Cashflow positive business with $5.8 million in annual revenue and EBITDA margins north of 19%
- Re: Function Health Group is an integrated network of 8 clinics with 37 specialists and allied health professionals offering various rehabilitation services
- Specialists & Allied Health Professionals include: Occupational Therapists, Physiotherapists, Kinesiologists, Psychologists, Counsellors, & Psychiatrists
- Important healthcare solution that provides assessments for enterprise clients, insurers and corporations for long term disability claims and return to work outcomes
- This acquisition provides CloudMD and Re: Function patients with a comprehensive, single stop for their healthcare needs
- The acquisition is immediately accretive with the existing CloudMD patient base gaining access to the clinical services offered by Re: Function through the use of the CloudMD suite of health technology tools and virtual health platform implemented within Re: Function
VANCOUVER, British Columbia, Nov. 09, 2020 (GLOBE NEWSWIRE) — CloudMD Software & Services Inc. (TSXV:DOC)(OTCQB:DOCRF)(Frankfurt: 6PH)(the “Company” or “CloudMD”), a telehealth company revolutionizing the delivery of healthcare to patients, is excited to announce that it signed a definitive share purchase agreement (“Definitive Agreement”) to acquire Re: Function Health Group Inc. (“Re: Function”), a leading rehabilitation clinic network, with 8 clinics and 37 specialists and allied health professionals across British Columbia. Since the acquisition was announced, the Re: Function team opened an additional clinic, increasing the previously announced 7 location network to 8 locations across BC. This acquisition represents a significant addition to the depth and spectrum of healthcare services provided by the CloudMD platform. With Re: Function, CloudMD’s network will include 15 clinics and over 95 healthcare practitioners servicing approximately 500,000 patients.
Re: Function is a state-of-the-art rehabilitation company built by like-minded health professionals offering superior patient focused care, with a longitudinal approach to healthcare delivery. The practice is made up of four key rehabilitation pillars, Re: Build (physiotherapy), Re: Think (counselling), Re: View (medlegal consulting) and Re: Tool (vocational rehabilitation), and a team of specialists including: Occupational Therapists, Physiotherapists, Kinesiologists, Psychologists, Psychiatrists and Counsellors.
Re: Function’s principle Directors, Ralph Cheesman and Mike Smith, both Occupational Therapists, will be joining CloudMD to lead the continued expansion of allied health services across North America, and together will provide a multidisciplinary, team-based approach to treatment.
The acquisition is mutually important in the shared vision to disrupt the current healthcare delivery system and to provide continuity of care across multiple verticals to ensure exceptional patient care. CloudMD will integrate its telemedicine solutions throughout the clinics, layering on additional allied health and specialist functions to the platform. CloudMD’s registered users will now have easier and more unified access to primary care doctors, specialists, and a network of mental, occupational and physical health specialists. The Re: Function team also gives CloudMD’s network of primary care physicians increased options to give patients referrals to extended care.
The acquisition will be immediately accretive to CloudMD as the Re: Function group of clinics generated approximately $5.8 million in revenues with earnings before interest, taxes, depreciation and amortization (EBITDA) margins exceeding 19% over the last fiscal year ending January, 2020.
Terms of Definitive Agreement
In consideration for the purchase of 100% of the outstanding securities of Re: Function, CloudMD has agreed to pay shareholders aggregate consideration of C$8,000,000 payable as follows: (i) C$3,000,000 in cash, subject to a working capital adjustment; (ii) C$3,500,000 in shares of the Company; and (iii) a performance-based earnout of C$1,500,000, which is payable in shares of the Company in annual issuances over a period of three years. All shares issued pursuant to the acquisition are issued at a deemed price of C$0.88 per share and are priced by calculating the ten-day volume weighted average trading price of the Company’s shares for the 10 trading days prior to the execution of the binding term sheet. The shares will be subject to certain contractual restrictions on trading for a period of thirty months from the date of issuance.
The acquisition is subject to customary closing conditions and receipt of TSX Venture Exchange approval.
CloudMD also provides an amendment to a previously announced press release. On June 18, 2020 the Company announced the appointment of Dr. Sohal Goyal as Head of Corporate Development in Ontario. Pursuant to the policies of the TSX Venture Exchange and the terms of the contractor services agreement (the “Agreement”) with Dr. Goyal, the Company will issue $500,000 in common shares of the Company to Dr. Goyal which equates to 699,301 common shares (the “Shares”). The Shares issued are subject to escrow over a 2-year period and will be released on a quarterly basis. The deemed price of the Shares is $0.715, which was calculated by using the volume weighted average closing share price on the last 10 trading days prior to the date of the Agreement. The Company announces that Dr. Goyal will also receive $100,000, payable in common shares, at the end of each 12-month period on an annual basis.
All securities issued pursuant to the Agreement remain subject to the approval by the TSX Venture Exchange.
About Re: Function Health Group
Re: Function is a state-of-the-art rehabilitation company built by like-minded health professionals offering superior patient focused care, with a longitudinal approach to healthcare delivery. The practice is made up of four key rehabilitation pillars, Re: Build (physiotherapy), Re: Think (counselling), Re: View (medlegal consulting) and Re: Tool (vocational rehabilitation), and a team of specialists including: Occupational Therapists, Physiotherapists, Kinesiologists, Psychologists, Psychiatrists and Counsellors. For more information visit www.refunction.ca
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. 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.
Forward-Looking Statements
This news release contains forward-looking statements that are based on CloudMD’s expectations, estimates and projections regarding its business and the economic environment in which it operates, including with respect to its business. 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 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 Re: Function’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 Re: Function, 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.
