Vitalhub Corp. (TSE: VHI) (OTCMRKTS: VHIBF) has completed its £9.7 million all cash acquisition of Induction Healthcare Group PLC, paying £0.10 per share through a court-sanctioned scheme of arrangement under UK law.
Announced on Monday, the deal adds to Vitalhub’s position in the United Kingdom, Europe, Canada, the Middle East and Australia, which are regions that are strategic priorities for growth.
Induction develops digital healthcare tools that improve care delivery and patient experiences in hospitals. Further, its two flagship products are Zesty and Attend Anywhere. Induction’s Zesty platform improves communication between patients and care teams. Additionally, Attend Anywhere adds secure video consultation capabilities to Vitalhub’s offerings.
“We see the Induction product set, in particular the Zesty platform, as highly complementary to our current suite of solutions,” said Dan Matlow, chief executive officer of Vitalhub.
“We believe our expanded end-to-end offering will enhance the value to our health care partners, improving the end-user experience and patient outcomes.”
This expands Vitalhub’s reach in key markets like the UK, Europe, Canada, the Middle East, and Australia.
The acquisition also creates opportunities for operational efficiencies and a broader product suite. Furthermore, Induction’s subscription-based revenue model strengthens Vitalhub’s recurring revenue stream.
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Acquisition promises healthy revenue bump
As of the acquisition date, Zesty held £2.2 million in annual recurring revenue. Attend Anywhere accounted for £4.6 million in recurring virtual care revenue. Vitalhub views Zesty as highly complementary to its existing platform and expects the integration to enhance its product suite.
For the six-month period ending September 30, 2024, Induction reported £5.4 million in revenue, a 78.2 per cent gross margin, and a £900,000 adjusted EBITDA loss. Zesty generated £2.0 million in revenue, while Attend Anywhere brought in £3.2 million.
The company also anticipates improved patient outcomes and more efficient operations across its solutions. Vitalhub believes Induction will thrive under its larger and better-capitalized structure, gaining access to stronger support and resources.
Furthermore, Vitalhub expects to finalize the transaction by July 31, 2025, with a long-stop date set for September 30, 2025.
National Bank Financial analyst John Shao rates Vitalhub as “outperform” in his new coverage, reported by The Globe and Mail on June 11.
Shao set a share target of USD$14, slightly above the average analyst target of USD$13.78. He believes Vitalhub is well-positioned to capitalize on future opportunities by leveraging its effective M&A strategy. Shao also notes the company has moved past the early roll-up phase, proving its ability to deploy capital with lower execution risk.
Additionally, Vitalhub’s scale allows it to focus on smaller, high-return deals. Furthermore, Vitalhub has achieved strong organic growth averaging 16 per cent since 2022, highlighting its solid market position and talent for identifying growth targets.
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joseph@mugglehead.com
