Calian Group is moving full-steam ahead with its aggressive strategy of growth through acquisitions, pulling the trigger on its biggest deal ever on Monday.
The Kanata company announced it has closed its purchase of Toronto-based digital health-care and cybersecurity firm Dapasoft, a transaction that could be worth up to $83 million if the southern Ontario firm hits certain earnings targets over the next two years.
Calian paid $50 million up front for Dapasoft, including $43 million in cash and $7 million in shares, making the deal “definitely our largest acquisition to date,” chief executive Kevin Ford said.
The veteran C-suite leader says Dapasoft checks off a multitude of boxes on his shopping list of attributes in a potential M&A target.
“We’ve been looking for a company like this, I would say, since I became CEO (in 2015),” Ford said.
Dapasoft’s infrastructure that connects hospitals to the cloud is used in more than 30 institutions across Canada, adding to Calian’s growing toolkit of health-care services and technology. Meanwhile, its virtual care platform lets clinicians meet patients and access medical records remotely using Microsoft Teams, a boon for health-care professionals at Calian’s cross-country network of clinics.
Thwarts cyber threats
In addition, Dapasoft’s iSecurity subsidiary, launched in 2019, makes software that hunts down and thwarts potential cyber threats for customers in the health-care, financial services and critical infrastructure sectors across North America, boosting Calian’s growing cybersecurity business.
The company is being slotted into Calian’s IT division rather than its health-care segment. Ford said most of its platforms can be readily adapted to industries beyond health care – a key factor for a company that prides itself on its diverse client roster.
After Calian’s IT and cybersecurity revenues fell two per cent in the last quarter, the company is hoping the acquisition of Dapasoft will help fuel a resurgence in that segment. Ford said its marriage of IT and health-technology is “custom fit” for Calian.
“What I like is we’re getting three very distinct assets that will now strengthen our IT services business,” Ford said. “Now, we can take our IT segment and our health-care segment and talk to customers about full-scope health care requirements.
“This changes the game for our IT services business. I’m pretty excited by that.”
"This changes the game for our IT services business. I’m pretty excited by that."
Founded in 1997, Dapasoft now has more than 100 employees, most of them in the Greater Toronto Area. Ford said the chance to plant a bigger flag in Canada’s largest tech talent market played a significant role in his decision to green-light the deal.
“We’ve been trying to expand in Toronto for years organically,” he said. “It’s been tough, frankly, to do that one person at a time. This gives us that capability and strength we’re looking for.”
The latest acquisition is another sign Calian isn’t about to ease off the gas pedal in its quest to add new customers and services via the M&A route.
Though perhaps less heralded than some other Ottawa tech powerhouses, Calian has blazed its own trail of growth over the past couple of years.
Much of that growth has been fuelled by acquisitions. After signing off on seven deals in 2020, the firm has already pulled out its corporate chequebook twice in 2021.
Calian did something else Monday that reflects the unusual magnitude of its latest transaction.
After raising its fiscal 2021 revenue projections to the half-billion-dollar mark in its most recent quarterly report earlier this month, Calian took the unusual step of boosting its guidance once again on Monday based on the sales bump it expects to receive from Dapasoft and iSecurity, which brought in a combined $27 million in their most recent fiscal year.
Calian now estimates that its revenues will tally somewhere between $476 million and $516 million in fiscal 2021 – up from the range of $460 million and $500 million it forecasted in early February.
The company says it now expects to turn an adjusted net profit of between $29.4 million and $32.7 million, compared with its previous projection that ranged from $27.5 million to $30.6 million.
“We just wanted the markets to understand the confidence we have in the assets that we’re acquiring here,” Ford said. “We think we’re on the right path here.”
Calian shares were up more than five per cent to $59.60 at the close of Monday’s trading on the Toronto Stock Exchange.