/THIS NEWS RELEASE IS INTENDED FOR DISTRIBUTION IN CANADA ONLY AND IS NOT INTENDED FOR
DISTRIBUTION TO UNITED STATES
NEWSWIRE SERVICES OR DISSEMINATION IN THE
UNITED STATES./
- NYSE and TSX listed CRH Medical or "CRH" generates a revenue
run-rate(1) that is greater than US$120M with approximately 40% operating
EBITDA(2) margins and more than 25% free cash
flow(3) margins.
- Significant financial accretion anticipated for WELL, including
approximately 120% on a revenue per share basis and 800% on an
EBITDA per share basis in 2021.
- Proposed acquisition of CRH represents a significant
opportunity for WELL to provide digital tools, tech-enablement and
data protection to 69 Ambulatory Surgery Centers(4) or
"ASCs" and GI (Gastroenterologist) Clinics located in 13 U.S.
states and thousands of GI partners in all 48 lower US states.
- Meaningfully enhances WELL's free cash flow profile, enabling
future reinvestment, capital compounding, and capital allocation
opportunities across other attractive healthcare and
healthcare-technology segments.
- Fully-funded via: (i) C$295.5M
non-brokered private placement led by Mr. Li Ka-shing and leading Canadian and US based
financial institutions at C$9.80, a
25% premium to WELL's 5-day VWAP; (ii) committed credit facilities
from the Canadian Imperial Bank of Commerce as lead arranger and
joint bookrunner along with HSBC Bank Canada; and (iii) WELL's
existing cash on hand.
VANCOUVER, BC, Feb. 8, 2021 /CNW/ - WELL Health
Technologies Corp. (TSX: WELL) ("WELL" or the
"Company"), a company focused on consolidating and
modernizing clinical and digital assets within the healthcare
sector, is pleased to announce it has entered into an arrangement
agreement (the "Agreement") to acquire all of the issued and
outstanding shares of CRH Medical Corporation ("CRH") (TSX:
CRH) and (NYSE: CRHM) at US$4.00 per
share in cash (the "Acquisition") representing equity
consideration of approximately US$292.7M and a transaction value of
approximately US$369.2M, inclusive of
CRH credit facility. WELL has also entered into binding
agreements with a group of institutional and individual investors
including Mr. Li Ka-shing
(collectively the "Investors") to raise C$295.5M of equity under a non-brokered offering
of subscription receipts at a price of C$9.80 per share
(the "Offering"). The Offering price represents a
25% premium to the 5-day volume weighted average price
("VWAP") of WELL's common shares on the Toronto Stock
Exchange (the "TSX") preceding this announcement. The
proceeds of the Offering are expected to be combined with debt
facilities provided jointly by the Canadian Imperial Bank of
Commerce and HSBC Bank Canada as well as WELL's existing cash to
fund the Acquisition. The Offering is expected to close in
mid-February 2021 and the Acquisition
is expected to close in Q2 2021. Completion of the
Acquisition is subject to regulatory, CRH shareholder, and court
approvals. The WELL common shares to be issued in connection
with the Offering have received conditional listing approval from
the TSX. Further details of CRH, the Acquisition and Offering
are set out below.
"This will be a monumental acquisition for WELL as it will
significantly boost our revenue and EBITDA profile, dramatically
enhance our U.S. operations, and provide us with additional
inorganic and organic growth opportunities," said Hamed Shahbazi, Chairman and CEO of WELL.
"The proposed acquisition of CRH is a fantastic opportunity to
apply WELL's expertise in digitization and modernization of
healthcare clinics to GI practices in the
United States. Furthermore, CRH's profitability and
cash-flow generation will provide WELL with ample opportunities to
allocate capital and grow without dilution. On a post-closing
basis, CRH is expected to be operated by its talented staff led by
Dr. Tushar Ramani who currently
serves as Chairman and CEO. We also expect that CRH will
continue to conduct its highly active and successful M&A
program following closing. 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. We are very excited for
WELL's future growth and profitability outlook upon closing of this
very strategic and accretive acquisition."
