Well Heath Technologies Corp.’s (TSX:WELL) acquisition spree is showing few signs of letting up after the Vancouver-based company revealed Monday it’s buying another Canadian firm for $206 million.
The cash-and-stock deal with Toronto’s MyHealth Partners Inc. could see the West Coast company pony up an additional earn-out of up to $60 million.
Well Health is the third-largest provider of electronic medical records in Canada, owns and operates health clinics across North America, and provides services for everything from telehealth to cybersecurity.
The acquisition deal would see the Vancouver company expand its clinic portfolio as well as its telehealth offerings.
MyHealth owns and operates 48 locations in Ontario, while about 75% of its consultations are done via telehealth.
The deal would make Well Health the largest owner-operator of outpatient medical clinics in Canada with a total of 74 locations.
CEO Hamed Shahbazi told BIV his company has made 20-plus acquisitions over the past few years with the intent of offering services to medical practitioners typically accustomed to navigating a fragmented market for digital technologies within health care.
Since the pandemic, the company’s shares have more than doubled as practitioners have been forced to rapidly accelerate their adoption of digital technologies in medical clinics.
“It’s really attractive to be in an industry like that. You feel an enormous sense of satisfaction when you get anything done – probably for that reason it’s a very hard industry,” Shahbazi said last month.
The CEO said his company has been able to capitalize on the medical industry’s lack of digitization as many practitioners still rely heavily on physical paperwork.
“As new doctors float in as millennials, when we talk to them we could just sort of hear the frustration in their voices about how it's crazy that there isn't more digitization in the marketplace,” Shahbazi said.
“Then the pandemic hit, of course, and it was a multi-year kind of accelerator that was quite dramatic.”
The acquisition is still subject to regulatory approval from both the TSX and Ontario’s Ministry of Health.
If and when the deal closes, MyHealth CEO Suresh Madan is expected to continue leading the organization as a subsidiary within Well Health.
In addition to $82 million in cash, Well Health is offering 9.6 million common shares priced at $9.80 each, totalling $94.3 million, to help finance the deal. Vendor takeback financing and new credit facilities are covering the remainder.
Well Health may also have to pay out another $60 million in cash after four years based on its new subsidiary’s performance.
“The performance-based earn-out is driven by maintaining and enhancing the company's profitability,” the company said in a release.
