• Combined digital health platform will be one of North America's leading fully-integrated health offerings, with a clinically-validated, broad continuum of care to address mild, moderate, acute and chronic mental and physical care
  • Adds scale and strengthens CloudMD's financial profile – CloudMD expects to have annualized revenues exceeding $185 million (a 19% increase from CloudMD's current revenue run rate of $155 million), as well as improved gross margin of 35%, post-close
  • CloudMD to offer $1.22 in cash and 2.285 common shares of CloudMD per MindBeacon share
  • CloudMD is projected to have cash on hand exceeding $60 million, post-close

TORONTO, Dec. 16, 2021 /CNW Telbec/ - MindBeacon Holdings Inc. ("MindBeacon" or the "Company") (TSX: MBCN) announces that the Management Information Circular (the "Information Circular") and associated Form of Proxy and Letter of Transmittal are being mailed to shareholders of MindBeacon on Friday, December 17, 2021 in connection with a definitive arrangement agreement (the "Arrangement Agreement") under which CloudMD Software & Services Inc. ("CloudMD" or the "Purchaser") (TSXV: DOC) will acquire all of MindBeacon's issued and outstanding common shares for a combination of cash and shares valued at approximately $116 million. Under the terms of the Arrangement Agreement, each common share of MindBeacon will be exchanged for $1.22 of cash and 2.285 common shares of CloudMD. A copy of the letter to MindBeacon shareholders is available below highlighting the key benefits and reasons for the transaction.

With the ongoing pandemic, MindBeacon's Special Meeting of Shareholders is to be held in a virtual only meeting format via live webcast online at https://web.lumiagm.com/458290597 on January 10, 2022 at 10:00 a.m. (Eastern time).

While these materials will be filed by MindBeacon under its issuer profile and be available for viewing on the SEDAR website (www.sedar.com), a copy of the letter to MindBeacon shareholders is included below. Furthermore, the disclosure in this press release supplements the disclosure in the Information Circular and is deemed to be incorporated by reference into the Information Circular.

How to Vote

Shareholders must vote their proxy before 10:00 a.m. (Eastern time) on January 6, 2022.

MindBeacon shareholders with questions or who need help voting are encouraged to contact Kingsdale Advisors at 1-888-302-5677 toll-free within North America, or 1-416-867-2272 (for collect calls outside North America), or e-mail at contactus@kingsdaleadvisors.com.

Letter to MindBeacon Shareholders

Dear Shareholders,

The board of directors (the "Board of Directors") of MindBeacon cordially invites you to attend a special meeting (the "Meeting") of the holders (the "Shareholders") of common shares (the "Shares") of the Company to be held in a virtual only meeting format via live webcast online at https://web.lumiagm.com/458290597 on January 10, 2022 at 10:00 a.m. (Eastern time).

Given the coronavirus (COVID-19) pandemic, its public health impact, the associated current restrictions on and the risk in attending large group gatherings and to mitigate risks to the health and safety of the Company's community, Shareholders and employees, the Company has made the decision to hold the Meeting in a virtual only format. Shareholders, regardless of geographic location and ownership, will have an opportunity to participate at the Meeting and engage with the directors of the Company and management by following the registration process outlined in the Information Circular.

THE TRANSACTION

At the Meeting, Shareholders will be asked to consider and, if deemed advisable, to approve a special resolution (the "Arrangement Resolution") approving a statutory plan of arrangement (the "Arrangement") under Section 192 of the Canada Business Corporations Act involving the Company and the Purchaser pursuant to which the Purchaser will acquire all of the issued and outstanding Shares. Under the terms of the Arrangement, the holders of Shares will receive, in exchange for each Share, (i) $1.22 in cash (the "Cash Consideration") and (ii) 2.285 validly issued, fully paid and nonassessable common shares of the Purchaser ("Purchaser Shares") (collectively, the "Consideration"). The Meeting is being called and the Arrangement is being pursued pursuant to the Arrangement Agreement entered into between the Purchaser and the Company on November 14, 2021.

BOARD RECOMMENDATION

The Board of Directors unanimously recommends that the Shareholders vote FOR the Arrangement Resolution.

REASONS FOR THE ARRANGEMENT

The recommendation of the special committee of the Board of Directors (the "Special Committee") and the Board of Directors that Shareholders vote FOR the Arrangement Resolution is based on various factors, including those presented below. A full description of the information and factors considered by the Special Committee and the Board of Directors is located in the Information Circular.

