Dialogue Health Technologies Inc., Canada’s premier virtual healthcare and wellness platform, is pleased to announce that it has reached an agreement to acquire London, UK-based Tictrac Ltd. for up to $56 million, subject to certain conditions and customary adjustments. Tictrac is a SaaS-based provider of a global health and wellness platform that enables healthier living for everyone. Tictrac supports employers and insurance partners, engaging their employees and customers to improve overall wellness, and driving positive outcomes through meaningful insights. The transaction is expected to close within 30 days and is subject to customary conditions for a transaction of this nature.
“We’re thrilled to add Tictrac’s innovative technology, deep expertise, and proven methodology to Dialogue,” said Cherif Habib, Chief Executive Officer of Dialogue. “This acquisition is our largest to date and contributes directly to the ambitious growth objectives we laid out in our IPO plan a year ago. Tictrac allows us to strengthen our Integrated Health Platform with a highly engaging new service, while also gaining exposure to attractive international markets with strong health and wellness potential.”
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The acquisition of Tictrac represents a unique opportunity to accelerate the development of Dialogue’s Integrated Health Platform (“IHP”) through the addition of a high margin, SaaS-based digital health and wellness offering. Dialogue aims to acquire businesses that can enhance its operations and capabilities, either by adding new customers, adding new services, or providing access to new markets. The current transaction aligns with all three stated objectives. Importantly, the acquisition of Tictrac allows Dialogue to:
- Extend its continuum of care to cover wellness and prevention through to diagnosis and treatment: Tictrac allows Dialogue to expand its IHP, adding a wellness service to help improve overall member health outcomes and generate strong returns on investment for its customers. Tictrac’s uniquely comprehensive offering in terms of breadth and depth of content is highly complementary to Dialogue’s IHP and will provide meaningful opportunities to cross-sell and up-sell to existing and prospective customers.
- Expand its growth opportunities and total addressable market: The global and Canadian corporate wellness markets are significant, fragmented, and rapidly growing, valued at US$58 billion2 ($73 billion) and US$2.7 billion3 ($3.4 billion) respectively. Tictrac derives revenue from 5 of the 7 top global markets that Dialogue has identified as having high strategic value in corporate wellness, including the United States and the United Kingdom.
- Drive a high level of engagement within its user base: Tictrac’s platform delivers leading engagement rates, which serve to drive first-point-of-contact and a powerful “hub” functionality to promote other services. Certain highly-engaged Tictrac clients boast monthly active user (“MAU”) rates of over 40%, and 45% of these MAUs access the platform at least 4 times per week.
- Add a high-margin, scalable, and very well-aligned SaaS-based business model: Tictrac operates on a per-member-per-month (“PMPM”) SaaS-based subscription model and generally structures contracts on 3- to 5-year terms, creating a high level of customer stickiness and revenue predictability. Its go-to-market strategy includes both a business-to-business (“B2B”) approach as well as a business-to-insurance (“B2I”) approach, working with employers and insurance partners, including 4 of the largest global insurers, to enable healthier outcomes for their employees and customers.
- Enhance its financial profile by accelerating revenue growth and improving the gross margin: Tictrac offers a high-margin product with significant growth and synergy potential. With a gross margin of nearly 90%, the revenue stream will be accretive to Dialogue’s overall profitability. Based on current
estimates, Tictrac expects annual recurring revenue4 (“ARR”) of approximately $13 million (£8 million) at the end of 2022, and full-year revenue of approximately $10.5 million (£6.5 million). In addition, a preliminary analysis suggests Dialogue could achieve ARR synergies of $8 to 10 million by the end of 2024 in its core Canadian market from the launch of a Wellness offering to current and new B2B customers, as well as to insurance and other partners. Dialogue also sees a potential to cross-sell its internet-based cognitive behavioural therapy (“iCBT”) to Tictrac’s existing international customer base and to add incremental services over time that can scale rapidly across many geographies. - Strengthen its existing management team: Tictrac’s management team is motivated to join Dialogue and combine efforts within a larger and complementary organization. The two companies share similar operating cultures of challenging the status quo and are strategically aligned in their respective missions to improve health and well-being. Martín Blinder, co-founder and Chief Executive Officer of Tictrac, will continue to lead the Tictrac team, reporting to Cherif Habib, Chief Executive Officer of Dialogue.
“We’re excited to join Dialogue and to bring our digital well-being and market-leading health engagement together with their diagnosis and treatment capabilities,” said Martín Blinder, Co-Founder and Chief Executive Officer of Tictrac. “We look forward to collaborating with their team and customers to bring our wellness solutions to Canada and to ultimately drive better health outcomes everywhere.”
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