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 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.
ON BEHALF OF THE BOARD OF DIRECTORS
“Dr. Essam Hamza, MD" Chief Executive Officer
FOR ADDITIONAL INFORMATION CONTACT:
Julia Becker VP, Investor Relations
julia@cloudmd.ca
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.
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