Dialogue will maintain its head office in Montréal and operate as a standalone entity as part of Sun Life Canada.
Sun Life Canada announced that it is acquiring Dialogue Health Technologies (TSX: CARE) and will pay company shareholders $5.15 in cash per common share.
The total equity value of Dialogue is $365 million CAD on a fully diluted basis (or $277 million for equity not currently owned by Sun Life or rolled by certain members of Dialogue’s executive management). Dialogue’s executive management will maintain a minority interest in Dialogue following closing.
Dialogue describes itself as a health and wellness platform with affordable, on-demand care.
Dialogue describes itself as a virtual health-care and wellness platform, and claims that it offers affordable, on-demand access to quality care. Providing service to employees and companies in Canada and internationally, nearly 2.8 million members across 50,000 organizations have access to Dialogue’s health-care team.
“Together we will empower Canadians with access to the care they need from the convenience of their home,” said Jacques Goulet, president, Sun Life Canada. “Using Dialogue’s platform for appropriate health concerns can help reduce the strain on our healthcare system. We are proud to be investing in a Canadian company, headquartered in Montréal, that has tremendous health expertise and incredible growth potential.”
Dialogue will maintain its head office in Montréal and operate as a standalone entity as part of Sun Life Canada. The management team, including founding shareholders CEO Cherif Habib and CTO Alexis Smirnov, will roll a portion of their equity ownership and remain in their current roles.
Dialogue will continue executing its business plan and serving its partners and customers, who will still have access to Dialogue’s services and capabilities, Sun Life Canada said, and will benefit from the continued innovation resulting from the combined strengths of both organizations.
The acquisition has been a long time coming. The two companies established a relationship in Canada in March 2020. That year Sun Life rolled out Dialogue’s services to its Group Benefits Clients under the name Lumino Health Virtual Care.
In mid-July 2023, Dialogue reached an agreement with Sun Life US to license its platform and distribute its services to members in the US.
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“In recent years, Dialogue has developed a strong relationship with Sun Life,” Habib said in a statement. “As a standalone entity backed by Sun Life, Dialogue will have more resources to deliver on our mission of helping people improve their health and well-being, and the flexibility to continue to deliver on our mission by leveraging the respective strengths of both organizations.”
Sun Life Canada said the acquisition followed a strategic review process on its part, and was supervised by a committee of independent directors. The transaction was approved unanimously by the board of directors of Dialogue following the unanimous recommendation of the strategic committee.
The deal is not subject to any financing condition and is expected to close in the fourth quarter of 2023, subject to obtaining the required shareholder, court, and regulatory approvals, and the satisfaction of other customary closing conditions.
RBC Capital Markets acted as financial advisor to Sun Life for the transaction and Torys LLP served as legal counsel to Sun Life.
In recent months, Dialogue has posted increased revenues while reducing its losses. Annual recurring revenue (ARR) from continuing operations in the first quarter of 2023 grew 23.8 percent year-over-year to $106 million.. The company claims this was driven by new customer acquisitions, existing customer and partner expansions, price increases, the acquisition of Tictrac, and other factors.
Dialogue’s core digital business in Canada, which represents 85 percent of total ARR, increased 35.9 percent year-over-year.
The company posted an adjusted loss from continuing operations of $1.8 million in the first quarter of 2023, compared to a loss of $5.4 million in the same period last year. Dialogue’s public filings claim the smaller loss was due to higher gross profit and strong cost control, partially offset by annual wage increases across the business and an unspecified loss at Tictrac.
Net loss from continuing operations was $2.7 million in the first quarter of 2023, compared to $6.7 million in the same period last year. The smaller loss was primarily due to higher gross profit and net financing income, offset in part by higher operating expenses compared to the first quarter of 2022, company documents say.
“It’s been an honour to be part of the Dialogue story since it was conceived as the first company in our venture builder, Diagram. Today is another exciting milestone for this innovative Montréal, Québec and Canada success story that now has over 900 employees and practitioners, and is available to over six million Canadians,” said Paul Desmarais III, chairman and CEO of Sagard and outgoing chairman of Dialogue.
“I am proud of the positive impact Dialogue has had in improving access to healthcare and modernizing the B2B healthcare space” Desmarais III added.
Featured image: Sun Life Canada has agreed to acquire Dialogue Health. Photo courtesy of CNW Group/Sun Life Financial Inc.
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