Loblaw Cos. Ltd. is expanding its investment in the health care sector, spending $75-million for a minority stake in telemedicine provider Maple Corp., a Toronto startup that has seen demand for its online doctor services swell this year because of the coronavirus pandemic.
Loblaw has been investing in health care since it bought the Shoppers Drug Mart drugstore chain in 2014. Loblaw acquired QHR Corp., a software firm that provides electronic medical record-keeping for doctors, for about $170-million in 2016. Shoppers has experimented with offering services such as cosmetic dentistry and dermatology in some locations. Last month, it opened a medical clinic in Toronto and plans to expand the business.
As concerns over COVID-19 mounted in March, Shoppers partnered with Maple to make virtual consultations available through the retailer’s website. About a month ago, Shoppers launched a test in British Columbia, giving access to the Maple service on iPads in 160 stores. Customers have primarily used the service for conditions such as skin problems, allergies, and infections of the eye, throat and urinary tract.
“Through COVID, [telemedicine] really became a critically important way of accessing care," Shoppers president Jeff Leger said. “... We think that there is a meaningful change, a tipping point in terms of how health care is accessed in Canada."
An industry source said Loblaw is believed to have bought 20 per cent to 25 per cent of Maple – giving the five-year-old company a valuation of nearly $300-million. The Globe and Mail is not identifying the source because they are not authorized to discuss the matter publicly.
Maple chief executive Brett Belchetz said his company’s valuation with the deal had more than quadrupled since it announced a $14.5-million investment one year ago from Royal Bank of Canada, Germany’s Acton Capital and SE Health.
Dr. Belchetz, an emergency-room physician in Toronto, co-founded the company in 2015 with chief operating officer Roxana Zaman and chief technology officer Stuart Starr. They designed Maple to offer online access to independently contracted medical providers through its platform within minutes.
By the start of this year, Maple had raised $20-million from investors and was growing by 10 per cent to 15 per cent month to month, also offering its services through insurers and employers and licensing its platform to governments, hospitals and practitioners to provide their own telemedicine services.
When the pandemic hit, demand that had been steadily growing took off for virtual health care companies. “COVID-19 broke down all of the objections and barriers” people had to visiting doctors over the internet, said Michelle McBane, senior investment director at MaRS Investment Accelerator Fund, an early Maple investor.
The 70-person startup now handles thousands of online appointments a day, up from 200 to 300 on average one year ago; revenue is running at an annualized rate of $25-million, up more than fourfold from a year ago. “The founders did an exceptional job adapting to the new reality and scaling up extremely quickly,” said Hannes Blum, a venture partner for Acton Capital. “A development that would normally take two to three years [growing adoption of telehealth services], happened in two months, pretty much."
The rapid shift has made telemedicine companies some of the hottest in the technology industry. Values have spiked for publicly traded companies that provide virtual care, and U.S.-based Teladoc Health Inc. announced plans last month to buy Chicago telemedicine provider Livongo Health for US$18.5-billion. U.S. telehealth providers American Well Corp. and MDLive have announced plans to go public, while Montreal’s fast-growing Dialogue Technologies Inc., which raised $32.7-million from Sun Life Financial this summer, has explored doing the same.
Shoppers plans to expand the Maple offering to stores outside B.C., part of a larger digital strategy to better reach customers, Mr. Leger said. Pharmacies already offer broader services than just filling prescriptions, including consulting on minor ailments and providing flu vaccines. The chain has locations within 10 kilometres of 85 per cent of all Canadians, he added.
“We have a great health care system, but sometimes it’s hard to access,” Mr. Leger said. “... There’s a need in that space to make it more convenient, and we know that digital is a big part of that.”
Both he and Dr. Belchetz say demand for telemedicine services in Canada will remain high after the pandemic. “The genie is out of the bottle,” Dr. Belchetz said. “Many people who would have never believed in telemedicine, both patients and providers, now believe in it. They understand that it works."
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