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 has signed a binding term sheet (“
Term Sheet”)
to acquire Rx Infinity Inc., Rxi Pharmacy Inc., and Rxi Health
Solutions Inc., (collectively
“Rxi”), enhancing
its specialty health services to patients, providers, payers and
manufacturers in Canada.
Rxi’s pharmaceutical logistic
services include drug distribution, patient navigation
assistance, a preferred pharmacy network of over 500 pharmacies and
real time universal disease management software. Historically,
patient support programs have been geared towards improving product
access and outcomes rather than holistic disease management and
linkage to care and clinical interventions that ensure proper
medication adherence and better overall health outcomes. As a
proven solution to the currently siloed healthcare system, Rxi’s
combined offerings provide a one-stop solution and centralized
platform that breaks down treatment barriers by offering a
team-based, real time, longitudinal approach to patient care and
disease management. Rxi oversees several national and provincial
patient support programs, specializing in Oncology, Infectious
Diseases and Inflammatory Bowel Disease (IBD). The company also
provides administrative and drug benefit management services to a
large third-party benefits provider, servicing more than
300,000 patients across Canada. Rxi is also licensed as a
National Wholesaler (GMP certified), approved by
Health Canada.
Speciality drugs are defined as high-cost
prescription medications used to treat complex, chronic
conditions. In Canada, less than 1% of claimants accounted for 30%
of total eligible costs in 2019 and specialty drugs are forecast to
account for almost 46% of the average monthly certificate cost by
2025(1). Often times these drugs are very costly, difficult to
access and challenging to navigate for patients, physicians, and
pharmaceutical companies, leading to suboptimal outcomes across all
therapeutic areas. Rxi’s platform focuses on user experience and
personalizes patients' complete healthcare journeys.
The acquisition of Rxi will be synergistic
across CloudMD’s platform of healthcare technology solutions and
will be integrated with its electronic medical records
(“EMR”) software, educational resources,
healthcare navigation and enterprise health services. The addition
of Rxi will expand CloudMD’s pharmacy offering and distribution and
fulfillment channel across Canada. CloudMD will have access to
Rxi’s network of 500 independent pharmacies to provide better, more
localized, access to care.
Rxi was founded by CEO, Christian Marcoux, who
has over 20 years’ experience within the specialty drug industry
and has effectively launched and managed dozens of national patient
support programs across Canada in various therapeutic areas.
Previous to starting Rxi, Christian spent almost 13 years at
Shoppers Drug Mart as part of the senior management team leading
the Speciality Health Network.
Rxi's annualized revenue for calendar year 2020
is approximately $16.6 million with earnings before interest,
taxes, depreciation and amortization (“EBITDA”) of
approximately $600,000(2). Rxi generates revenue through (1)
wholesale and dispensary services, (2) licensing for its
proprietary technology and (3) pharmacy partnerships. Upon closing,
the acquisition of Rxi will be immediately accretive to CloudMD
with synergies the company believes will drive further revenue and
increased EBITDA margins through cross-selling and integration
across its portfolio of healthcare technology solutions.
Dr. Essam Hamza, CEO of CloudMD
commented, “The acquisition of Rxi is transformational for CloudMD
and aligns with our vision and focus of providing holistic, patient
focused care. It will be immediately accretive to our top line
while adding new revenue streams and driving value and growth
across many verticals of our business. Their revolutionary disease
management software can be integrated into many of our healthtech
solutions including our EMR platforms, IMD’s patient education
platform, enterprise health services and pharmacy and clinic
networks. It also provides a comprehensive platform to better care
for complex and chronic care patients and gives us the ability to
distribute and fulfill prescription drugs nationally. We welcome
Christian and his team to the CloudMD family and look forward to
working with them to continue unlocking value.”
Christian Marcoux, Chief Executive
Officer of Rxi commented, “CloudMD’s acquisition of
Rxi represents a transformational shift in the evolution and
delivery of highly specialized patient support programs. Rxi will
be able to optimize and cross-sell into CloudMD’s current client
network by offering manufacturers and payers more comprehensive
solutions and real-time visibility into the patient journey,
something that has been lacking in our industry for well over a
decade. CloudMD’s telemedicine expertise combined with Rxi’s
universal disease management experience and customizable software
will significantly improve communication and transparency across
multi-disciplinary stakeholder groups; thus, enabling quicker
access to treatments and improved clinical treatment outcomes.”
Terms of Acquisition
In consideration for the purchase of 100% of the
outstanding securities of Rxi, CloudMD has agreed to pay
shareholders of Rxi aggregate consideration of $9.5 million payable
as follows: (i) $2.5 million in cash, subject to a working capital
adjustment; (ii) $4 million in common shares of the Company; and
(iii) a performance-based earnout of $3 million, which is payable
in common shares of the Company in equal annual issuances over a
period of two years. All common shares issued pursuant to the
acquisition will be issued at a deemed price of $2.39 per common
share and are priced by calculating the 10-day volume-weighted
average trading price of the Company's common shares for the 10
trading days prior to the execution of the binding term sheet. The
common shares will be subject to certain contractual restrictions
on trading for a period of 20 months from the date of issuance.
The acquisition is subject to customary closing
conditions, including the execution of a definitive acquisition
agreement and receipt of TSX Venture Exchange approval.
(1) https://plus.telushealth.co/blogs/health-benefits/wp-content/uploads/AST2986-Drug-Trends-Report-July-2020-EN-V6.pdf
(2) Annualized revenue figures are calculated
based on annualizing the available results for the 11-month period
ending Nov. 30, 2020.
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. For more information visit:
investors.cloudmd.ca
About Rxi
Rxi is a Canadian based specialty drug
wholesaler, pharmacy and technology/patient support program
administrator. The company develops customized programs for a
variety of clients that offer end-to-end solutions to optimize
holistic disease management and clinical treatment outcomes for
patients requiring complex and expensive pharmaceutical treatments.
For more information visit: www.rxinfinity.ca
ON BEHALF OF THE BOARD OF DIRECTORS
“Dr. Essam Hamza, MD"Chief Executive Officer
FOR ADDITIONAL INFORMATION CONTACT:
Julia Becker VP, Investor
Relationsjulia@cloudmd.ca
Forward Looking Statements
This news release contains forward-looking
statements, including statements regarding projected revenue,
completion of the Rxi 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 Rxi 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.
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 Rxi’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 Rxi, 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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