Vancouver-based CloudMD, a SaaS health technology provider, acquires Toronto-based health technology company MindBeacon in a transaction valued at approximately C $ 116 million.
News of the deal coincided with the announcement of MindBeacon’s third quarter results, the third reporting period since it became a public company in December 2020.
The deal came as MindBeacon shares were at $ 4.09 (at time of publication) down from a 52-week high of $ 15.10.
The deal comes less than a year after MindBeacon’s listing on the Toronto Stock Exchange.
The transaction is subject to a number of conditions, including the approval of at least two-thirds of the votes cast at a special meeting of MindBeacon shareholders, as well as the approval of the TSX Venture Exchange (CoudMD is a company listed on the TSX Venture Exchange).
MindBeacon’s shareholders’ meeting is expected to be held in January and the transaction will close shortly thereafter.
The transaction was unanimously approved by the boards of directors of both companies. The MindBeacon Board of Directors unanimously recommends that MindBeacon shareholders vote in favor of the transaction.
MindBeacon’s mental health services will be integrated with CloudMD’s comprehensive integrated health services platform.
MindBeacon is focused on providing affordable and accessible virtual mental health care. For its part, CloudMD is building a single, connected platform that includes hybrid primary care clinics, specialty care, telemedicine, mental health support, healthcare navigation, educational resources and intelligence. artificial.
CloudMD currently serves an ecosystem of over 7,000 psychiatrists, approximately 4,500 therapists and counselors, approximately 4,000 psychologists, over 22,000 family physicians, over 34,000 medical specialists and over 1,500 allied health professionals.
The inclusion of MindBeacon’s full suite of mental health services as part of CloudMD’s broader integrated healthcare offerings will create one of North America’s leading fully integrated healthcare offerings, according to the MindBeacon third quarter results.
Together, the two companies say they have a network of 5,500 corporate clients, more than five million patients and significant government contracts.
CloudMD said the acquisition will drive expansion into the United States through additional services, cross-selling synergies and the recent acquisition of Harmony Healthcare by MindBeacon for an undisclosed amount. Harmony, based in Las Vegas, is a provider of mental health care and addiction treatment in the United States.
Cloud MD has announced plans to leverage its Digital Health Services division and network of more than 20,000 regulated healthcare professionals to promote MindBeacon’s white label iCBT SaaS offering “Beacon in a Box”.
RELATED: MindBeacon Sees Revenue Increase in Second Quarter as It Accelerates International Expansion
“We continue to rapidly execute our product roadmap through strategic acquisitions to create a leading healthcare and wellness offering in North America,” said Essam Hamza, CEO of CloudMD.
“MindBeacon’s mental health services and iCBT platform add another important capability to our strong healthcare ecosystem and further position us with a leading, clinically validated mental health solution,” Hamza added.
Hamza told BetaKit that MindBeacon “selected” CloudMD because of its long-term suitability and creation of shareholder value.
“CloudMD’s goal is to become one of the leading fully integrated healthcare offerings in North America, with a broad continuum of clinically validated care to address mild, moderate, acute and chronic mental and physical care, and this acquisition helps us get there, ”says Hamza.
MindBeacon is not alone in the Canadian digital mental health space. Other companies include Felix Health, Maple, and Dialogue.
By announcing its third quarter 2021 results concurrently with the deal, MindBeacon reported revenue of $ 5.2 million in the quarter, an increase of 66% over the same period. last year.
The company reported gross profit of $ 2.3 million from $ 1.5 million in 2020, while for the nine months ended September 30, 2021, MindBeacon’s gross profit increased to $ 7.3 million against $ 3 million in 2020.
MindBeacon’s adjusted EBITDA for the quarter ended September 30, 2021 showed a loss of $ 3.1 million, compared to $ 1.7 million for the same period in 2020.
“The decrease in Adjusted EBITDA is in line with our expectations as MindBeacon continues to invest in the growth of the business,” the company said in its earnings report.
MindBeacon noted that its gross margin was offset by higher marketing costs as it promoted its technology, higher product and development spend as it invested in its technology and platform, and higher general and administrative costs. The latter was attributed to “the increase in operating costs as a public enterprise”.
The firm also said it experienced increased administrative and recruiting costs associated with building its network of therapists, as well as increased employee expenses resulting from the addition of new positions during the year.
In its previous quarterly earnings call, which saw revenue and gross profits rise alongside rising losses, a MindBeacon spokesperson said: Be expected. However, we expect this to normalize as our providers reach full case load capacity in the coming quarters. “
In its third quarter earnings report, MindBeacon management said, “We are proud of our performance in the third quarter of 2021 in all aspects of our business. We expected our revenue growth to be affected as we enter the third quarter of 2021 due to the seasonality we have historically seen during the peak holiday seasons in July and August. We are well positioned to continue our momentum in 2022 and beyond. “
Feature image courtesy of MindBeacon
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