TDSI Flash NoteEvent
WELL has agreed to acquire ExecHealth for ~$10.7mm in cash and stock.
Impact: SLIGHTLY POSITIVE Acquisition details. The $10.7mm purchase price consists of ~$6.5mm in cash and ~$4.2mm in stock (based on the five-day VWAP pre-closing). There is also a ~ $1.9mm multi-year performance-based earnout. The acquisition is expected to close in early May. Expanding into the large and strategic Ontario clinical market.
Since 2005, ExecHealth has provided primary care, executive health, employee wellness, preemployment and periodic medical exams, and other integrative services including physiotherapy and counselling services to over 1,000 clients (over two-thirds are recurring membership clients). ExecHealth has focused on offering its services to executives, diplomats, and other professionals and their families in the Ottawa region.
This acquisition gives WELL its first (omni-channel) clinical footprint in Ontario, a key market for WELL and where most of its OSCAR EMR customers are located. We expect WELL will acquire many more (omni-channel) clinics in the province, as it looks to significantly increase its presence in this very strategic market. The addition of ExecHealth will also help increase WELL's presence in the high margin corporate and executive health market, following the acquisition of ExcelleMD last December.
Upon close, we would expect WELL to begin deploying some or all of its suite of solutions into ExecHealth's business, including its OSCAR EMR, telehealth, cybersecurity, and billing and back office solutions.
Highly accretive deal for a high growth and high margin business. ExecHealth has LTM revenue (ending Feb. 28, 2021) of ~$3mm and EBITDA margins >50%. Revenue and EBITDA has grown at over 20% over the last three years. Attractive valuation. The implied acquisition multiples (LTM) are ~3.6x revenue and ~7x EBITDA. We note that despite ExecHealth generating much stronger EBITDA margins than ExcelleMD (>50% vs. ExcelleMD at >20%), the EBITDA multiple appears to be right in-line with what WELL paid for ExcelleMD.
Intrahealth acquisition closes.
This past Monday, WELL closed the $19.3mm acquisition of Intrahealth, significantly expanding its EMR business into larger healthcare organizations and internationally while doubling its EMR revenue base. More details can be found in our March 8th note.