LifeSpeak goes public on TSX, closes $125 million public offering

tsx

Toronto-based employee wellness software company LifeSpeak began trading on the Toronto Stock Exchange Tuesday, after closing a previously announced $90 million initial public offering (IPO) and a $35 million secondary offering.

LifeSpeak issued nine million common shares at a price of $10 per share, securing total gross proceeds of $90 million. Through an accompanying secondary offering, a group of LifeSpeak shareholders, including founder and CEO Michael Held and Toronto’s Round13 Capital, sold an aggregate of 3.5 million common shares at $10 per share, for total gross proceeds of $35 million.

LifeSpeak issued nine million common shares at a price of $10 per share, securing total gross proceeds of $90 million.

LifeSpeak plans to use the net proceeds from its IPO to add more services to its platform, bolster its ability to pursue new enterprise clients, make strategic acquisitions, and repay $10 million in outstanding debt.

LifeSpeak is currently listed on the TSX under the symbol ‘LSPK.’ The company’s shares opened at $10 and have since dropped by 15 percent to $8.50 per share at time of publication.

Nolan Bederman, chairman of LifeSpeak’s board of directors, told Betakit that LifeSpeak decided to go public, in part, to build capital for potential mergers and acquisitions (M&A).

“We put all that stuff together to [pursue a] really interesting chance for us to really tap what we see as a huge, huge growth opportunity,” said Bederman.

Founded in 2004, LifeSpeak provides digital mental health and well-being education software to mid and enterprise-sized organizations. The company serves over 225 clients across the world, from Fortune 500 companies to government agencies, insurance providers, and other healthtech firms.

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According to LifeSpeak’s final prospectus, the firm had $21 million in annual recurring revenue for the 12 months ending March 31, 2021. During the same period, LifeSpeak reported revenues of $13 million, a gross profit of $11.8 million, and a net loss of $667,000.

The offering was made through a syndicate of underwriters led by RBC Capital Markets, Canaccord Genuity Corp., and Scotiabank as joint bookrunners. The IPO was also supported by CIBC Capital Markets, TD Securities, Roth Canada, ULC, Desjardins Capital Markets, and Stifel GMP. The IPO’s underwriters have been granted an over-allotment option to purchase up to an additional 1,875,000 common shares from selling shareholders at a price of $10 per share.

LifeSpeak’s IPO comes less than a year after it secured its first round of institutional financing, raising a $42 million CAD equity round led by Round13 Capital’s Growth Fund, and follows years of growth for the company, driven in part by COVID-19, which forced companies to shift to remote or hybrid work models..

“The trends and events that really have propelled this business started years before [COVID-19],” Held told BetaKit. What Held said the pandemic did do, however, was “change the way the C-Suite prioritizes mental health,” driving what he anticipates will be a permanent shift that has benefitted LifeSpeak’s business.

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Following the closing of LifeSpeak’s IPO, Held holds a total of 19.5 percent of LifeSpeak. This stake includes ownership or control of over 9,298,215 common shares, including 1,018,041 shares held directly and control over 8,280,174 common shares held by Grasshopper Holdings LP, Michael Held Family Trust, and Krista Mussell.

Round 13 Growth has ownership and control over 5,276,248 common shares, for a total of 11.1 percent of LifeSpeak.

LifeSpeak employs just under 60 people, and plans to use some of the IPO’s proceeds to double its sales team by the end of 2022 and triple its investment in content and product.

The company also plans to use some of the proceeds to fuel its recent growth in Canada, the United States, the United Kingdom, and Europe, as well as the Middle East and the Asia-Pacific region, which it sees as key areas for expansion.

“Our goal is to be ubiquitous and be the brand for mental health and well-being education around the world,” said Held. “I think, every time we add a new country, language, and really spread to many more millions of people, those are the milestones.”

UPDATE (07/06/21): This story has been updated to include commentary from Michael Held and Nolan Bederman.

Feature image from Wikimedia Commons

Josh Scott

Josh Scott

Josh Scott is a BetaKit staff writer who loves to tell Canadian business and tech stories. His coverage is more complete than his moustache.