Sun Life Canada has revealed plans to acquire Dialogue Health Technologies, an on-demand healthcare and wellness platform. Shareholders of Dialogue Health, listed on TSX under the ticker CARE, will receive $5.15 per common share in cash. With a total equity value at approximately $365 million CAD on a fully diluted basis, the deal also encompasses $277 million for equity not presently owned by Sun Life or that will be retained by Dialogue’s executive team, who will keep a minority stake post-acquisition.
Based in Montréal, Dialogue provides cost-effective, readily accessible high-quality care to nearly 2.8 million members across 50,000 organizations both domestically and globally. Jacques Goulet, president of Sun Life Canada, praised Dialogue’s potential for alleviating the strain on the healthcare system and emphasized their shared vision for making care accessible from the comfort of home.
Dialogue to Retain Operational Independence
Despite the change in ownership, Dialogue will maintain its Montréal headquarters and operate as an independent entity within Sun Life Canada. The founding shareholders, CEO Cherif Habib and CTO Alexis Smirnov, will retain a portion of their equity ownership and continue in their current roles. Dialogue’s existing business plans, partnerships and customer relationships will remain intact, allowing customers to continue to access their services and benefit from the joint innovations of the two companies.
Filling the Gap in Primary Care Access
Dave Jones, president of Sun Life Health, acknowledged the crucial role of family physicians while also highlighting how Dialogue’s solutions could enhance healthcare delivery for Canadians. He quoted a recent Canadian Medical Association Journal survey, noting that an alarming 6.5 million Canadians do not have a regular healthcare provider, a significant increase from the 4.5 million reported in 2019. Jones assured Sun Life’s commitment to be a trusted partner in health for Canadians, with the acquisition expected to provide quick access to care for the nearly 50% of Canadians unable to secure a same-day or next-day primary care appointment.
Employer-Paid Model Promising Better Public Health System
The Dialogue model is primarily employer-paid, a feature Jones considers crucial to prevent Canadians from paying for care out-of-pocket. Jones believes employment benefits have the potential to augment the public system and create more capacity by offering digital care options that are both efficient and quick.
Future Growth and Expansion Opportunities
Dialogue’s COO, Jean-Nicolas Guillemette, believes the acquisition will present exciting new prospects and markets. Given Sun Life’s global reach, he noted the deal’s potential to introduce international opportunities. With employers increasingly seeking the platform to attract and retain talent, and an escalating demand for digital care, the deal’s timing seemed ideal.
Long-Standing Relationship Leading to Acquisition
Sun Life and Dialogue’s relationship dates back to March 2020 when Sun Life introduced Dialogue’s services to its Group Benefits Clients under the name Lumino Health Virtual Care. The acquisition followed a strategic review process on Sun Life’s part and was approved unanimously by Dialogue’s board of directors. The deal, expected to close in the fourth quarter of 2023, awaits necessary shareholder, court, and regulatory approvals, and other standard closing conditions.
Dialogue’s Rising Revenues and Reducing Losses
In recent months, Dialogue has been demonstrating a healthy financial performance with increased revenues and reduced losses. The company’s Annual Recurring Revenue (ARR) for Q1 2023 rose by 23.8 percent YoY to reach $106 million, driven by new customer acquisitions, price increases, and other factors. In the same period, the adjusted loss reduced from $5.4 million last year to $1.8 million this year, indicating higher gross profit and robust cost control.
TL;DR
Sun Life Canada has announced plans to acquire Dialogue Health Technologies, a virtual healthcare and wellness platform, for a total equity value of around $365 million CAD. Dialogue will continue to operate independently, with the executive team retaining a minority stake in the company. The deal is expected to enhance healthcare delivery for Canadians and offer exciting growth opportunities for Dialogue. The acquisition is slated to close in Q4 2023.
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