CloudMD Software & Services Inc. (TSXV: DOC, OTCQB: DOCRF,
Frankfurt: 6PH) (the “
Company” or
“
CloudMD”), a healthcare technology company
revolutionizing the delivery of care, is excited to announce that
it has signed a binding agreement to acquire Oncidium Inc.
(“
Oncidium”), one of Canada’s leading healthcare
providers to employers. Oncidium has built a difficult-to-replicate
ecosystem of over 500 clients, more than 1,000 health care
providers and medical assessors, and its clients with over 2
million employees across the country.
The employer market vertical is the fastest
growing area in healthcare and this acquisition makes CloudMD a
Canadian leader in the space. Built on over 20 years of experience
in the employer health market, Oncidium is one of Canada’s leading
health management companies with clients from a number of Canada’s
Fortune 500 Companies. Oncidium’s services focus on reducing
occupational absence by delivering solutions that improve the
health and wellness of employees. Oncidium’s services include
solutions that support absentee management, short-term and
long-term disability, workers’ compensation claims management,
mental health assessment and evaluation services that focus on
prevention, accommodation, and recovery. Oncidium’s services are
delivered virtually, on-demand and on-site through its network of
over 1,000 healthcare professionals, assessors and medical centers
nationally.
The acquisition of Oncidium aligns with
CloudMD’s strategy of providing whole-person care and will fit into
its connected healthcare platform. Oncidium’s solution will be a
key component of the Company’s Enterprise Health Solutions
(“EHS”) Division and will provide complementary
services to the Company’s already established employer base. This
will enable CloudMD to provide a comprehensive EHS solution to the
combined network of over 5,500 clients and 5 million employees
across North America. The addition of Oncidium will immediately be
synergistic for a number of key reasons:
- Instantly accretive to CloudMD with LTM revenues of $37 million
and Adjusted EBITDA margin exceeding 14% with current 4-month
annualized revenue run rate in excess of $40 million
- On a consolidated basis, CloudMD will have an annualized
revenue run rate in excess of $120 million, overall gross margin of
35% and achieve positive Adjusted EBITDA
- Drives revenue and margin expansion for the Enterprise Health
Solutions division5 with annualized revenue run rate of $53
million, Adjusted EBITDA of +10% and a healthy gross margin of
40%
- Rapidly growing business in the fastest growing segment of the
Canadian healthcare space
- Cross selling opportunities through a combined network of 5,500
loyal corporate clients and over 5 million lives
- Increases CloudMD’s capabilities to include additional employer
health services
- Competitive advantage to industry peers with comprehensive
platform, addressing whole-person healthcare through assessment,
triage and support across mental health, specialist care,
healthcare navigation, short-term and long-term support and
educational resources
Dr. Essam Hamza, CEO of CloudMD
commented, “This transformative acquisition was another highly
strategic decision and part of our overall product roadmap and
positions CloudMD as a leader in the employer healthcare market.
The Oncidium team has built an incredible healthcare offering and
the company has become one of the leading health services provider
to the employer marketplace. I am incredibly excited for our future
growth as we continue building out our healthcare capabilities that
now includes: brick-and-mortar clinics, allied care, virtual care,
a leading mental health solution, direct-to-consumer offerings and
a robust and expansive Enterprise Health Solutions division. We are
uniquely positioned to deliver and drive shareholder value.”
Karen Adams, Chief Health Innovation
Officer & Global Head of Enterprise Health Solutions
added, “We have already identified immediate synergies which will
drive further revenue and margin growth and we will continue to
unlock growth opportunities throughout the integration. This
acquisition allows us to take the leadership position in the
employer market with a fully-integrated product offering which
addresses all aspects of employee health and wellness and ensures
optimization of employer spend.”
Dr. Lu Barbuto, CEO of
Oncidium commented, “The trend lines in Canada and
across the industrialized world are clear: the employer is
increasingly absorbing employee healthcare costs and is becoming
more engaged in managing the related costs and outcomes. We believe
that there will be tremendous opportunities for existing CloudMD
services to be delivered to Oncidium’s excellent employer client
base, so that collectively we can continue to support their growing
needs. With the CloudMD team, I look forward to continuing to
develop, expand and deliver science based precision health
solutions to Employers that will in turn improve the lives of
Canadians.”