CRH at a Glance
CRH provides GIs throughout the U.S. with innovative products
and services for the treatment of gastrointestinal diseases
including anesthesia services for patients undergoing endoscopic
procedures at 69 ASCs and GI clinics across 13 states, representing
approximately 440,000 annual cases (on a run-rate basis). CRH
has relationships with 3,200 GIs in the U.S. and Canada and initially entered the GI anesthesia
provider space in 2014. CRH uses a team of more than 670
CRNAs (Certified Registered Nurse Anesthetists) and Physician
Anesthesiologists. Additionally, approximately 10% of CRH's
revenue is derived from product sales of its FDA-approved and
patented medical device known as the CRH O'Regan System, which is a
single-use disposable product for the treatment and safe removal of
hemorrhoids. CRH has a successful track-record of M&A, having
completed more than 30 anesthesia-related acquisitions with an
active pipeline that aligns with WELL's M&A strategy.
Post-closing, WELL expects CRH will continue to operate
autonomously as WELL's seventh business unit, under the leadership
of its current Chairman and CEO, Dr. Tushar
Ramani.
Acquisition Highlights
- Major Access to US Healthcare with a Rapidly Growing
Asset. This strategic acquisition will provide deep access to
the U.S. healthcare system by partnering with a market leader in
gastroenterology anesthesia services. CRH's core business is
expected to experience strong growth in 2021 driven by underlying
trends in case-loads, billing rates, and organic and acquisitive
expansion. Post-closing, WELL will have access to 3,200 GIs mostly
in the U.S. and their extended practitioner networks which
represents a compelling channel to unlock new revenue and business
opportunities.
- Attractive Financial and Operating Profile. CRH's
revenue run-rate(1) currently exceeds US$120M (based on unaudited Q3 2020 results)
derived primarily from a stable, predictable and growing base of
practitioner services. Additionally, CRH is highly profitable with
approximately 40% operating EBITDA(2) margins and
greater than 25% free cash flow(3) margins.
- Significant Financial Accretion. The acquisition is
expected to drive significant financial accretion for WELL,
including approximately 120% on a revenue per share basis and 800%
on an EBITDA per share basis in 2021, before considering
synergies.
- Immediate Synergy and Tech-Enablement Opportunity. WELL
intends to deliver its suite of digital tools, tech-enablement and
data protection solutions to CRH's network across the GI healthcare
marketplace. WELL plans to introduce digital health tools and
capabilities to help GI-focused ASCs engage more effectively with
their patients, improve clinical workflow, improve accuracy and
efficiency, and ultimately to increase revenues and reduce costs.
Post-closing, WELL expects to launch a patient-centric digital
application on iOS, Android and its own "apps.health" marketplace
to: (i) educate patients about colorectal and GI issues,
preventative health programs and best practices; (ii) suggest
treatment options to discuss with providers for chronic issues; and
(iii) connect patients and GI practices.
- Financed on Attractive Terms with Key Institutional
Partners. WELL has received binding equity commitments of
C$295.5M under a non-brokered private
placement of subscription receipts led by Mr. Li Ka-shing at a price of C$9.80, representing a 25% premium to WELL's
5-day VWAP. WELL has also received a committed credit facility to
support the acquisition with the Canadian Imperial Bank of Commerce
acting as lead arranger and joint bookrunner along with HSBC Bank
Canada. As a result of the foregoing and together with cash on
hand, WELL is fully-funded to complete the Acquisition.
- Enhanced Healthcare Leadership Position. Post-closing,
WELL's financial and operating profile makes it a clear leader in
the Canadian healthcare market and a strong emerging player in the
U.S. healthcare market. WELL will be optimally positioned for
continued growth and expansion across desired healthcare verticals
within North America.