  • Ability to Participate in Future Potential Growth of the Purchaser. The Share Consideration being offered to the Shareholders under the Arrangement allows Shareholders to have an opportunity to participate in any potential increase in the value of the Purchaser after the Effective Date. The value of the Purchaser after the Effective Date may benefit from, among other things, the following:
  • Strength of the Purchaser following Acquisition of the Company. The Purchaser, after it has acquired the Company, will have a digital health platform expected to be one of North America's leading fully-integrated health offerings, with a clinically-validated, broad continuum of care to address mild, moderate, acute and chronic mental and physical care.
  • Increased Scale and Financial Strength. The Purchaser is anticipated to benefit from a strong pro forma balance sheet, more robust cash flow and improved ability to raise capital and issue shares, each of which are expected to support the Purchaser's organic and acquisitive growth initiatives following completion of the Arrangement.
  • Potential Revenue Opportunities and Customer Diversification. The Purchaser will benefit from potential cross-selling revenue opportunities from the Purchaser's current five million covered lives, combined 5,500 corporate clients, and the Company's strategic government and employer relationships. The Purchaser will benefit from an increased customer base as a result of acquiring the Company and will not have the concentration risk that the Company has with the agreement with Ontario Telemedicine Network, a division of Ontario Health, an agency established under the Ministry of Health, for the provision of psychology services in Ontario.
  • Anticipated Operational Synergies. The Purchaser has already identified cost savings of approximately $2 million and cross-sell synergies and has started to plan the integration of the Company's synergistic healthcare solutions into its mental health services offerings. In addition, the Purchaser believes there are an additional $2 million in potential synergies available over time through the integration of the Company and the Purchaser's other acquisitions.
  • Accelerated U.S. Expansion. The Company's recent acquisition of a U.S.-based mental health provider combined with the Purchaser's U.S.-based digital services and a dedicated U.S. sales team is expected to accelerate the expansion into the U.S. through organic growth and new and/or expanding distribution channels.
  • Significant Premium to the Shareholders. The implied offer price of $4.78 represents a premium of approximately 49% to the seven (7)-day volume weighted average price of the Shares as of November 12, 2021, the last trading day prior to the announcement of the Arrangement.
  • Certainty of Value and Liquidity. The Cash Consideration being offered to the Shareholders under the Arrangement allows Shareholders to immediately realize value for a portion of their investment and provides certainty of value and immediate liquidity.
  • Canadian Tax Deferral. Shareholders who hold their Shares as capital property, who are Eligible Holders, who receive Purchaser Shares under the Arrangement and who properly complete and file the required tax election, may benefit from a full or partial Canadian tax deferral in respect of capital gains that would otherwise be realized on the disposition of Shares. See "Certain Canadian Federal Income Tax Considerations" in the Information Circular.
  • Fairness Opinion. The Board of Directors and the Special Committee received an opinion from TD Securities, which provided that, as of the date of such opinion, based upon and subject to the assumptions, limitations and qualifications set out therein, the Consideration to be received by the Shareholders pursuant to the Arrangement is fair, from a financial point of view, to the Shareholders. See "The Arrangement Fairness Opinion" in the Information Circular.
  • Increased Trading Liquidity. The Purchaser after completion of the Arrangement will have a broader shareholder base and an expected increased trading liquidity and a larger public float than the Company presently holds. The expected increased market capitalization and trading liquidity upon completion of the Arrangement is anticipated to broaden the Purchaser's investor appeal with enhanced market interest and analyst coverage. By contrast, the Company has historically experienced limited trading liquidity, which makes it difficult for Shareholders to realize meaningful liquidity through the public markets on which the Shares trade.
  • Consideration of Strategic Alternatives. The Board of Directors and the Special Committee conducted a review of various strategic alternatives, including the Company continuing to operate as an independent stand-alone business, and the Company entering into a strategic or sale arrangement with another interested party. In furtherance of the foregoing, the Board of Directors and the Special Committee took into consideration the potential rewards, risks and uncertainties associated with these and other alternatives, including stock market uncertainties which could affect the value of the Shares. Following a consideration of the alternatives available to the Company, the Board of Directors and the Special Committee concluded that the Arrangement is the most favourable alternative for the Company to pursue (and can be achieved with less risk) than the value that might have been realized through pursuing other alternatives reasonably available to the Company. These included:
  • Executing on Its Current Strategic Plan. The Special Committee and the Board undertook a detailed assessment of the current and anticipated future opportunities and risks associated with the business operations, assets, financial condition and prospects of the Company as an independent, publicly traded company, including the challenges the Company has experienced and the risks facing the Company described above under "The Arrangement – Background to the Arrangement" in the Information Circular; and
  • Sale to a Potential Competing Bidder. It was the Special Committee's and the Board of Directors' view that there was significant uncertainty associated with realizing an alternative transaction with another potential buyer on more attractive terms, in light of the fact that that ten prospective strategic buyers were contacted prior to entering into exclusivity with the Purchaser and none of the other proposals provided for terms that were more attractive than those offered by the Purchaser. The Special Committee and the Board also identified the Purchaser as a strong strategic partner for the Company with high synergistic opportunities.
  • Procedural Safeguards. For the Arrangement to proceed, among other things, (i) the Arrangement Resolution must be approved by not less than two-thirds of the votes cast at the Meeting by Shareholders virtually present or represented by proxy and entitled to vote at the Meeting, (ii) the Arrangement Resolution must be approved by a simple majority of the votes cast at the Meeting by Shareholders virtually present or represented by proxy and entitled to vote at the Meeting, excluding for this purpose any person required to be excluded pursuant to Section 8.1(2) of MI 61-101, and (iii) the Arrangement must be approved by the Ontario Superior Court of Justice (Commercial List), which will consider, among other things, the fairness of the Arrangement. In addition, Shareholders have been provided with Dissent Rights with respect to the Arrangement.
  • Arm's Length Negotiations and Oversight. The Arrangement Agreement is the result of robust, arm's length negotiations involving the Company, on the one hand, and the Purchaser, on the other hand. Extensive financial, legal and other advice was provided to the Special Committee and the Board of Directors. Such advice included detailed financial advice from highly qualified financial advisors, including with respect to remaining an independent publicly traded company and continuing to pursue the Company's business plan on a stand-alone basis.
  • Director & Officer and Shareholder Support. Directors, executive officers and the other Supporting Shareholders, representing in the aggregate approximately 28% of the issued and outstanding Shares, have entered into irrevocable Support and Voting Agreements pursuant to which each has agreed to vote in favour of the Arrangement Resolution, subject to customary exceptions.
  • Ability to Respond to Superior Proposal. Under the Arrangement Agreement, the Board of Directors, in certain circumstances prior to Shareholder approval being obtained in respect of the Arrangement, is able to consider, accept and enter into a definitive agreement with respect to a Superior Proposal, or withdraw, modify or amend its recommendation that Shareholders vote to approve the Arrangement Resolution. In the view of the Board of Directors and the Special Committee, the amount of the Termination Fee (being $4.1 million), which is payable by the Company in certain circumstances described under "Summary of Material Agreements – The Arrangement Agreement – Termination – Termination Fees" in the Information Circular would not preclude a third party from making a Superior Proposal.
  • Limited Conditions to Closing. The Purchaser's obligation to complete the transaction is subject to a limited number of customary conditions the Special Committee and the Board of Directors believe are reasonable in the circumstances. The completion of the Arrangement is not subject to any financing condition or approval by shareholders of the Purchaser.
  • Dissent Rights. Shareholders have the right to dissent with respect to the Arrangement Resolution and demand payment of the fair value of their Shares.

