British Columbia’s WELL Health Technologies is set to acquire all issued and outstanding shares of fellow Vancouver health services company CRH Medical for $373 million CAD ($292.7 million USD). WELL Health plans to finance the transaction with a non-brokered private placement equity offering.
CRH Medical is a New York Stock Exchange-listed company that provides anesthesia for patients that undergo endoscopic procedures. Although it is based in Canada, CRH operates mainly in the United States. WELL Health is a Toronto Stock Exchange-listed healthtech firm that provides various health services in Canada and the US.
WELL’s CEO called the proposed acquisition a good opportunity for WELL to apply its expertise in healthcare digitization to the US.
The proposed acquisition of CRH Medical is part of WELL Health’s plan to consolidate and modernize clinical and digital assets in the healthcare sector, and acts a gateway towards its expansion into the US healthcare market. The acquisition is expected to close in Q2 2021.
UPDATE (04/23/21): The acquisition closed on April 22. WELL has acquired CRH Medical for $5 CAD per share in cash, at an equity consideration of nearly $358 million CAD and a total transaction value of $467 million, including CRH Medical’s credit facility.
“This will be a monumental acquisition for WELL as it will significantly boost our revenue and EBITDA profile, dramatically enhance our US operations, and provide us with additional inorganic and organic growth opportunities,” said Hamed Shahbazi, WELL Health’s chairman and CEO.
WELL Health owns and operates 27 health clinics in British Columbia, Quebec, and California as well as an electronic medical records (EMR) service that it claims is the third-largest in Canada, serving over 2,200 clinics and 10,700 physicians. The company also operates a national telehealth service and provides other billing, digital health, and cybersecurity solutions.
Through a private placement, WELL Health intends to raise $295.5 million CAD from a group of undisclosed institutional and individual investors led by Hong Kong billionaire Li Ka-shing. The company expects this equity offering to close by mid-February.
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WELL Health plans to use the proceeds from this private placement, plus debt facilities provided by CIBC and HSBC Canada and its existing cash, to finance the purchase of CRH Medical.
CRH Medical provides endoscopic anesthesia services to 69 ambulatory surgery centres and gastroenterologist (GI) clinics in 13 US states, and serves thousands of other GI partners across the US with its hemorrhoid treatment system.
The total transaction value is approximately $471 million CAD ($369 million USD), including CRH’s credit facility. This acquisition price values CRH Medical at $4.00 USD per share. The proposed acquisition is not subject to any financing conditions, however, the deal still requires approval from CRH’s shareholders.
WELL Health has an acquisitive growth strategy. The company’s recent acquisitions include healthtech startup AdraCare and cybersecurity company Source 44.
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Shabazi called the proposed CRH acquisition a good opportunity for WELL to apply its expertise in healthcare digitization to GI practices in the US.
“WELL’s technology and shared services teams will work with CRH to help digitize and modernize operations in a manner similar to how WELL has executed in the primary healthcare space in Canada,” said Shabazi.
WELL expects CRH to continue its active merger and acquisition program. Shabazi anticipates that CRH’s profitability and cash-flow generation will give WELL “ample opportunities to allocate capital and grow without dilution.”
Post-closing, WELL expects CRH to continue to operate autonomously as WELL’s seventh business unit and retain its current leadership.
Photo by the National Cancer Institute via Unsplash