Dr. Tushar Ramani, Chairman and
CEO of CRH Medical commented, "Today's announcement is the result
of many years of hard work and dedication by all of us at CRH, and
we are rightfully proud of the confidence WELL has shown in
CRH. I'd like to thank our talented staff for their continued
hard work and support. We are confident that today's
transaction will benefit patients and providers in our
ecosystem."
Details of the Acquisition
The Acquisition, which is to be carried out by way of a
court-approved plan of arrangement under the Business
Corporations Act (British
Columbia), will require the approval of: (i) two-thirds of
the votes cast by shareholders of CRH; and (ii) two-thirds of the
votes cast by shareholders, holders of CRH stock options and
holders of CRH restricted share units, voting together as single
class (the "Meeting"). Certain employee incentive
securities of CRH will be exchanged for equivalent employee
incentive securities of WELL pursuant to the Acquisition.
CRH's directors and officers, holding in aggregate 2.1% of
the outstanding common shares of CRH, have each entered into voting
support agreements to vote their shares in favour of the
Acquisition. Completion of the Acquisition will also be
subject to court and regulatory approvals, which are currently
expected to be received in Q2 2021.
The Acquisition Agreement contains certain customary provisions,
including covenants in respect of non-solicitation of alternative
acquisition proposals for CRH, a right to match any superior
proposals for WELL and a termination fee of $10M payable to WELL in certain circumstances.
The Acquisition Agreement also provides for a reverse termination
fee of $10M payable to CRH in the
event of any breach of any representation and warranty or covenant
by WELL.
Further details with respect to the Acquisition will be included
in the information circular to be mailed to CRH shareholders in
connection with the Meeting. A copy of the Agreement will be filed
on WELL's SEDAR profile and will be available for viewing
at www.sedar.com.
Details of the Offering
Pursuant to the terms of the Offering, 1286392 B.C. Ltd., a wholly-owned British Columbia subsidiary of WELL
("Finco") will issue and sell 30,153,061 subscription
receipts ("Subscription Receipts") at a price of
C$9.80 per Subscription Receipt for
anticipated gross proceeds of approximately C$295.5M. Upon the closing of the Offering,
which is anticipated to occur in mid-February 2021, the proceeds will be deposited
in escrow with Computershare Trust Company of Canada (the "Escrow Agent") pursuant to
the terms of a Subscription Receipt Agreement among WELL, Finco and
the Escrow Agent. In conjunction with completion of the
Acquisition, the escrowed proceeds of the Offering will be released
to Finco by the Escrow Agent and each Subscription Receipt will
automatically convert, without any further action on the part of
the subscription receipt holders and for no additional
consideration, into one common share of Finco (each an "Finco
Share"). Immediately thereafter, and as part of the plan
of arrangement under the Acquisition, each Finco Share will be
exchanged for one common share of WELL. If the Acquisition is
not completed on or before June 30,
2021, then, unless otherwise agreed by the holders of the
Subscription Receipts, such holders will be entitled to receive the
aggregate subscription amount paid for their Subscription Receipts
and the Subscription Receipts will be cancelled. The TSX has
conditionally approved the listing of the WELL common shares upon
completion of the Acquisition.
WELL has received binding commitments for participation in the
Offering from all members of WELL's board of directors and the
extended management team (including but not limited to WELL's CEO,
CFO, COO, CMO and CLO) in the aggregate of C$1,000,000 or 102,040 Subscription Receipts.
WELL's CEO accounted for more than 50% of this amount.