In the course of their deliberations, the Special Committee and the Board of Directors also identified and considered a variety of risks (as described in greater detail under "Risk Factors" in the Information Circular) and potentially negative factors relating to the Arrangement, including the following:

  • the risks to the Company if the Arrangement is not completed, including the costs to the Company in pursuit of the Arrangement, the diversion of management's attention away from conducting the Company's business in the ordinary course and the potential impact on the Company's current business relationships (including with current and prospective employees, customers, suppliers and partners);
  • the limitations contained in the Arrangement Agreement on the Company's ability to solicit alternative transactions from third parties, as well as the fact that if the Arrangement Agreement is terminated in certain circumstances the Company may be required to pay the Termination Fee or the expense reimbursement, which may adversely affect the Company's financial condition;
  • the fact that if the Arrangement Agreement is terminated and the Board of Directors decides to seek another transaction or business combination, there is no assurance that the Company will be able to find a party willing to pay greater or equivalent value compared to the Consideration available to Shareholders under the Arrangement or that the continued operation of the Company under its current business model will yield equivalent or greater value to Shareholders compared to that available under the Arrangement Agreement;
  • the restrictions imposed pursuant to the Arrangement Agreement on the conduct of the Company's business and operations during the period between the execution of the Arrangement Agreement and the consummation of the Arrangement or the termination of the Arrangement Agreement;
  • the conditions to the Purchaser's obligation to complete the Arrangement and the rights of the Purchaser to terminate the Arrangement Agreement in certain circumstances;
  • the fact that under the Arrangement Agreement, the Company's directors and certain of its executive officers may receive benefits that differ from, or be in addition to, the interests of Shareholders generally as described under "The Arrangement – Interests of Certain Persons in the Arrangement" in the Information Circular; and
  • other risks associated with the parties' ability to complete the Arrangement.

