• Oncidium is one of Canada’s leading health management companies with a loyal client base of over 500 corporate and public sector clients across various industries
• This transformative acquisition expands CloudMD’s National footprint to include 5,500 clients, 8,500 direct healthcare providers and over 5 million individual lives touched
• The $100 million transaction value (including the full performance-based earnout) represents CloudMD’s largest acquisition to date; upfront consideration implies a valuation multiple of ~1.8x last twelve months (“LTM”)¹ sales
• Oncidium has a strong financial profile with LTM revenues of $37 million, Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”)² margin of 14% and a current 4-month revenue run rate³ in excess of $40 million annualized
• Oncidium has significant growth projections with 3-year revenue CAGR of more than 30% and a blue-chip client base that includes many of Canada’s Fortune 500 Companies
• The employer market is the fastest growing area in healthcare spending and is expected to grow 130% by 2025⁴
• This acquisition accelerates the positioning of CloudMD as the leading service provider in the employer market and creates opportunities for synergies and cross sale of existing services
• CloudMD will host a webinar today to discuss the acquisition at 11am EST (8am PST)

VANCOUVER, British Columbia, April 08, 2021 (GLOBE NEWSWIRE) — 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:

A presentation will be made available on the Company’s website following the webinar.

About CloudMD Software & Services

CloudMD Software & Services Inc. (TSXV:DOC)(OTCQB: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, 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.

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.

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