Accordingly, the Offering constitutes a "related party transaction"
as such term is defined in Multilateral Instrument 61-101 –
Protection of Minority Security Holders in Special
Transactions ("MI 61-101"), which requires that the
Company, in the absence of exemptions, obtain a formal valuation
for, and minority shareholder approval of, the related party
transaction. The Offering will be exempt from the valuation
and the minority shareholder approval requirements of MI 61-101 by
virtue of the exemptions contained in section 5.5(a) and 5.7(1)(a),
respectively, as neither the fair market value of the consideration
for the subscription receipts nor the value of the Subscription
Receipts issuable to "related parties" is more than 25% of the
Company's market capitalization. As the material change
report relating to the completion of the Offering will be filed on
SEDAR less than 21 days before the completion of the Offering,
there is a requirement under MI 61–101 to explain why the shorter
period is reasonable or necessary in the circumstances. In the view
of the Company, such shorter period is reasonable and necessary in
the circumstances because the subscribers the Company wished to
complete the Offering in a timely manner, given the importance of
the proceeds of the Offering to the successful completion of the
Acquisition.
The securities being offered in the Offering have not been, nor
will they be, registered under the United States Securities Act of
1933, as amended, and may not be offered or sold in the United States or to, or for the account or
benefit of, U.S. persons absent registration or an applicable
exemption from the registration requirements. This news
release shall not constitute an offer to sell or the solicitation
of an offer to buy nor shall there be any sale of the securities in
any state in which such offer, solicitation or sale would be
unlawful.
Details of the Debt Financing Commitment
CRH currently has a US$200M line
of credit which includes a committed US$150M line and a US$50M accordion with a syndicate of major banks
in the United States and
Canada, of which US$76.5M is currently drawn. WELL has
commitments in place to replace this debt facility and complete the
Acquisition. The Canadian Imperial Bank of Commerce is acting
as lead arranger and joint bookrunner with HSBC Bank Canada on the
credit facilities in support of the Acquisition.
Advisors and Counsels
CIBC Capital Markets, Eight Capital, HSBC Securities
(Canada) Inc. and Stifel GMP are
acting as financial advisors to WELL. Torys LLP and Clark
Wilson LLP are acting as legal counsel to WELL.
Conference Call Details
WELL will be hosting a conference call webinar for investors and
analysts to discuss the Acquisition. Please see details
below to participate:
Date:
|
Monday, February 8,
2021
|
Time:
|
9am PST (12 noon
EST)
|
Webinar:
|
https://www.well.company/for-investors/events/
|
Dial-in:
|
647 558 0588 (Toronto
Local)
|
|
778 907 2071
(Vancouver Local)
|
Webinar
ID:
|
954 8793
9595
|
Footnotes:
|
- Run-rate figures are based on
published Q3 results for CRH.
- EBITDA is a Non-GAAP measure.
Earnings before interest, taxes, depreciation and amortization
("EBITDA") should not be construed as alternatives to net
income/loss determined in accordance with IFRS. EBITDA does not
have any standardized meaning under IFRS and therefore may not be
comparable to similar measures presented by other issuers.
The Company believes that EBITDA is a meaningful financial metric
as it measures cash generated from operations which the Company can
use to fund working capital requirements, service future interest
and principal debt repayments and fund future growth initiatives.
For EBITDA reconciliation to Net income, please refer to the
Company's Management Discussion and Analysis filings on
Sedar.com.
- Free cash flow is defined as
EBITDA less NCI and capex
- ASC or ambulatory surgery center,
is a health care facility that specializes in providing surgery and
pain management.
|
WELL HEALTH TECHNOLOGIES CORP.
Per: "Hamed
Shahbazi"
Hamed Shahbazi
Chief Executive Officer, Chairman and Director
About WELL Health Technologies Corp.
WELL is an omni-channel digital health company whose overarching
objective is to empower doctors to provide the best and most
advanced care possible while leveraging the latest trends in
digital health. As such, WELL owns and operates 27 primary
healthcare clinics, is Canada's
third largest digital Electronic Medical Records (EMR) supplier
serving approximately 2,200 healthcare clinics, operates a high
quality telehealth services in both Canada and the
United States and is a provider of digital health, billing
and cybersecurity related technology solutions. WELL is an
acquisitive company that follows a disciplined and accretive
capital allocation strategy. WELL is publicly traded on the
Toronto Stock Exchange under the symbol "WELL". To
access the Company's telehealth service, visit: tiahealth.com, and
for corporate information, visit: www.well.company.