In reaching their respective determinations, the Special Committee and the Board of Directors also considered and evaluated, among other things, current industry, economic and market conditions and trends, including the impact of the COVID-19 pandemic; and other stakeholders, including creditors, employees, customers and the communities in which the Company operates, and noted in this regard the longer-term prospects of the Purchaser whose financial and strategic resources are well-suited to the underlying nature of the Company's business.

The Special Committee and the Board of Directors' reasons for recommending the Arrangement include certain assumptions relating to forward-looking information, and such information and assumptions are subject to various risks. See "Management Information Circular – Forward-Looking Statements" and "Risk Factors" in the Information Circular.

SUPPORT AGREEMENTS

The Company's directors and senior management team, together with certain significant shareholders of the Company (the "Supporting Shareholders"), have entered into voting support agreements pursuant to which they have agreed to vote their Shares, representing in aggregate approximately 28% of the issued and outstanding Shares as of the Record Date (as defined below), in favour of the Arrangement Resolution.

APPROVAL REQUIREMENTS

The Board of Directors has set the close of business on November 29, 2021 (the "Record Date") as the record date for determining the Shareholders who are entitled to receive notice of, and to vote at, the Meeting. Only persons shown on the register of Shareholders at the close of business on that date, or their duly appointed proxyholders, will be entitled to attend the Meeting and vote on the Arrangement Resolution. Each Share entitled to be voted at the Meeting will entitle the holder thereof as of the Record Date to one (1) vote at the Meeting in respect of the Arrangement Resolution.

Pursuant to the interim order of the Ontario Superior Court of Justice (Commercial List) dated December 10, 2021, as same may be amended, modified or varied, and Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions ("MI 61-101"), the Arrangement Resolution will require the affirmative vote of: (a) at least two-thirds (2/3) of the votes cast by the Shareholders present in person or represented by proxy and entitled to vote at the Meeting; and (b) a simple majority of the votes cast by the Shareholders present in person or represented by proxy and entitled to vote at the Meeting, other than any person required to be excluded for the purpose of such vote under Section 8.1(2) of MI 61-101.

The Arrangement is subject to customary closing conditions for a transaction of this nature, including court and shareholder approvals. If the necessary approvals are obtained and the other conditions to closing are satisfied or waived, it is anticipated that the Arrangement will be completed shortly after the Meeting (on or about January 14, 2022), and as a Shareholder, you will receive payment for your Shares shortly after closing, provided, if you are a registered holder of Shares (a "Registered Shareholder"), that the depositary receives your duly completed letter of transmittal, together with any other documents required by the depositary.

The notice of special meeting (the "Notice of Meeting") and Information Circular contain a detailed description of the Arrangement and set forth the actions to be taken by you at the Meeting. You should carefully consider all of the relevant information in the Notice of Meeting and the Information Circular and consult with your financial, legal or other professional advisors if you require assistance.

If you are a registered shareholder, we are asking you to take two actions.

First, your vote is important regardless of how many Shares you own. Shareholders are encouraged to vote in advance of the Meeting. If you are a Registered Shareholder, whether or not you plan to attend the Meeting, to vote your Shares at the Meeting, you can either return a duly completed and executed form of proxy to the Company's transfer agent, TSX Trust Company (the "Transfer Agent"), Proxy Department, by mail at: P.O. Box 721 Agincourt, ON M1S 0A1, or via the internet at https://astvotemyproxy.com not later than 10:00 a.m. (Toronto time) on January 6, 2022 or, if the Meeting is adjourned or postponed, prior to 10:00 a.m. (Toronto time) on the second (2nd) business day before any adjournment or postponement of the Meeting. If you hold Shares through a broker, investment dealer, bank, trust company or other intermediary (a "Beneficial Shareholder"), you should follow the instructions provided by your intermediary to ensure your vote is counted at the Meeting.

