Mississauga-based PointClickCare Technologies, one of Canada’s largest private software companies, is buying Salt Lake City’s Collective Medical, continuing a recent volley of cross-border takeovers in Canada’s technology sector.
The parties did not release terms but PointClickCare CEO and co-founder Mike Wessinger said the deal, to be funded by debt, cash and equity, cost between US$500-million and US$1-billion, his company’s largest acquisition yet.
That follows two US$425-million-plus purchases in the past five weeks by Montreal point-of-sale software and payments company Lightspeed POS Inc. of U.S. rivals. Acquisitive payments technology company Nuvei Corp. of Montreal also said last week it would buy payments company Base Commerce LLC of Arizona for an undisclosed sum. Farther afield, Toronto legal software provider Dye & Durham Corp. last Friday said it bought the global property division of Australia’s SAI for $87-million; news of the deal sent the stock of the newly public Canadian company up by 30 per cent in the past two days.
U.S. buyers have been active in Canada too. Last week Silicon Valley software firm ServiceNow Inc. agreed to buy Montreal’s Element AI for an undisclosed amount believed to be less than US$400-million and U.S. retail consumer financer Affirm Holdings Inc. said it would buy Canada’s PayBright Inc. for $340-million. Last month saw the largest takeout of a Canadian software company in 13 years as Nasdaq Inc. bought St. John’s-based fraud detection software provider Verafin for US$2.75-billion. Rockwell Automation Inc. bought Toronto maintenance management software provider Fiix Inc. without revealing the deal value.
While a slew of takeovers of domestic players may awaken old fears of the sector “hollowing out,” Canadian tech firms “are getting more aggressive” as acquirers, said Ed Bryant, CEO of Sampford Advisors, a mid-market technology-focused mergers and acquisitions advisory firm based in Ottawa.
He said in the past Canadian buyers were typically slower or less willing to pay up for acquisitions, but now “some are waking up to the fact mergers and acquisitions are an important part of their life cycle, and it’s not just about organic growth.” Canadian tech companies have bought 197 companies so far in 2020, according to Pitchbook, and the list should top 200 for the third year, compared to tallies below 150 early in the 2010s.
Canada is home to several public tech companies that have led successful and lucrative consolidation strategies, including Open Text Corp., Constellation Software Inc., and Descartes Systems Group Inc. Others, including ecommerce player mdf commerce Inc. and media technology company BBTV Holdings Inc., have talked recently about making acquisitions to boost shareholder returns.
While many acquirers operate in mature markets and buy most of their growth, companies that are still expanding organic revenues at a faster clip have been able to tap deep, ready pools of capital on private and public markets to fuel their acquisitions.
For PointClickCare, the Collective acquisition is a strategic move to expand beyond its core business of offering internet-based health-care records software to 21,000 nursing homes, retirement facilities and home health agencies. PointClickCare booked close to US$400-million in revenue in its fiscal year ended Oct 31, up almost 20 per cent from the prior year, with growth slightly muted by the pandemic. While PointClickCare would be worth billions of dollars if it were to go public, it pulled plans to do so in 2015 and hasn’t looked back, preferring to tap what Mr. Wessinger says is ample funding from private investors to fund growth.
The company said 97 per cent of U.S. hospitals discharge patients to a nursing facility that uses PointClickCare’s software. Collective’s platform, meanwhile, tracks 80 million patients with a range of conditions and needs at 1,300-plus hospitals, thousands of ambulatory practices and long-term post-acute care providers, plus other care organizations and national health plans across 39 U.S. states.
By combining with 178-person Collective, Mr. Wessinger said PointClickCare will be able to fill in the gaps in caregiving between acute care settings like hospitals and post-acute centres such as long-term facilities to provide “integrated care co-ordination....[and] really start to make an impact on the outcomes for seniors.” He said the acquisition positions his company for “the next wave of growth as we try to solve the challenge that will be created by the silver tsunami” of aging baby boomers hitting their final years and putting heightened demand on the health and eldercare system.
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