Al Gore’s Generation Investment Management has made its second big bet on the Canadian technology sector this year, leading a $225-million investment in Montreal’s AlayaCare Inc.
The financing values the seven-year-old company – which provides a software platform used by more than 500 companies in the home-care industry – in the high nine-figures, according to two sources familiar with the deal. The Globe and Mail is not identifying the sources because they are not authorized to discuss the matter. Past investors Klass Capital, Inovia Capital, Caisse de dépôt et placement du Québec and the Quebec government’s Investissement Québec arm also participated. The company, which does business as AlayaCare, will get $150-million of the proceeds; the balance will go to early investors and employees. TD Securities advised AlayaCare on the deal.
“Building sustainable health systems is one of our core focus areas,” said Dave Easton, a partner with Generation’s US$1-billion-plus Sustainable Solutions Fund, which invested in Calgary charitable giving platform provider Benevity Inc. this year. (Mr. Gore, the former U.S. vice-president, is Generation’s chairman and founding partner.)
“Primary care is a way of keeping people well, out of hospital, improving outcomes and reducing [health care] system costs,” Mr. Easton said. “AlayaCare fits into that approach. Being able to back a software player that enables the whole sector is a great place to be from both an investment and a sustainability and enablement perspective.”
The company’s platform handles myriad tasks related to sending hundreds of thousands of workers to visit more than one million aging and disabled people in their homes, including electronic referral intake, assessments, scheduling, dispatching, records retrieval, billing and payroll. Mobile workers and nurses get access on their phones to information needed for their rounds, and the company uses artificial intelligence to optimize caregiver routes and predict which patients need visits.
The company is a big player in Canada and Australia, but 70 per cent of its new business is coming from the United States – where its sales have grown sevenfold in the past two years– as AlayaCare faces a fragmented set of competitors including incumbent giant WellSky. AlayaCare “is beyond the ‘Can they may it work in the U.S.’ question,” Mr. Easton said. “It’s how fast at this stage.”
AlayaCare, led by chief executive officer Adrian Schauer, is emerging from the pandemic relatively unscathed. In early 2020, the company announced it had raised US$37-million and made two acquisitions, which almost tripled annual revenue to $50-million a year.
The company had forecast organic growth of 50 per cent for 2020 when the pandemic hit. Many of its customers reported a sharp drop in home visits, and sales activity plummeted.The company cut its growth forecast in half, but Mr. Schauer went against the advice of financial advisers and didn’t lay off any staff.
“We just slowed down our hiring and rode it out,” he said. “I felt it was the right thing to do, but it also turned out to be a good business decision. Now it’s an absolute battle for talent.” After two quarters, momentum returned and the company beat its previous sales record in the fourth quarter. It now has 465 employees, up from 372 at the start of 2020.
“Not that there’s any silver lining to a global pandemic, but a lot of health systems have realized there’s a lot more that can be done in the home setting than they previously thought, so our customers are all in growth mode,” Mr. Schauer said.
Dennis Kavelman, an Inovia Capital partner and AlayaCare director, said “we had a thesis pre-COVID that home care would really matter” and that agencies would respond positively to innovation that made it easier for them to automate their businesses. Given the high incidences of infections and death at long-term care homes during the pandemic, “that just quadrupled the desire of people to stay in their homes as long as they can. That just made what AlayaCare does so much more front and centre.”
Mr. Schauer said he expects AlayaCare to use more than half of the funding proceeds for acquisitions. He said he’s in no hurry to go public, but said the company would spend the next 12 to 18 months preparing for the option to list publicly if it decides to follow that path.
CDPQ put out a press release on how AlayaCare raises $225 million to accelerate the digital transformation of home health care:
AlayaCare, a global home and community care software company, today announced a $225 million Series D funding round led by Generation Investment Management LLP with participation from Klass Capital and incumbent investors Inovia Capital (“Inovia”), CDPQ, and Investissement Québec. AlayaCare has scaled its business substantially powering more than one billion patient visits around the world. The US is now the fastest growing part of AlayaCare’s business, representing 7x growth in the last 24 months.
Today’s announcement fuels AlayaCare’s mission to deliver home care of the future through transformative innovation, data-driven insights, and a superior care worker experience that ultimately delivers better patient outcomes and lower costs for providers. AlayaCare will use the funding to continue global expansion, hire additional staff and further invest in innovation capabilities to build a more complete post-acute offering in addition to products that help solve labour market issues around employee shortages and churn.
According to Precedence Research, the global home healthcare market size is anticipated to grow at a CAGR of more than 8%. The explosive growth of the aging population – combined with a growing prevalence of chronic diseases, a global shortage of care workers and a shift to value-based reimbursement – is forcing a rethink of how care is delivered.
“Employee shortages and retention continues to be one of the biggest headaches for all home health providers. AlayaCare is uniquely positioned to help tackle common pain points related to scheduling challenges and balancing patient and caregiver preferences,” said Adrian Schauer, CEO & Founder, AlayaCare. “Our innovative technology helps run the back office more efficiently, allowing care staff to focus on outcomes instead of paperwork. Through the support and confidence of our investors, customers, partners and employees, we are excited to scale the AlayaCare platform and take the more sustainable home health-based model mainstream.”
