharmacies.
As pharmacists get more power to diagnose and treat common ailments, there is opportunity to provide diagnostic services, sell drugs, and offer over-the-counter solutions. The clinics drive foot traffic and revenue through Shoppers stores and offer patient referrals to Lifemark.
To align with this emphasis, Loblaw sold its 42 Wellwise by Shoppers stores in the spring for an undisclosed sum. The stores sell a range of health and wellness goods from CPAP machines and mobility aids to compression wear and fitness gear.
Loblaw’s second quarter earnings released in July showed a 5.2% revenue increase to $14.67 billion, while adjusted EPS of $2.37 per share was 11.6% higher.
In a conference call, CFO Richard Dufresne said the growth of drug retail sales continues to outpace food at grocery stores. Same-store pharmacy services rose 5.4% in the quarter, driven by broad strength in prescription and healthcare services. The $0.14 quarterly dividend yields 1% at current prices.
Telus Corp. (TSX: T, NYSE: TU) Recent close $21.89
Background: Telus is Canada’s largest wireless telecom company with annual revenues of $20 billion. Its core business is internet and mobile phone service through the Telus and Koodo brands. Roughly 10-to-15% of revenue comes from its healthcare unit, or between $2 billion and $3 billion annually.
Discussion: Telus Health began in 2007 when Telus acquired a company making software to manage medical records. That has evolved into a business being groomed for a spin-off. In addition to record and practice management, it offers services for physical, mental, and financial wellbeing. The Telus Health MyCare app connects to medical professionals via video or chat, for such things as primary care, prescriptions, mental health support and dietitian consultations.
Telus is applying its data gathering and IT expertise to medical record keeping and pharmacy management. This includes AI-driven analytics for diagnostics, remote monitoring of patients, and chronic disease management tools.
Its biggest acquisition was the 2022 purchase of Lifeworks Inc. for $2.9 billion, a company formerly known as Morneau Shepell. Lifeworks provides employee and family assistance plans, pension and benefits administration, and retirement planning. Its main markets are in Canada and the US, but it also has offices in the UK, Australia, and Asia.
In 2023 Telus Health acquired 15 outpatient clinics from a mix of independent operators for an undisclosed sum. It joins Loblaw and Well Health in this largely unconsolidated sector.
This year it has built on its collaboration with Nova Scotia Health, that province’s healthcare provider. It provides medical records management and built an app that connects the province’s patients to their health records.
In its most recent quarter, Telus has revenue of $5.1 billion, 2% higher. Per share earnings were $0.22, about 47% higher. The health unit’s operating income rose 16% while health unit margins grew 29%. In a conference call CEO Darren Entwistle specifically mentioned the “strong operating momentum” of the unit.
Telus pays a $0.416 quarterly dividend that yields 7.25% at current prices.
A big question is when Telus Health will be spun off. It is on hold for now, not helped by the spin-off failure of Telus International, renamed Telus Digital. Shares issued at US$25 in a 2021 IPO are trading at $4.50. Telus is taking the company private.
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Adam Mayers 
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