Montreal telemedicine company Dialogue Health Technologies Inc. has priced its impending initial public offering at $12 a share, the top end of its target range, after receiving strong demand from investors during the deal’s marketing period.
The company, which set out earlier this month to raise $100-million in an offering on the Toronto Stock Exchange at between $9 and $12 a share, received more than $1-billion worth of orders for the stock from investors, making it 10-times oversubscribed, two sources familiar with the transaction said. The company closed the book on orders from investors mid-Monday but did not increase the total size of the offering – 8.34 million shares at the offering price – meaning the company and its advisers anticipate leaving some room for the stock to jump after it starts trading next week under the ticker CARE.
The Globe and Mail is not disclosing the identities of the sources because they are not authorized to speak publicly about the matter.
The company’s underwriters also have a right to buy $15-million worth of stock from existing investors, including three entities associated with Power Corp. of Canada, at the issue price from some of the company’s shareholders.
Based on the number of common shares outstanding, the proposed offering would value Dialogue at $778-million based on its revised prospectus filed late Tuesday. The company’s two largest shareholders, Sun Life Assurance Co. of Canada and White Star Capital’s Fund VI, will own a combined 27.4 per cent of the company’s stock. The five year-old company has raised more than $100-million in venture capital to date.
Dialogue, led by chief executive officer Cherif Habib, chief product officer Anna Chif and chief technology officer Alexis Smirnov, is testing investor appetites for new Canadian technology issues at a time when stocks of digital companies have been subject to volatility. The tech-heavy Nasdaq fell 1.12 per cent Tuesday,
The offering is being led by National Bank of Canada, Royal Bank of Canada, Bank of Nova Scotia and Toronto-Dominion Bank. The rest of the underwriting syndicate includes CIBC World Markets, Desjardins Securities, Canaccord Genuity, iA Private Wealth, INFOR Financial and Laurentian Bank Securities.
Dialogue’s preliminary prospectus reveals it has experienced explosive growth, owing largely to the pandemic. Revenue from the company’s online health service in 2020 nearly tripled to $29-million from $10.1-million in 2019. That was up from $4-million in 2018. The service is now available to 2.5 million Canadians and their dependents, offered through four of Canada’s five largest group insurers. Dialogue lost $20.5-million in 2020, compared with a $12-million loss in 2019.
Total revenue reached $35.8-million in 2020 after Dialogue last year purchased Argumed Consulting Group GmbH, a German provider of occupational health and safety services, and Optima Global Health Inc., a Canadian employee-assistance-program seller. Annual recurring revenue was at a rate of $60-million early this year.
Valuations for public tech companies have skyrocketed since the start of the pandemic as people sheltering at home increasingly turned to online tools for shopping, workplace communications, training – and medical consultations.
The Globe first reported last summer that Dialogue was considering going public. Since then, several Canadian tech companies have hired bankers or filed to go public. Many initially met with a warm investor response in what has shaped up to be the busiest period for IPOs since the dot-com boom, though tech shares have eased off in recent weeks. MindBeacon Holdings Inc., a smaller and earlier-stage company than Dialogue offering online mental-health services, raised $65-million in a highly oversubscribed IPO in December. Industry observers believe Toronto telemedicine startup Maple Corp. could also be a near-term IPO candidate.
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