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Physician IT

QHR to acquire Clinicare for $5 million

KELOWNA, B.C. – QHR Technologies Inc. announced that it has signed a letter of intent to acquire up to 100% of the shares in Clinicare Corporation, a privately held Calgary-based Electronic Medical Records company. The purchase is subject to TSX Venture Exchange approval, Clinicare shareholder acceptance and to normal closing conditions, which is expected to be completed by the end of November, 2009.

Clinicare’s Board of Directors have unanimously recommended QHR’s offer to acquire their shares of the company and acceptance by the Clinicare shareholders. QHR and Clinicare have entered into an Exclusivity & Standstill Agreement that is effective immediately and until completion of shareholder purchase agreements.

Once completed, QHR will merge the Clinicare operations with its EMR division, Optimed Software Corporation, and intends to retain Clinicare’s Calgary and Toronto offices. 

Optimed will then be supporting over 3,000 physicians across Canada in almost every province for its products, with over 2,000 physicians utilizing EMR. QHR believes more Canadian physicians will be using Optimed’s EMR than any other EMR solution and these physician clients have the most extensive EMR database of patient information in Canada.

This acquisition once completed is expected to generate approximately $3.25 million in recurring revenue in 2010, for a combined EMR division with over $6 million in recurring revenue, and QHR’s consolidated recurring revenue in excess of $10 million for 2010.

Clinicare Corporation, founded in 1984, has approximately 1,200 physicians on their EMR and Practice Management software in Canada and the United States. Clinicare is well known in Canadian healthcare circles as the EMR industry leader for the larger Canadian clinics. Many of Clinicare’s physician clients were the early adopters of EMR systems and the drivers behind the adoption of EMR across Canada.

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 the $236M in physician funding program recently announced by OntarioMD.

In announcing the acquisition, Mr. Al Hildebrandt, President and CEO of QHR Technologies,  said, “Clinicare and Optimed have been competing for the past six years in the EMR market. Both companies have invested significant amounts in development to gain market acceptance and provincial certification. Now those duplicate development dollars can be turned into enhancing our marketing efforts across the country and increasing levels of customer support. The level of functionality that a Clinicare client would use in their EMR system and guidance from many of Canada’s EMR pioneers will be an asset to Optimed’s growing community”.

Internally, Optimed’s General Manager, Fred Chapman, already has a strong relationship with most of the Clinicare customers from his former roles with Clinicare from 1989 until 2005, most recently as COO and VP Sales.

Mr. Karim Kanji, President & CFO for Clinicare said that, “Clinicare’s shareholders and Board of Directors wanted to ensure that the ongoing operations of Clinicare were placed in the hands of people who understood the EMR business, were able to immediately deliver more current technology and would ensure that our clients’ extensive amount of patient data would be completely transferred when the clients choose to upgrade to Optimed’s product in the next 3-5 years. QHR’s overall business operation goes beyond EMR, which allows Clinicare to join a larger organization, thereby protecting our customers’ investments and providing opportunities for our employees to continue servicing the customers they have built relationships with.”

QHR is acquiring Clinicare for $5 million, with an adjustment for net working capital. Initial payment to shareholders is scheduled for December 31, 2009 with final payments by January 31, 2010.

Clinicare shareholders may also benefit by way of various earn out performance payments from closing until September 30, 2010. Once the shareholder amounts have been finalized, qualifying shareholders have the option to convert their shares into cash or QHR shares at $0.65.

To partially fund this acquisition and ongoing business expansion, QHR has secured an initial $1 million from the Southern Interior Development Initiative Trust (SIDIT) thru a four-year debt agreement at 14% interest. The mission of SIDIT is to support regionally strategic investments in economic development projects that will have long-lasting and measurable regional benefits for the Southern Interior of BC.

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.

About QHR Technologies Inc.
QHR operates two business units in distinct markets:
The Electronic Medical Records division offers a suite of medical software modules that provides computer-based medical records for family physicians, medical specialists, and surgeons, as well as administrative modules for billing and patient scheduling, that is a key component of the move throughout Canada to provide electronic healthcare records for all Canadians. The EMR division also provides on-site and off-site (ASP) hosting capabilities. The Enterprise Management Software division specializes in workforce management software, which consists of integrated payroll, staff scheduling and human resource software, and in customized financial management software built on the Microsoft Dynamics GP platform. These products are targeted at complex healthcare and social services environments.

Posted November 12, 2009

 

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