Healwell AI to acquire VeroSource Solutions for $24.5 million

TORONTO: Healwell AI Inc. (OTCQX: HWAIF), a healthcare technology company focused on AI and data science for preventative care, has entered into an agreement to acquire VeroSource Solutions Inc., a multi-service technology enterprise focused mainly on providing both products and consulting services for total consideration of approximately $24.5 million.

A significant portion of the consideration is expected to be paid in Healwell Class A subordinate voting shares.

VeroSource is a Canadian based, multi-service software and services technology company focused on providing healthcare solutions, including a “Digital Front Door” to provincial healthcare systems, including the Province of New Brunswick and several others.

VeroSource securely integrates health data from sources such as EMRs, pharmacies and hospital information systems into a single platform which is used for analysis across a variety of applications.

The company has developed and validated best-in-class capabilities in data management, interoperability and rendering which are key capabilities when unlocking clinical value and addressing unmet needs for patients and providers.

VeroSource harnesses AI technology via its VS Data-as-a-Service (VS DaaS) product, enabling powerful data visualization and unlocking value through actionable insights.

The VeroSource infrastructure and suite of digital health solutions is fully compatible with HEALWELL’s AI capabilities, enabling the expansion of Healwell’s digital co-pilot tools into the VeroSource footprint as well as VeroSource’s data interoperability and visualization tools to be used across Healwell’s footprint.

Combined with Healwell’s data structuring and abstraction technology, VeroSource provides additional expertise for Healwell to further accelerate its mission of early disease detection.

Dr. Alexander Dobranowski, CEO of HEALLWELL, stated, “We are excited to announce the proposed acquisition of VeroSource who has created a compelling data interoperability platform that powers large enterprises such as provincial health systems.

 Once integrated with our best-in-class AI-powered disease detection and patient identification capabilities, VeroSource has the potential to roll out very significant population health features that are very much at the core of value-based healthcare trends. VeroSource has demonstrated impressive historical revenue growth rates of 30% CAGR, with a strong pipeline of long-term contracts producing a mix of one-time and recurring SaaS revenue.

We look forward to building on their exceptional track record by leveraging our deep connectivity to the Canadian outpatient landscape through our partnership with WELL Health and their successful public sector sales program. We are excited about the growth synergies and the potential to expand our footprint rapidly into new provinces.”

Mark McAllister, CEO of VeroSource, commented, “We are thrilled to join forces with HEALWELL. Our combined expertise will accelerate our mission of empowering people and unlocking the value of healthcare data.

With HEALWELL’s support, we can expand our innovative digital health solutions more rapidly and effectively across Canada. We believe that we can help accelerate HEALWELL’s mission of early disease detection and providing more comprehensive, AI-driven healthcare solutions.”

VeroSource has had well over one million users since inception, which includes both patients and providers, and is expected to generate over $8 million in revenues in 2024 with expected EBITDA margins over 10%.

Historically, VeroSource has achieved over 80% gross margins, and consistently produced positive EBITDA, and positive cashflows.

Over 70% of its sales are high margin recurring revenue. The proposed acquisition will add significant revenue, a robust pipeline of long-term enterprise grade contracts, and an innovative digital health platform to HEALWELL. The proposed acquisition is highly accretive, cash conservative, and is expected to deliver significant value.

HEALWELL is expected to benefit from VeroSource’s recurring high-margin software and services revenue, strong relationships with private and public sector stakeholders, and a talented team of healthcare technology entrepreneurs, engineers, and data scientists. On closing, this acquisition will mark a significant milestone in the ongoing effort to enhance healthcare delivery and improve patient outcomes through cutting-edge technology.

Closing of the transaction is subject to a number of standard conditions, including conditional approval from the Toronto Stock Exchange (TSX).

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