Canadian health-care software firm PointClickCare Technologies Inc. has delayed its plans to go public and instead has raised $85-million (U.S.) in a private financing led by San Francisco fund Dragoneer Investment Group.
Mississauga-based PointClickCare had filed in September, 2015, to raise $100-million in an initial public offering on the Nasdaq and Toronto Stock Exchange, just before the market for new tech issues cooled off. That lasted well into last year, but investor interest returned in recent months with a series of successful new tech issues in the United States, leading to the impending IPO by instant-messaging giant Snap Inc. on the New York Stock Exchange.
Despite the more favourable climate for tech IPOs, "There was an awful lot of private money out there that said, 'Look, we'd be happy to finance you' … without the hassle or expense of having to be a public company," PointClickCare founder and chief executive Mike Wessinger said. "There is little to no downside of doing a private financing versus an IPO."
He added investor uncertainty about the U.S. health-care industry given new U.S. President Donald Trump's pledge to undo predecessor Barack Obama's Affordable Health Care Act made this a good time to hold off on an IPO.
Dragoneer has made late-stage venture investments in some of the biggest global tech names, including still-private Uber Technologies Inc. and Airbnb Inc. as well as companies that subsequently went public, including Atlassian Corp. PLC, Hortonworks Inc. and AppFolio Inc. Previous PointClickCare investor JMI Equity, which invested $50-million in 2011, also participated in the financing. "We view this as a franchise company," said JMI managing partner Matt Emery, a PointClickCare director. "It's a nice place to be invested and we want to keep going."
There have been no tech IPOs on the Toronto Stock Exchange since Shopify Inc. went public in May, 2015. PointClickCare was seen as a likely candidate to break the dry spell. "We'll keep lifting our head up every quarter and say, 'Does it make sense?'" to go public," Mr. Wessinger said. For now, the company will let its registration with security regulators lapse.
Mr. Wessinger, a 46-year-old native of Milton, Ont., started the company in 1995 as a one-man shop, installing computer technology made by others in local nursing homes, a business he knew through his mother, Sheila McBride, a consultant to the industry. In 1999, Mr. Wessinger, younger brother Dave – the company's chief technology officer – and their mother devised a strategy to offer the industry solutions to update its antiquated legacy technology by providing software for billing and other back-office functions. Rather than selling them on-premise programs, the company offered to host the software on its servers and charge them for monthly access over the Internet. "We recognized there was a real opportunity to come and disrupt the market" this way, he said. What they didn't realize then was that made the firm a pioneer in the "software-as-a-service" model that years later became a hot technology trend.
PointClickCare found success early, signing up Canada's largest long-term care facility provider CPL Long Term Care Real Estate Investment Trust (now Revera Inc.) as a customer in 2001, and adding big U.S. operators Manor Care Inc. and Genesis Healthcare Inc. in 2005. That enabled the company to quickly expand across the United States. PointClickCare now provides cloud-based health-care record and revenue-management software tools to more than 13,000 North American institutions that provide care for seniors. The company earned an operating profit on revenue of $160-million last year – up from $82.1-million in 2013 – and expects to be profitable this year and increase revenue by more than 20 per cent.
PointClickCare's venture financing is the latest in a string of significant private-capital injections into scaling Canadian tech firms; there were eight deals for $75-million or more by Canadian firms in 2016, up from one in 2015.