NexgenRx Inc.
Tuesday, July 24, 2018 - 5:00 PM EDT

NexgenRx Announces Agreement to Acquire Two Benefit Administration Companies



Toronto, Ontario (FSCwire) - NEXGENRX INC. ("NexgenRx" or the "Company") is pleased to announce that it has entered into a binding purchase agreement to acquire two benefits administration companies, Canadian Benefit Administrators Ltd. ("CBA") and My Benetech Inc. ("MBT").  CBA is a Third Party Administrator ("TPA") providing administrative services to plan advisors and other intermediaries who wish to provide their clients with eligibility, enrolment & billing functionality, independent of any one insurance carrier. CBA has a team of administrators providing this service on behalf of various plan sponsors.  MyBenetech provides a wholesale value-add SaaS (Software as a Service) platform to plan sponsors who have their own dedicated administrators wishing to have the independence from any one insurance carrier, as well as TPA's like NexgenRx.  Both organizations use the industry-leading "Vital Objects" software, as the software platform.

 

CBA and MBT are each private Ontario-based companies with common shareholders.  The binding purchase agreement provides for the acquisition by NexgenRx of all of the issued and outstanding shares of each of CBA and MBT for an aggregate purchase price of $4,000,000, with $2,800,000 being due and paid upon closing and a further $1,200,000 being paid on the second anniversary of the closing date, subject to certain standard purchase price adjustments and subject to acceleration of payment in the event of a change of control.  The amount payable on the closing date shall consist of a cash payment of $2,650,000, together with an aggregate of $150,000 in common shares of the Company.  An aggregate of 600,000 common shares will be issued to the vendors of the shares (and allocated among them on a pro rata basis) on the closing date at a price of $0.25 per share.  Standard four (4) month hold periods will apply to the securities issued under this transaction in accordance with applicable securities laws.  Of the remaining deferred compensation, $1,100,000 will be paid in cash (subject to adjustments), with the remaining $100,000 in consideration being issued in the form of shares at a price based upon the ten (10) day average closing price on the two year anniversary of closing (or earlier, in the event of acceleration upon a change of control).  The cash portion of this deferred compensation is subject to a purchase price adjustment in certain circumstances, such as failure to meet earnings and working capital targets.  Financing for the cash portion of the purchase price has been arranged by way of a secured loan from an arm's length shareholder in the aggregate amount of $1,750,000, which has been fully funded.  Such loan bears interest at a rate of four percent (4%) per annum and matures on the date that is one (1) year, plus one (1) day from the date of issuance.  The proceeds from this loan will be used to pay the cash portion of the consideration that is due to the vendors of CBA and MBT upon closing.  The balance of the cash portion of the purchase price that is due upon closing will be paid from the Company's cash on hand.

 

The principals of each of the acquired companies will enter into long-term employment agreements upon closing of this transaction and will be granted an aggregate of 500,000 options to acquire common shares in the capital of NexgenRx at a price of $0.25 for a period of 10 years (vesting as to 33.3% each year for three years, beginning on the first anniversary of the grant date).  All of such options (and the common shares issuable upon exercise) will be subject to applicable securities law hold periods.

 

Completion of the transaction is subject to various standard closing conditions, including but not limited to: finalization of all ancillary documentation, receipt of all required approvals and consents (including but not limited to board of directors' approval and approval by the TSX Venture Exchange), receipt of a standard software support agreement and the continuing operation of the businesses in the ordinary course, with no material adverse changes, etc.

 

"I am delighted with our agreement to acquire these two strategic companies and their professional staff that are integral to the transaction. We have had a long standing business relationship and this acquisition is expected to solidify an integral part of our value proposition.  I look forward to completing the acquisition in due course and to working with their senior management as we continue to expand our market penetration," stated Ron Loucks, President & CEO, NexgenRx.

 

About NexgenRx

 

NexgenRx is Canada's only independent full service technology solutions provider, offering proprietary full front end enrolment, hour bank and mobile access capabilities, combined with state of the art claims adjudication and full provider network coverage. These combined capabilities allow NexgenRx to provide complete proprietary solutions to plan sponsors that need sophisticated front end administration and health benefit technology applications, all in a cost- effective manner. NexgenRx is committed to building partnerships with organizations looking to exceed the expectations of their clients and plan members and deliver superior administration and claims processing solutions at a competitive cost. More information on NexgenRx can be found at www.nexgenrx.com.

 

Caution Regarding Forward-Looking Statements

 

Except for statements of historical fact, this news release contains certain "forward-looking information" within the meaning of applicable securities law. Forward-looking information is frequently characterized by words such as "plan", "expect", "project", "intend", "believe", "anticipate", "estimate" and other similar words, or statements that certain events or conditions "may" or "will" occur.  In particular, forward-looking information in this press release includes, but is not limited to references to completion of the acquisition of CBA and MBT, as well as future consideration payable in respect thereof.  Although we believe that the expectations reflected in the forward-looking information are reasonable, there can be no assurance that such expectations will prove to be correct. We cannot guarantee future results, performance or achievements. Consequently, there is no representation that the actual results achieved will be the same, in whole or in part, as those set out in the forward-looking information.

 

Forward-looking information is based on the opinions and estimates of management at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those anticipated in the forward-looking information.  Some of the risks and other factors that could cause the results to differ materially from those expressed in the forward-looking information include, but are not limited to: uncertainty as to whether our strategies and business plans will yield the expected benefits; availability and cost of capital; the ability to identify and develop and achieve commercial success for existing and new products and technologies; the level of expenditures necessary to maintain and improve the quality of products and services; changes in technology and changes in laws and regulations; continued development and enhancement of the Company's proprietary software technology; cyber security risks and the other risks and uncertainties disclosed in our annual Management's Discussion and Analysis, as filed under our profile on SEDAR at www.sedar.com.  Readers are cautioned that this list of risk factors should not be construed as exhaustive.

 

The forward-looking information contained in this news release is expressly qualified by this cautionary statement. We undertake no duty to update any of the forward-looking information to conform such information to actual results or to changes in our expectations except as otherwise required by applicable securities legislation.  Readers are cautioned not to place undue reliance on forward-looking information.

 

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of the release.

 

FOR FURTHER INFORMATION PLEASE CONTACT:

 

Ronald C. Loucks

Kelly Ehler CPA, CA

NexgenRx Inc.

NexgenRx Inc.

President and CEO

Chief Financial Officer

416.695.3393 x801

416-695-3393x803







Source: NexgenRx Inc. (TSX Venture:NXG)

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