Custom Health Holdings Inc (TSX:CHLT) has completed its acquisition of Spencer Health Solutions, bringing the maker of the spencer smart medication dispenser fully in-house as part of the company's push to expand its in-home medication management business.
Spencer is now a wholly owned subsidiary of Custom Health, and its team will be folded into the company's operations.
The deal was first announced in early August and closed under the terms of that agreement.
By owning Spencer's dispensing and monitoring technology outright, Custom Health said it can better combine that hardware with its own pharmacy and clinical operations as it grows in Canada and the US.
"With the acquisition of Spencer now complete, Custom Health owns the full technology stack supporting its in-home medication management model, from dispensing hardware through to pharmacist-led clinical follow-up," said Shane Bishop, CEO of Custom Health.
"Bringing this technology and expertise in-house gives us greater control over our product roadmap and allows us to align the development of our hardware and software more closely with the needs of our pharmacy and clinical operations.”
Bishop said the combination of Spencer's connected in-home technology with Custom Health's pharmacist-led care, including Remote Therapeutic Monitoring, is already an important part of the company's medication management model.
"We can now more closely integrate those capabilities through AdhereNet to support faster development, improve operational efficiency and reduce per-patient costs as Custom Health continues to scale," Bishop added.
Custom Health structured the deal as a statutory merger, with Spencer surviving as its subsidiary. It paid US$1.5 million in cash plus stock consideration delivered through pre-funded warrants for its common shares. Those warrants can be exercised starting 90 days after closing and up to 15 months afterward, based on the share price at the time of exercise, and carry an aggregate value of about US$23.5 million, subject to working capital adjustments, plus a 12% annualized gross-up based on the days elapsed between closing and exercise.
Toronto Stock Exchange rules cap how many shares can be issued through the warrants, at 24.999% of shares issued under the deal and 19.99% of shares outstanding before closing. Any value beyond those caps will be paid out through promissory notes instead.
The deal also converted Custom Health's existing funding and forbearance arrangement with Spencer and Research Corporation Technologies into full ownership.
