CloudMD to acquire Oncidium
April 21, 2021
VANCOUVER – CloudMD Software & Services Inc., a healthcare technology company modernizing the delivery of care, has signed an agreement to acquire Oncidium Inc., 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 healthcare providers and medical assessors, and its clients with over 2 million employees across the country.
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 many of Canada’s Fortune 500 Companies. Its 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. Services are delivered virtually, on-demand and on-site through its network of over 1,000 healthcare professionals, assessors and medical centers nationally.
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 over 5,500 clients and 5 million employees across North America.
The addition of Oncidium will immediately be synergistic for many 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 division 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; and
- 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
“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,” said Dr. Essam Hamza (pictured), CEO, CloudMD.
“The Oncidium team has built an incredible healthcare offering and the company has become one of the leading health services providers 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.”
Terms of Acquisition
In consideration for the purchase of 100% of the outstanding securities of Oncidium, CloudMD has agreed to pay shareholders of Oncidium $30 million in cash, subject to applicable working capital adjustments; $38 million in common shares of the company at a deemed price of $2.30 per common share; and 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 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,” said Dr. Lu Barbuto, CEO of Oncidium. “We believe 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.”