Calian Group acquires two Ottawa-based health-tech companies

calian
From left: Calian CEO Kevin Ford, Allphase and Alio president Jeff Smith and Gordon McDonald, vice-president of Calian's health segment. Photo provided

Fresh off its best fiscal year ever, Ottawa’s Calian Group has added two new companies to its growing list of acquisitions in a bid to rewrite its corporate record books again in 2020.

The Kanata-based firm, which offers a wide range of health-care, IT, engineering and training services and technology, said Friday it’s acquired two local health-tech ventures in a deal worth a total of $14.5 million. 

The transaction, which closed Thursday night, will see Calian add Ottawa-based Allphase Clinical Research Services and Alio Health Services to its stable of companies. Calian (TSX:CGY) will pay $12 million in cash and offer 62,054 common shares to Allphase and Alio’s shareholders to complete the deal, which could also see the companies receive payments of $6 million in both 2021 and 2022 if certain earnings targets are met.

The two companies are operated and majority owned by Ottawa entrepreneur Jeff Smith. They employ a total of more than 200 people, with about 40 based in Kanata and the rest at locations across the country.

Founded in 2001, Allphase helps major pharmaceutical companies such as Johnson & Johnson develop and manage clinical drug trials. Alio, which was launched in 2012, offers support services such as nursing and treatment programs to patients in hospitals and in their homes.

Calian CEO Kevin Ford said the latest acquisitions will help his 3,400-person company continue to expand its customer base and add new technology to its stable of products. Allphase and Alio’s combined revenues, which have been doubling annually for the past several years, will be rolled into Calian’s health division, which generated $116 million for the company in fiscal 2019.

“They’ve been growing steadily, and from a Calian perspective, they’ll be a strong addition to our health segment for sure,” Ford said, adding the acquisitions were nearly two years in the making.

Ottawa’s 2017 CEO of the Year said the new deal’s benefits have the potential to extend far beyond the health segment.

Alio, for example, has created an app that Ford likened to “Uber for nursing” that contacts all nurses in a specific area when shifts need to be covered at the last minute. Ford said the technology could eventually be applied to other segments of Calian’s operations.

“They've built a very good product there that we think is going to help us scale not only health, but potentially in other areas as well as we get to know them better,” he said.

Calian’s chief executive praised Allphase’s success at cultivating lasting relationships with big pharma customers through its clinical trial management services. 

“It’s a very stringent process, and you really need to have a very strong program, project management capability to do these things,” he noted. 

Ford said he originally thought about forming an arm’s-length business partnership with the two companies. But he said after getting to know their leadership teams, he became convinced that bringing them directly under the Calian umbrella was the way to go.

“Culturally, I think it’s going to be a great fit here,” he said. “The fact they’re Ottawa-based was clearly the icing on the cake.” 

Including the latest deals, Calian has now made 10 acquisitions since Ford joined the company more than nine years ago. Noting that the firm recently opened an office dedicated to pursuing M&A plays, he suggested there will be more such announcements to come.

“We’ve never been busier out there scouring the Earth for acquisition opportunities.”

“We think there are opportunities in every segment we operate in,” he said. “We’ve never been busier out there scouring the Earth for acquisition opportunities in each of those segments.”

Calian’s share price was up 55 cents to $42.80 in late-day trading on the Toronto Stock Exchange. The company is scheduled to present its first-quarter earnings on Wednesday.