The Kelowna, British Columbia-based QHR Technologies has signed a letter of intent to acquire up to 100 percent of the shares in Clinicare, an EMR company.
QHR is acquiring Calgary, Alberta-based Clinicare for CAD $5 million ($4.76 million U.S.) with an adjustment for net working capital. The acquisition is expected to generate $3.25 million ($3.09 million) in recurring revenue in 2010.
The purchase is subject to TSX Venture Exchange approval, Clinicare shareholder acceptance and to normal closing conditions and is expected to be completed by the end of November. QHR and Clinicare have entered into an exclusivity and standstill agreement effective immediately, until completion of shareholder purchase agreements.
Once completed, QHR will merge the Clinicare operations with its EMR division, Optimed Software, while intending to retain Clinicare's Calgary and Toronto offices. Optimed will be supporting more than 3,000 physicians across Canada in almost every province for its products, with more than 2,000 physicians utilizing EMR.
Clinicare is one of four certified EMR vendors in Manitoba (along with Optimed) and one of six full certification OntarioMD CMS version 3.0 vendors. Physicians who implement CMS 3.0 systems are eligible for part of a $236 million ($224.5 million) physician funding program recently announced by OntarioMD.
Initial payment to shareholders is scheduled for Dec. 31, with final payments by Jan. 31, 2010. Clinicare shareholders may also benefit by way of various earn out performance payments from closing until Sept. 30, 2010.
To partially fund this acquisition and ongoing business expansion, QHR has secured an initial $1 million ($950,000) from the investment organization Southern Interior Development Initiative Trust through a four-year debt agreement at 14 percent interest.
Additional funding to complete the acquisition is expected to come from on-going company operations and additional equity investments expected to be completed before year end.