CloudMD Software & Services (TSXV: DOC) this morning announced its largest acquisition to date. The company will be acquiring that of Oncidium, a healthcare provider to employers whos clients have over 2.0 million employees across Canada.
Similar to Well Health’s announcement this morning, CloudMD has elected to move into the employer market vertical as a new market segment. Oncidium reportedly has over 500 clients, as well as over 1,000 health care providers and assessors within its ecosystem. Services are provided on-demand, on-site, and virtually, with the company providing employer-focused solutions such as short and long term disability, absentee management, workers compensation claims management, and more.
In terms of financials, the target reportedly has last twelve month revenues of $37 million, while adjusted EBITDA margins are currently sitting at 14%. On a consolidated basis, the acquisition is expected to take CloudMD to an annual revenue run rate of $120 million, of which $53 million comes from the Enterprise Health Solutions division.
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Under the terms of the transaction, the total figure to be paid by CloudMD currently sits at $100 million, assuming the full earn-out payment is awarded. $30 million in cash is to be paid upon closing, as well as $38 million of CloudMD common shares at a price of $2.30 per share. Performance based earn-outs of $32 million over a three year period are also applicable, which may be paid in either cash or shares.
Common shares issued under the transaction are subject to restrictions for up to 30 months post-closing of the transaction. The valuation ascribed to Oncidium is based on 1.8x LTM sales and 13.1x adjusted EBITDA.
The transaction is expected to close in the first half of June 2021.
CloudMD Software & Services last traded at $2.06 on the TSX Venture.
Information for this briefing was found via Sedar and CloudMD Software & Services. The author has no securities related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
