SOUTH Australian-based medical IT group Alcidion is about to herald a new future for Naracoota Resources (ASX: NRR) through a $12.4 million share deal that is effectively a reverse takeover of the struggling Perth minerals explorer.
Naracoota has announced it has entered into a binding term sheet to acquire Alcidion for $12.4 million in scrip, with plans to issue 400 million shares at 3.1c per share.
The move will see current Naracoota directors Gavin Wates and Tom Bahen stand down from the board, giving way to Alcidion directors Malcolm Pradham, Ray Blight and Nathan Buzza (pictured).
Bahen, institutional director at Patersons Securities, joined the Naracoota board in March at a time when the company said it was pursuing new acquisition opportunities outside of the resources sector.
The Alcidion deal brings with it $5.18 million in revenue, which is up 36 per cent on FY14, and the capacity for the merged group to take on the $US40 billion global medical IT market.
Alcidion will be granted a further $4 million in Naracoota scrip should it achieve $10 million in revenue over the next two years and another $4 million in scrip should revenue hit $15 million within three years.
The newly merged entity will have 602.7 million shares on issue, initially valuing the group at $18 million.
The deal is subject to shareholder approval on November 9 with shares of the newly merged entity set to resume trading on the ASX on November 27.
Once the buyout is completed, Naracoota will have $7 million in cash, boosted by a $2 million capital raising conducted through Patersons Securities.
The buyout is backed by Brisbane-based Blue Sky Private Equity (ASX:BLA), which helped raise $2 million for Alcidion in 2012 to help commercialise its Miya CDSS (clinical decision support systems) technology.
Funding also comes from Allure Capital, the private investment vehicle of technology entrepreneur Nathan Buzza, who is an executive director of Alcidion.
"I have been privileged to be involved in a number of medical technology companies and without a doubt, Alcidion is the most exciting business I have seen to date," says Buzza.
"After spending the last two decades in the clinical middleware space, I have had the opportunity to review countless software platforms and the Alcidion platform represents one of the most significant innovations in clinical decision support that I have seen over this time."
The Miya CDSS system, which monitors and tracks every aspect of a patient's journey through a hospital services, is the brainchild of Malcolm Pradhan, an adjunct professor in health informatics at the University of South Australia, and Ray Blight, a former CEO and chairman of the South Australian Health Commission.
Alcidion's Miya platform operates in 11 Australian hospitals. The platform is said to be unique because it has been built with the purpose of supporting structured clinical data and advanced CDSS and can operate agnostically to an electronic medical record.
Alcidion has invested about $15 million in research and development over the past 15 years.
"The Miya Platform is about helping the clinician understand a patient's clinical risk so they can make the best possible decisions," Blight says. "We are able to gather expert knowledge about a particular condition and present that in the context of a specific patient, thereby assisting the clinician in making the best possible care decisions."
Alcidion is primarily targeting the US market, which has been buoyed by Obamacare, and it already has an office in Florida. It says there is a concerted effort to prepare the company for entry into the US market as soon as possible.
However, the healthcare IT sector remains competitive and Alcidion identifies at least 10 ASX-listed rivals in the space.
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