One of Canada’s fastest growing technology startups, Alaya Care Inc., has bought a larger rival and is set to close a second deal this month. The two purchases, funded by its heavyweight Quebec backers, puts the Montreal startup in select company as one of Canada’s few cloud-software firms to hit $50-million in revenue.
Alaya Care, which generates $19-million in annual revenue, purchased Victoria-based Procura, a division of Schaumburg, Ill.-based Complia Health that generates $25-million in annual sales. The second pending deal for an unidentified U.S. player will add about $6-million in revenue.
To fund the acquisitions, Alaya Care has raised US$37-million from iNovia Capital and Caisse de dépôt et placement du Québec, six months after the two investors, along with the Quebec government’s Investissement Québec arm, invested $51-million in the business. The new financing values Alaya Care at more than $250-million.
The Caisse “strongly believes in Alaya Care’s vision of how cloud software, virtual care, and artificial intelligence will transform the delivery of home health care,” said Charles Émond, the institution’s executive vice-president, Québec, private equity and strategic planning, in a statement. “When we [initially invested] it was with the intention of backing the company to build a globally dominant platform, and we are thrilled to watch the Alaya Care team accelerate that vision with moves like this one.”
The company’s platform, AlayaCare, handles myriad tasks related to sending workers to visit aging and disabled patients in their homes, including electronic referral intake, assessments, scheduling, dispatching, records retrieval, billing and payroll. Mobile workers and nurses get real-time access on their mobile devices to information needed for their rounds, and the company uses artificial intelligence to optimize caregiver routes and predict which patients need visits.
After the Procura deal, valued at $40-million-plus, Alaya Care will have 360 employees and about 500 home and community health-care agencies and public health authority customers in Canada, Australia and the United States.
“Together we’ll care for over 10 million patients and support about one million workers,” said chief executive officer Adrian Schauer, a serial entrepreneur who co-founded Alaya Care in 2014, two years after selling his last startup. “Our purpose is to enable the type of home care we’d want our loved ones to receive.”
While Alaya Care’s customers subscribe online to its platform, 30 per cent of Procura’s customers are on a similar “software-as-a-service” (SAAS) subscription cloud-based plan. The rest use older software installed on their premises. The two are also on different trajectories: Alaya Care’s revenue expanded by 2,732 per cent over the past four years, making it Canada’s eighth-fastest growing technology company, according to Deloitte; Procura’s revenue is stagnant.
Mr. Schauer said the key opportunity is “to accelerate the transition to the cloud” by Procura customers and offer them newer capabilities. By taking out a major rival in Canada and Australia, Alaya Care can focus sales efforts in the United States, which accounts for 20 per cent of sales, he said.
“It’s not intuitive for a fast-growing SAAS company to make a big acquisition,” iNovia general partner Dennis Kavelman said. “This was such a good fit and made so much sense we thought the benefits far outweighed the risks.”
The deal comes two months after startup rival ClearCare Inc. of San Francisco was purchased by U.S. health-care software company WellSky Corp. Other players in the industry include Netsmart Technologies Inc. and Heart Communications Inc.’s Homecare Homebase LLC.
Mr. Schauer’s goal is to build a big stand-alone Canadian company. He said he’d prefer to keep financing the company privately rather than go public.
“I enjoy getting to pick my investors and the interactions I have with them. ... It’s a handful of smart, sophisticated people around the table,” he said, adding private equity firms have bid up deals to the point that valuations are equal to public market prices.