PointClickCare Inc.’s two largest outside investors have increased their stake in a deal that values the private software vendor – one of Canada’s biggest – at more than US$5-billion.
U.S. private equity firm Hellman & Friedman LLC and JMI Equity picked up between US$200-million and US$300-million worth of shares in PointClickCare from early investors and employees in a deal that closed on April 22, the company said. Executive chair and co-founder Mike Wessinger said in an interview the deal valued the Mississauga-based company at the same multiples of revenues and operating earnings as a similar transaction in early 2021, in which H&F and private equity firm Dragoneer Investment Group bought most of JMI Equity’s stake. That previous deal valued PointClickCare at US$4-billion.
The latest investment locks in – on paper – the valuation of the health care software company at early 2021 levels despite crashing values for publicly traded technology stocks and, increasingly, their privately held peers in recent months. This makes it one of Canada’s most valuable privately held or publicly traded technology companies.
PointClickCare, which provides internet-based health records software to 27,000 senior care facilities and more than 2,700 hospitals in the U.S., did not receive any proceeds from the transaction.
“We have a strong balance sheet and we’re in a great financial position and the health care end market isn’t going anywhere,” Mr. Wessinger said.
The profitable company has increased its pace of hiring this year at a time when many tech companies are either slowing their employment expansion plans or even cutting jobs. The company has hired 500 people already this year, ahead of plans, and it now has more than 2,100 employees.
Mr. Wessinger said the hiring dynamic has shifted sharply in recent months, as the talent crunch that drove up salaries and made prospective employees scarce has loosened considerably.
“For two years we weren’t getting résumés, we were getting ransom notes” from prospective hires who were in a stronger position to dictate employment terms and “were asking about your sabbatical policy on Day 1,” he said. “It’s a different market now.”
PointClickCare generates more than US$500-million in annual revenue and has been growing by about 20 per cent a year. The 22-year-old company has also made 14 acquisitions. Most have been small “tuck-in” deals, but in the past 19 months it has made two large purchases for more than US$750-million combined that expanded the company into the realm of collecting and exchanging data as patients are transferred between health care facilities.
Mr. Wessinger said his company doesn’t anticipate doing another large acquisition for at least another eight to 12 months once the two acquired companies – Utah-based Collective Medical and Audacious Inquiry of Baltimore, Md. – are completely integrated. He said his company would have the financial capacity to pay “in the hundreds of millions” for a deal without having to raise outside capital. However, the company chair, whose brother and co-founder Dave Wessinger succeeded him as chief executive officer last year, added “there’s a high probability” that PointClickCare would acquire a smaller company by the end of the year.
Mike Wessinger said he believed his company would be in a good position “to be opportunistic in the next couple of years as mergers and acquisition targets come out of nosebleed valuations into something that is more rational.
”We need to be thoughtful, we don’t want to do M&A just for the sake of doing M&A and make sure we don’t bite off more than we can chew.”
Editor’s note: An earlier version of this story incorrectly stated that U.S. private equity firm Dragoneer Investment Group bought more shares of PointClickCare. This version has been corrected.
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