CloudMD Software & Services Inc. (TSXV: DOC, OTCQB: DOCRF,
Frankfurt: 6PH) (the “
Company” or
“
CloudMD”), a telehealth company seeking to
revolutionize the delivery of healthcare to patients, is pleased to
announce that it has closed the previously announced acquisition of
HumanaCare Organizational Resources Inc.
(“
HumanaCare”), an integrated, Employee Assistance
Services (“
EAP”) solution which provides
compassionate, holistic, physical and mental health support for
employees and their family members, by way of acquiring 100% of the
shares of HumanaCare’s parent company, First Health Care Services
of Canada Inc. (“
First Health”).
HumanaCare is an industry leading EAP, funded by
employers to provide access to mental and physical wellness support
services. HumanaCare provides employee health services to over 5000
corporate clients, 1 million employees and their family members
utilizing a clinical network of more than 3500 clinicians.
Currently, HumanaCare has multi-year agreements to service fortune
500 clients, leading corporations and advisors. The solution uses
nurse triage to support mental health and short-term incidental
issues including counselling, financial stress, nutrition, legal
and eldercare consultation. HumanaCare’s programs include,
YourNurse, Chronic Disease Management, Eldercare, Medical
Second Opinion and Disability Support
Services.
HumanaCare has more than 35 years of Canadian
healthcare experience and has solidified its place as one of the
top EAP providers in Canada. The EAP segment has shown significant
year over year growth and is only increasing in importance as the
mental and physical strain of remote working and social distancing
become more evident. With a focus on innovation, a holistic
approach to care, and continuity of care centred around the
patient, CloudMD believes HumanaCare will be a market leader.
Historically, EAP’s have focused exclusively on
short-term incidental care. This is a transformational acquisition,
as HumanaCare combined with CloudMD’s enterprise platform will not
only provide short-term support, but now employees and family
members will have access to a patient-focused approach to
longer-term and chronic care management. CloudMD will be able to
optimize and cross-sell into HumanaCare’s current client network by
offering corporations and employers a more comprehensive solution
which includes telemedicine, triaging, on-demand mental health
support, and educational healthcare resources. As a solution to the
currently siloed healthcare system, the combined offerings will
provide one, centralized platform that breaks down the barriers to
access by offering a team-based, longitudinal approach to employee
wellbeing.
HumanaCare’s current annualized revenue run
rate(1) is approximately $3.3 million with EBITDA (earnings before
interest, taxes, depreciation and amortization) margins that are
greater than 19 per cent. Upon closing, the acquisition of
HumanaCare will be immediately accretive to CloudMD with synergies
the Company believes will drive further revenue and increased
EBITDA margin through cost savings achieved through scaling of
operations and by tapping into CloudMD’s network of counsellors,
nurses, and other healthcare professionals.
Terms of Acquisition
HumanaCare was acquired by way of the the
Company’s acquisition of 100% of the issued and outstanding shares
of First Health (the “Purchased Shares”), which
owns 100% of the issued and outstanding shares in the capital of
HumanaCare.
In consideration for the purchase of 100% of the
Purchased Shares, CloudMD has agreed to pay the sellers thereof an
aggregate consideration of $17.5 million payable as follows: (i)
$6.3 million in cash, subject to a working capital adjustment; (ii)
$6.825 million in common shares of the Company; and (iii) a
performance-based earnout of $4.375 million, which is payable in
common shares of the Company in equal annual issuances over a
period of two years. All common shares issued pursuant to the
acquisition will be issued at a deemed price of $2.88 per share and
are priced by calculating the 10-day volume-weighted average
trading price of the Company's common shares for the 10 trading
days prior to the execution of the binding term sheet (press
release dated October 28, 2020). The common shares will be subject
to certain contractual restrictions on trading for a period of 25
months from the date of issuance.
(1) Annual revenue run rate figures are
calculated based on annualizing the total current contracted
revenue based on signed agreements. This figure includes
approximately $372,000 of signed contracts with start dates ranging
from November 1, 2020 to January 1, 2021.
About CloudMD Software &
Services
CloudMD is digitizing the delivery of healthcare
by providing a patient centric approach, with an emphasis on
continuity of care. The Company offers SAAS based health technology
solutions to healthcare providers across North America and has
developed proprietary technology that delivers quality healthcare
through a holistic offering including hybrid primary care
clinics, specialist care, telemedicine, mental health support,
educational resources and artificial intelligence (AI). CloudMD
currently services a combined ecosystem of over 500
clinics, almost 4000 licensed practitioners and 8 million patient
charts across North America.About HumanaCare
HumanaCare is a Canadian leader in employee
health programs focused on delivering improved mental and physical
health outcomes to organizations, employees and families. Through
its Employee Assistance Programs, Medical Second Opinion Services,
Disability Support and Eldercare Case management Services,
HumanaCare supports hundreds of thousands of members,
employees and their families of more than 5,000
organizations across Canada and the US. For more
information on HumanaCare, visit www.humanacare.com
ON BEHALF OF THE BOARD OF DIRECTORS
“Dr. Essam Hamza, MD"Chief Executive Officer
FOR ADDITIONAL INFORMATION CONTACT:
Julia Becker VP, Investor
Relationsjulia@cloudmd.ca
Forward Looking Statements
This news release contains forward-looking
statements, including statements regarding projected revenue,
completion of the HumanaCare acquisition, future business synergies
and cost savings. Such forward-looking statements are based on
CloudMD’s expectations, estimates and projections regarding its
business and the economic environment in which it operates,
including the expectations regarding closing of the HumanaCare
acquisition and the ability of the Company to carry out its
business plans. Although CloudMD believes the expectations
expressed in such forward-looking statements are based on
reasonable assumptions, such statements are not guarantees of
future performance and involve risks and uncertainties that are
difficult to control or predict. Therefore, actual outcomes and
results, including revenue projections, may differ materially from
those expressed in these forward-looking statements and readers
should not place undue reliance on such statements. These
forward-looking statements speak only as of the date on which they
are made, and CloudMD undertakes no obligation to update them
publicly to reflect new information or the occurrence of future
events or circumstances, unless otherwise required to do so by
law.
Non-GAAP and Non-IFRS Measures
This press release refers to “EBITDA” and
“EBITDA margins” which are non-GAAP and non-IFRS financial measures
that do not have a standardized meaning prescribed by GAAP or IFRS.
The Company’s presentation of these financial measures may not be
comparable to similarly titled measures used by other companies.
These financial measures are intended to provide additional
information to investors concerning the Company’s and HumanaCare’s
performance. EBITDA is defined as earnings before interest, taxes,
depreciation and amortization and EBITDA margins is defined as
EBITDA as a percent of total revenue. EBITDA and EBITDA margins are
Non-IFRS measures the Company uses as an indicator of financial
health and excludes several items which may be useful in the
consideration of the financial condition of the Company and
HumanaCare, as applicable, including interest expense, income
taxes, depreciation, and amortization.
The TSX Venture Exchange does not accept
responsibility for the adequacy or accuracy of this release.
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