Terms of Acquisition
In consideration for the purchase of 100% of the
outstanding securities of Oncidium, CloudMD has agreed to pay
shareholders of Oncidium: (i) $30 million in cash, subject to
applicable working capital adjustments; (ii) $38 million in common
shares of the Company at a deemed price of $2.30 per common share;
and (iii) a performance-based earnout of up to $32 million over a 3
year period, which is payable in cash or common shares of the
Company, at the sole discretion of CloudMD at the time of the
earnout. The common shares will be subject to certain contractual
restrictions on trading for a period of up to 30 months from the
date of issuance. CloudMD intends to fund the cash portion of the
upfront consideration with cash on hand and/or debt.
The upfront portion of the consideration implies
a valuation of ~1.8x LTM Sales and ~13.1x LTM Adjusted EBITDA. The
total transaction value (including full performance-based earnout)
carries an implied valuation of ~1.5x Sales and ~8.1x Adjusted
EBITDA.
The acquisition is subject to customary closing
conditions, including TSX Venture Exchange approval. The closing of
the transaction is expected to occur during the first half of June
2021.
Echelon Capital Markets (a member of Echelon
Wealth Partners Inc.) is acting as exclusive financial advisor to
CloudMD in connection with the transaction.
CloudMD Acquisition of Oncidium
Webinar
Investors are invited to participate in a live
webinar with CloudMD management to discuss the acquisition and ask
questions.
Date and Time: April 8, 2021 at 11am EST
(8am PST)
Webcast
link: https://edge.media-server.com/mmc/p/io6nnw2q
If investors would like to participate via telephone, use the
dial-in numbers below:
Participant
Toll-Free Dial-In Number: |
(833)
562-0117 |
Participant International Dial-In Number: |
(661) 567-1009 |
Passcode: |
1067246 |
A presentation will be made available on the Company’s website
following the webinar.
About CloudMD Software &
Services
CloudMD is digitizing the delivery of healthcare
by providing a patient centric approach, with an emphasis on
continuity of care. By leveraging healthcare technology, the
Company is building one, connected platform that addresses all
points of a patient’s healthcare journey and provides better access
to care and improved outcomes. Through CloudMD’s proprietary
technology, the Company 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
7,000 psychiatrists, approximately
4,500 therapists and counsellors, approximately
4,000 psychologists, over 22,000
family physicians, over 34,000 medical
specialists, over 1,500 allied health
professionals, over 500 clinics, and over
2.5 million individuals across North America.
CloudMD’s Enterprise Health Solutions Division includes one of the
top 4 Employee Assistance Programs in Canada and offers one
comprehensive, digitally connected platform for corporations,
insurers and advisors to better manage the health and wellness of
their employees and customers. For more information visit:
www.cloudmd.ca.
ON BEHALF OF THE BOARD OF DIRECTORS
“Dr. Essam Hamza, MD"Chief Executive Officer
FOR ADDITIONAL INFORMATION CONTACT:
Julia Becker VP, Investor
Relationsjulia@cloudmd.caTel: (604) 785-0850
Forward-Looking Statements
This news release contains forward-looking
statements, including statements regarding projected revenue,
completion of the Oncidium 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 Oncidium
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.
In addition, this news release contains information, including
financial information, pertaining to an acquisitions that is at an
early stage and which is not codified in a definitive agreement. As
a result there is no assurance that any proposed acquisition will
be completed upon the terms described.
Non-GAAP and Non-IFRS
Measures
This press release refers to “Adjusted EBITDA”
and “Adjusted EBITDA margin” 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 Oncidium’s performance. Adjusted EBITDA reference
herein relates to earnings before interest, taxes, depreciation,
amortization, stock-based compensation, financing-related costs,
acquisition-related costs, litigation costs and loss provision,
loss from discontinued operations and other non-recurring items.
Adjusted EBITDA margin is defined as Adjusted EBITDA as a percent
of total revenue. Adjusted EBITDA and Adjusted EBITDA margin 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
Oncidium, 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.
__________________
1 LTM represents the period from March 1, 2020 to February 28,
2021.2 Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP
measure as described in the Non-GAAP and Non-IFRS Measures section
of this news release.3 4-month revenue run rate represents the
period from November 1, 2020 to February 28, 2021.4
https://www.mercer.ca/en/our-thinking/rising-employee-healthcare-costs.html5
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