Al Gore’s Generation Investment Management has made its second big bet on the Canadian technology sector this year, leading a $225-million investment in Montreal’s Alaya Care Inc.
The financing values the seven-year-old company – which provides a software platform used by more than 500 companies in the home-care industry – in the high nine-figures, according to two sources familiar with the deal. The Globe and Mail is not identifying the sources because they are not authorized to discuss the matter. Past investors Klass Capital, Inovia Capital, Caisse de dépôt et placement du Québec and the Quebec government’s Investissement Québec arm also participated. The company, which does business as AlayaCare, will get $150-million of the proceeds; the balance will go to early investors and employees. TD Securities advised AlayaCare on the deal.
“Building sustainable health systems is one of our core focus areas,” said Dave Easton, a partner with Generation’s US$1-billion-plus Sustainable Solutions Fund, which invested in Calgary charitable giving platform provider Benevity Inc. this year. (Mr. Gore, the former U.S. vice-president, is Generation’s chairman and founding partner.)
“Primary care is a way of keeping people well, out of hospital, improving outcomes and reducing [health care] system costs,” Mr. Easton said. “AlayaCare fits into that approach. Being able to back a software player that enables the whole sector is a great place to be from both an investment and a sustainability and enablement perspective.”
The company’s platform handles myriad tasks related to sending hundreds of thousands of workers to visit more than one million aging and disabled people in their homes, including electronic referral intake, assessments, scheduling, dispatching, records retrieval, billing and payroll. Mobile workers and nurses get access on their phones to information needed for their rounds, and the company uses artificial intelligence to optimize caregiver routes and predict which patients need visits.
The company is a big player in Canada and Australia, but 70 per cent of its new business is coming from the United States – where its sales have grown sevenfold in the past two years – as AlayaCare faces a fragmented set of competitors including incumbent giant WellSky. AlayaCare “is beyond the ‘Can they may it work in the U.S.’ question,” Mr. Easton said. “It’s how fast at this stage.”
AlayaCare, led by chief executive officer Adrian Schauer, is emerging from the pandemic relatively unscathed. In early 2020, the company announced it had raised US$37-million and made two acquisitions, which almost tripled annual revenue to $50-million a year.
The company had forecast organic growth of 50 per cent for 2020 when the pandemic hit. Many of its customers reported a sharp drop in home visits, and sales activity plummeted. The company cut its growth forecast in half, but Mr. Schauer went against the advice of financial advisers and didn’t lay off any staff.
“We just slowed down our hiring and rode it out,” he said. “I felt it was the right thing to do, but it also turned out to be a good business decision. Now it’s an absolute battle for talent.” After two quarters, momentum returned and the company beat its previous sales record in the fourth quarter. It now has 465 employees, up from 372 at the start of 2020.
“Not that there’s any silver lining to a global pandemic, but a lot of health systems have realized there’s a lot more that can be done in the home setting than they previously thought, so our customers are all in growth mode,” Mr. Schauer said.
Dennis Kavelman, an Inovia Capital partner and AlayaCare director, said “we had a thesis pre-COVID that home care would really matter” and that agencies would respond positively to innovation that made it easier for them to automate their businesses. Given the high incidences of infections and death at long-term care homes during the pandemic, “that just quadrupled the desire of people to stay in their homes as long as they can. That just made what AlayaCare does so much more front and centre.”
Mr. Schauer said he expects AlayaCare to use more than half of the funding proceeds for acquisitions. He said he’s in no hurry to go public, but said the company would spend the next 12 to 18 months preparing for the option to list publicly if it decides to follow that path.
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