SINGAPORE (Dec 19): Singapore Exchange (SGX) has raised several concerns, as Alliance Healthcare Group announced Thursday it is investing $3.5 million to acquire a 55% stake in the enlarged issued share capital of digital healthcare platform Jaga-Me.
The consideration includes a cash consideration of $2.0 million for the subscription of new shares in the capital of Jaga-Me, and $1.5 million for the purchase of existing vendor shares.
Jaga-Me’s proprietary digital platform enables consumers to use a mobile web application to schedule and pay for clinical services, medical equipment and consumables, which are delivered to the patients’ homes.
Jaga-Me also curates and deploys a network of over 500 independent, licensed healthcare professionals, who are able to remotely access health data, clinical reports and clinical workflows through the platform.
Alliance Healthcare intends to fund the proposed investment through a bank loan, as well as the partial use of proceeds raised from its initial public offering (IPO).
The group says the partnership will allow it to leverage Jaga-Me’s mobile health capabilities and scalable digital platform to support the delivery of holistic care to patients across their entire healthcare journey.
It adds that synergies between Alliance Heathcare and Jaga-Me will result in differentiated and cost-effective solutions for medical needs – such as hospitalisation, critical illness care, and chronic care – which will strengthen the group’s product portfolio and competitive advantage.
Following the completion of the proposed investment, Jaga-Me will become a subsidiary of Alliance Healthcare.
In response to queries from SGX regarding the transaction, Alliance Healthcare says there are “no known prior relationships” between the board, key management of the company and the vendors.
Alliance Healthcare says executive chairman and CEO Dr Barry Thng Lip Mong first approached the founders of Jaga-Me in 2019, after the platform was identified as a potential acquisition target.
SGX had also raised concerns that, at a consideration of $3.5 million for the acquisition of 55% in Jaga-Me, this represents a valuation of $6.37 million for the platform despite current net tangible assets (NTA) of only $0.388 million.
Alliance Healthcare says the purchase consideration and the subscription consideration were arrived at after arm’s length negotiations and taking into account the management’s expertise, the technological know-how, the market potential of Jaga-Me’s platform, the future plans and business prospects of Jaga-Me, and benchmarking against the past transacted value of the Jaga-Me’s shares.
In addition, the group says the subscription consideration was negotiated after considering the working capital requirements and projected capital investment of Jaga-Me.
“The board is of the view that it is more appropriate to consider the potential earnings prospects of Jaga-Me rather than adopting an asset based valuation approach such as net tangible assets as Jaga-Me is a healthcare business,” Alliance healthcare says.
For FY2018 ended December, Jaga-Me had incurred a net loss of $682,247, widening from a net loss of $384,810 in FY2017.
Meanwhile, its net tangible assets stood at $387,794 as at end-December 2018.
“Through this strategic investment, it allows us to further tap on Jaga-Me’s proprietary digital healthcare platform and extensive network of medical professionals to augment our business expansion,” Thng says.
“The proposed investment enables the group to seamlessly deliver quality healthcare to all patients, including rapidly ageing population, which is line with our growth strategy,” he adds.
Shares in Alliance Healthcare closed flat at 14 cents on Thursday, some 30% lower than its IPO price of 20 cents in May this year.