Second, if the Arrangement is approved and completed, before the Purchaser can issue the Consideration for your Shares, the depositary will need to receive the applicable letter of transmittal completed by you, together with the certificates representing the Shares and any additional documents that may be required. Registered Shareholders must complete, sign, date and return the enclosed letter of transmittal. If you are a Beneficial Shareholder, you will receive payment for your Shares through your financial intermediary if the Arrangement is completed.

If you have any questions with regard to the procedures for voting, please contact the Company's strategic shareholder advisor and proxy solicitation agent, Kingsdale Advisors, by telephone at 1-888-302-5677 toll-free in North America, 1-416-867-2272 (outside of North America) or by e-mail at contactus@kingsdaleadvisors.com.

On behalf of the Company, I would like to thank all of our Shareholders for their continuing support.

Yours very truly,

(Signed) "Samuel L. Duboc"
Chair, Board of Directors

About MindBeacon Holdings Inc.

MindBeacon provides a continuum of mental healthcare that includes self-guided psychoeducational and wellness content, Peer-to-Peer Support, Therapist Guided Programs and Live Therapy Sessions all offered virtually through its secure and private platform. As one of the first commercially available, digitally-native platforms to offer therapist-assisted internet-based Cognitive Behavioural Therapy in Canada, MindBeacon's professional service is designed around end users – their health, their way. Working with employers, insurance carriers and government ministries, MindBeacon offers services that are accessible, available, affordable and, most importantly, proven to be effective. MindBeacon is changing the therapy landscape by making professional care available to every person, no matter when, where and how they choose to access it.

About CloudMD Software & Services Inc.

CloudMD (TSXV: DOC, OTCQX: DOCRF, Frankfurt: 6PH) 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, healthcare navigation, educational resources, and artificial intelligence (AI). 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.

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 5 million individuals across North America. For more information visit: https://investors.cloudmd.ca.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

FORWARD-LOOKING STATEMENTS

This press release contains "forward-looking statements" and "forward-looking information" within the meaning of Canadian securities laws. Forward-looking statements in this press release include, but are not limited to, statements with respect to the impact and benefits of the transaction, the mailing of the Information Circular, anticipated timing for completion of the transaction and receiving the required regulatory, court and shareholder approvals. These statements are based upon information currently available to MindBeacon. All information that is not clearly historical in nature may constitute forward-looking statements. In some cases, forward-looking statements may be identified by the use of terms such as "forecast", "assumption" and other similar expressions or future or conditional terms such as "anticipate", "believe", "could", "estimate", "expect", "intend", "may", "plan", "predict", "project", "will", "would", and "should" or the negative of these terms or variations of them or similar terminology. Forward-looking statements contained in this press release are based on certain factors and assumptions made by management of MindBeacon based on their current expectations, estimates, projections, assumptions and beliefs regarding their respective businesses and MindBeacon does not provide any assurance that actual results will meet management's expectations. While they consider these assumptions to be reasonable based on information currently available to them, they may prove to be incorrect. Such forward-looking statements are not guarantees of future events or performance and by their nature involve known and unknown risks, uncertainties and other factors, including but not limited to: (a) the possibility that the Arrangement will not be completed on the terms and conditions, or on the timing, currently contemplated, and that it may not be completed at all, due to a failure to obtain or satisfy, in a timely manner or otherwise, required shareholder and court approvals and other conditions of closing necessary to complete the Arrangement or for other reasons; (b) the possibility of adverse reactions or changes in business relationships resulting from the announcement or completion of the Arrangement; (c) risks relating to the Company's ability to retain and attract key personnel during the interim period; (d) the possibility of litigation relating to the Arrangement; (e) business, operational and financial risks and uncertainties relating to the COVID-19 pandemic; (f) other risks inherent to the Company's business and/or factors beyond its control which could have a material adverse effect on the Company or the ability to consummate the Arrangement; and (g) those risks described in the respective Management's Discussion and Analysis and Annual Information Form of MindBeacon (which has been filed under its issuer profile on SEDAR and can be accessed at www.sedar.com), that may cause the actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Although MindBeacon has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, other factors may cause actions, events or results to be different than anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate as actual results and future events could vary or differ materially from those anticipated in such forward-looking statements. Accordingly, readers should not place undue reliance on forward-looking information. MindBeacon does not undertake to update any forward-looking information, whether as a result of new information or future events or otherwise, except as may be required by applicable securities laws.

SOURCE MindBeacon Holdings Inc.

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