About CRH Medical Corporation
CRH is a North American company focused on providing
gastroenterologists throughout the United
States with innovative services and products for the
treatment of gastrointestinal diseases. In 2014, CRH became a
full service gastroenterology anesthesia company that provides
anesthesia services for patients undergoing endoscopic procedures
in ambulatory surgical centers. To date, CRH has completed 30
anesthesia acquisitions, and now serves 69 ambulatory surgical
centers in 13 states. In addition, CRH owns the "CRH O'Regan
System", a single-use, disposable, hemorrhoid banding technology
that is safe and highly effective in treating all grades of
hemorrhoids. CRH distributes the O'Regan System, treatment
protocols, operational and marketing expertise as a complete,
turnkey package directly to gastroenterology practices, creating
meaningful relationships with the gastroenterologists it serves.
CRH's O'Regan System is currently used in all 48 lower US
states.
Notice Regarding Forward Looking Statements
Certain statements in this news release related to the Company
are forward-looking statements and are prospective in nature
including the statements regarding: the completion and timing of
the Acquisition and the Offering; post-closing objectives of WELL
for the CRH business unit; the expectation that CRH will be
operated by its current staff led by Dr. Tushar Ramani; the expectation that CRH will
continue to conduct its M&A program; the expectation that
WELL's technology and shared services teams will work with CRH to
help digitize and modernize operations in a fashion similar to how
WELL has executed in the primary healthcare space in Canada; the expectations regarding WELL's
future growth and profitability outlook upon closing of the
acquisition; and anticipated accretive revenue, free cash-flow and
EBITDA to WELL resulting from the Acquisition. Forward-looking
statements are not based on historical facts, but rather on current
expectations and projections about future events, and are therefore
subject to risks and uncertainties which could cause actual results
to differ materially from the future results expressed or implied
by the forward-looking statements. These statements generally can
be identified by the use of forward-looking words such as "may",
"should", "could", "would", "intend", "estimate", "plan",
"anticipate", "expect", "believe", "working on" or "continue", or
the negative thereof or similar variations. There are numerous
risks and uncertainties that could cause actual results and WELL's
plans and objectives to differ materially from those expressed in
the forward-looking information, including: risks that the Offering
or Acquisition may not close for any number of reasons; inability
to secure regulatory and CRH shareholder approval for any reason;
risks outlined in WELL's publicly filed documents available on
SEDAR; business disruption risks relating to COVID-19; regulatory
risks, including those related to healthcare, privacy and data
security; and integration risks relating to the acquired business
on a post-closing basis. Actual results and future events
could differ materially from those anticipated in such information.
These and all subsequent written and oral forward-looking
information are based on estimates and opinions of management on
the dates they are made and are expressly qualified in their
entirety by this notice. Except as required by law, the
Company does not intend to update these forward-looking
statements.
This news release contains future-oriented financial information
and financial outlook information (collectively, "FOFI")
about WELL's expected increase in revenue, cash flow and EBITDA on
a post-closing basis assuming consummation of the Acquisition, all
of which are subject to the same assumptions, risk factors,
limitations, and qualifications as set out in the above paragraphs.
The actual financial results of WELL on a post-closing basis
may vary from the amounts set out herein and such variation may be
material. WELL and its management believe that the FOFI has been
prepared on a reasonable basis, reflecting management's best
estimates and judgments. However, because this information is
subjective and subject to numerous risks, it should not be relied
on as necessarily indicative of future results. Except as
required by applicable securities laws, WELL undertakes no
obligation to update such FOFI. FOFI contained in this news
release was made as of the date hereof and was provided for the
purpose of providing further information about WELL's anticipated
future business operations on a post-closing basis. Readers
are cautioned that the FOFI contained in this news release should
not be used for purposes other than for which it is disclosed
herein.
SOURCE WELL Health Technologies Corp.