Alliance Healthcare enters deal to acquire 20 percent stake in SG IMED

Singapore two-dollar bills

Alliance Healthcare Group has entered a deal to acquire 20 percent of healthcare information technology company SG IMED from founders Tsai Yu-Chen (Alex) and Tang Chi Feng (Jerome) for S$630,000, the Singapore-listed company said in a filing to SGX Wednesday.

The deal values SG IMED at around S$3.15 million.

In addition, Alliance Healthcare Group, via subsidiary Alliance Healthcare Pte. Ltd. (AHPL), will also loan SG IMED S$610,000 to fund its operations and growth, the filing said. The loan will be for a two-year term with a rate of 1.0 percent a year plus the Singapore Overnight Rate Average, the filing said.

SG IMED’s Hummingbird e-clinic platform for clinic management and online medical records includes online appointment systems, medical billing, mobile application module and data analytics, according to the company website. The product is aimed at general practitioners, specialists and dentists. SG IMED’s partners include Parkway Health Laboratory, Parkway Health Radiology, Lifescan Imaging and Innoquest, according to the website.

“The transaction is in the best interest of the company as the partnership with SG IMED will allow the group to leverage SG IMED’s capabilities and scalable digital platform to create an integrated digital platform that engages patients and clinics within the healthcare
ecosystem in an efficient manner,” Alliance Healthcare said in the filing.

“In particular, the company will be able to promote its e-services to clinics using the Hummingbird Software as well as their patients, realising the economic benefits of the existing ecosystem’s transactions. Also, through the development of joint products and services based on the
Hummingbird Software, the company and SG IMED will also be able to jointly strengthen their competitiveness and drive market share in the CMS/EMR space.”

After two years or after SG IMED reaches a subscription base of 500 clinics for its Hummingbird Software, whichever occurs first, AHPL will have the right to exchange the loan for SG IMED shares representing a 10 percent stake in SG IMED, the filing said. If AHPL doesn’t exercise its right to the additional stake within two years, SG IMED will be required to repay the principal amount over the course of six months, the filing said.

In addition, AHPL will have the option to purchase shares representing a 30 percent stake in SG IMED for S$3.07 million, with the option only exercisable after three years or once SG IMED’s Hummingbird Software reaches a subscription base of 800 clinics, the filing said. That amount would be paid 70 percent in cash, with the remainder payable in a cash, Alliance Healthcare shares or a mix of both.

Tsai Yu-Chen (Alex) and Tang Chi Feng (Jerome) currently hold 40 percent and 60 percent, respectively, of SG IMED, the filing said.

For the fiscal year ended 31 July 2020, SG IMED reported net profit of S$30,263 and a book value of S$44,057, the filing said. As of end-January, SG IMED had a book value of S$187,540, the filing said, noting that because SG IMED is privately held, there is no open market valuation. No independent valuation was commissioned, Alliance Healthcare said.

Alliance Healthcare provides general practitioner and in-house specialist clinics, and a wholesale pharmacy.