The acquisition price that Loblaw has agreed to pay for QHR Corp. (QHR Corp. Stock Quote, Chart, News: TSXV:QHR) fully values the company, says Haywood analyst Pardeep Sangha.
This morning, Loblaw Companies Ltd. and QHR Corp. announced they had signed an agreement that will see Loblaw will acquire all of the outstanding common shares of QHR for $3.10 a share, a price that values QHR at about $170-million. The figure is a 22 per cent premium to QHR’s August 19 closing price of $2.54.
“The future of health care is digital and this strategic investment will make us a better partner to patients and providers,” said Loblaw and Shoppers Drug Mart executive vice-president, pharmacy and health care Jeff Leger. “QHR brings complementary talent and technology to our organization, providing opportunities to establish new business partnerships and drive improved care co-ordination for Canadians.”
QHR CEO Mike Checkley also commented on the deal.
“Our focus, as always, remains great service and the continued delivery of innovative technology that connects health care providers and their patients,” said Checkley. “We are excited to join Shoppers Drug Mart and we see the acquisition as a great vote of confidence for our team, our technology solutions, and the thousands of physicians and business partners that rely on our products daily.”
Sangha says he believes the $3.10 acquisition price fully values QHR, and says it is very likely that it is the best price management could get.
“We believe a counter bid from Telus (T-T) is not very likely,” says Sangha. “Telus recently acquired Nightingale’s (NGH-V) assets on July 15, 2016 for $14M. Assuming Nightingale had approximately 2,200 physicians on its platform, this represents an acquisition price of $6,400/doctor; whereas Loblaw is set to pay a much higher price of approximately $22,000/doctor for QHR’s 7,700 physicians. Furthermore, Telus currently has several different EMR platforms through its previous acquisitions, so adding another platform at this time would be difficult to manage.”
In a research update to clients today, Sangha changed his rating from “Hold” to “Tender” and raised his target price to the offer price of $3.10.