Medicinal cannabis group Vitura Health (ASX: VIT) has acquired the privately owned telehealth services provider Doctors on Demand for $25 million, with the deal aimed at driving Vitura’s ambitions of becoming a diversified digital health outfit.
The cash-and-scrip buyout of the Brisbane-based Doctors on Demand is expected to be completed on 26 October, bringing to Vitura a digital platform that services about 280,000 patients a year.
Doctors on Demand, which was founded in 2015 by Brisbane pharmacists John Martin and John Neilson, provides telehealth, healthcare and related services to patients through a network of more than 120 medical practitioners via videoconferences.
Vitura sees the sector as a critical growth sector with the adoption of telehealth services partly being driven by cost-of-living pressures and the constrained availability of doctors.
However, Vitura also says a significant share of revenue for the business comes from service agreements with some of Australia’s largest health insurers and corporates - an area of the business it is planning to grow.
Vitura CEO Rodney Cocks describes the acquisition as a ‘significant milestone’ for the company.
“Just like the merger between Cronos Australia and CDA Health to form Vitura was a game changer, we see this transaction to acquire Doctors on Demand as having the same significant impact,” Cocks says.
“This not only embeds Vitura as a diversified digital health company as we bolt on more services, products and verticals beyond medicinal cannabis, but also supports and assists our sustainable growth and profitability.”
The Melbourne-based Vitura says the acquisition gives the group access to new healthcare verticals, including urgent care, men’s and women’s health, weight loss and smoking cessation, as well as everyday health consults, medical certificates, pathology referrals and specialist referrals.
The company is also looking at boosting the service offering of Doctors on Demand by providing patients access to purchase a range of medications following their consults.
Under the acquisition agreement, Vitura is paying $18.75 million in cash to shareholders of Doctors on Demand and $6.25 million via the issue of 17.38 million Vitura shares priced at 35.96c each.
The cash component is being funded through existing reserves and a new debt facility of $6.25 million to be provided by ANZ Bank (ASX: ANZ).
Kirsty Garrett, the CEO of Doctors on Demand, will assume the role of Vitura’s chief operating officer following settlement of the deal.
“Today the real work starts, as we ready for integration beyond the transaction closing date,” Cocks says.
“We look forward to continuing to serve Doctors on Demand’s B2C customers and B2B patients with high quality healthcare solutions, while we grow the existing business and introduce additional verticals.
“Concurrently, we will also continue to serve the patients, prescribers, pharmacists and suppliers on our CanView platform, just like we have for years now.”
Doctors on demand, which is based in South Brisbane, is the fifth physical location for Vitura beyond the company’s Melbourne and Gold Coast headquarters and the respective distribution centres in each of these cities.
Among Vitura’s divisions is Burleigh Heads Cannabis which operates online platform CanView, selling more than 260 product SKUs in Australia.
The company also owns 50 per cent of Cortexa, a joint venture with Canada’s PharmAla Biotech supplying psychedelics, GMP MDMA and GMP psilocybin for research and therapeutic use in Australia.
Vitura sees the Doctors on Demand acquisition diversifying its operations and revenues beyond medicinal cannabis into a ‘significantly wider addressable market’.
Vitura posted a net profit of $13.8 million in FY23, up 128 per cent from a year earlier, as revenues surged 75 per cent to $117.3 million.
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