Today, more than 500 home and community care organizations around the world rely on AlayaCare’s leading software to improve operational efficiencies through its modern, intelligent software. A key differentiator of the platform is its artificial intelligence (“AI”)-based predictive models that enable business leaders to spend less time on manual tasks, and more time focused on growing their organizations as they seek to meet the huge demand coming from health systems for home care. The AlayaCare platform also has robust third-party application programming interface (“API”) integration, enabling customers to integrate it holistically within their existing systems. Today’s announcement accelerates AlayaCare’s global growth strategy and will enable organizations around the world to access the award-winning platform.
“We fundamentally believe that treating people in the home is key to building a sustainable health system that provides better outcomes at lower cost. AlayaCare provides a win-win for both patients and providers by meeting the strongly growing demand for care at home with a more modern, efficient, data-driven and easy-to-use system that vastly improves the experience for caregivers and their agencies,” said Dave Easton, Growth Equity Partner, Generation Investment Management LLP. “We look forward to supporting AlayaCare as it doubles down on its investment in R&D and builds out the next generation of homecare and home health software, further building on its machine learning capabilities to help its customers prepare for a more tech-enabled, efficient and value-based future.”
“There is an inflection point in the home care market and COVID-19 has confirmed our investment thesis in that sector,”said Dennis Kavelman, Partner, Inovia.“We are proud to continue to support AlayaCare as they execute their M&A playbook and accelerate their growth in the US market.”
“With its sophisticated solutions that home health care agencies use to optimize performance and the quality of patient care, AlayaCare is a compelling example of how technology can be leveraged to serve communities,” said Alexandre Synnett, Executive Vice-President and Chief Technology Officer, CDPQ. “With the sharp rise in home healthcare around the world, AlayaCare is well positioned to continue growing and consolidate the international market.”
“Investissement Québec, a leading investor in this round of financing, is proud to reaffirm its confidence in AlayaCare, a promising Montréal company that is reinventing the way home care is delivered. This is exactly what our agency is here for: working with solid investment partners to support growth and empower tomorrow’s technology leaders while helping to keep head offices and value-added commercial activity here in Québec,” noted Investissement Québec President and CEO Guy LeBlanc.
The transaction was supported by TD Securities Inc. as exclusive financial advisor, Aust Legal, and Stikeman Elliott LLP who acted as advisors for AlayaCare.
Since its launch, AlayaCare has experienced double-digit growth, expanded its operations in the US, Canada, and Australia and now employs nearly 500 staff with aims to hire an additional 300+ employees over the coming years.
Visit www.alayacare.com to learn more about the AlayaCare platform, which includes scheduling, reporting, clinical documentation, billing, care worker mobile app, and dedicated portals for patients, family members, and care workers.
About AlayaCare
AlayaCare offers an end-to end software platform for home and community care providers to manage the entire client lifecycle from referrals and intake to billing, payroll and beyond. Combining traditional in-home and virtual care solutions, AlayaCare enables care providers across the world to propel towards innovation and healthcare of the future. AlayaCare was founded in 2014 and is the parent company of Procura, Arrow, CIMS, and AcuteNet. www.alayacare.com
After reading this, I can't help but feel impressed and proud that a Montreal based company is revolutionizing the home care industry, now more than ever as the pandemic has opened up a whole new opportunity set.
AlayaCare is a software company but its success is based on a three big secular themes:
- Aging demographics and more prevalence of chronic disease
- Global shortage of care workers
- Digitalization of the economy and more specifically healthcare
This is the key passage in the CDPQ press release:
According to Precedence Research, the global home healthcare market size is anticipated to grow at a CAGR of more than 8%. The explosive growth of the aging population – combined with a growing prevalence of chronic diseases, a global shortage of care workers and a shift to value-based reimbursement – is forcing a rethink of how care is delivered.
And the key passage from the Globe article:
The company’s platform handles myriad tasks related to sending hundreds of thousands of workers to visit more than one million aging and disabled people in their homes, including electronic referral intake, assessments, scheduling, dispatching, records retrieval, billing and payroll. Mobile workers and nurses get access on their phones to information needed for their rounds, and the company uses artificial intelligence to optimize caregiver routes and predict which patients need visits.
The company is a big player in Canada and Australia, but 70 per cent of its new business is coming from the United States– where its sales have grown sevenfold in the past two years – as AlayaCare faces a fragmented set of competitors including incumbent giant WellSky. AlayaCare “is beyond the ‘Can they may it work in the U.S.’ question,” Mr. Easton said. “It’s how fast at this stage.”
No wonder Al Gore’s Generation Investment Management invested in this company, it sees a huge potential in an explosive growth market.
Moreover, I don't personally know its CEO, Adrian Schauer, but was impressed to learn he didn't fire employees during the pandemic but instead rode it out and came out stronger:
The company had forecast organic growth of 50 per cent for 2020 when the pandemic hit. Many of its customers reported a sharp drop in home visits, and sales activity plummeted. The company cut its growth forecast in half, but Mr. Schauer went against the advice of financial advisers and didn’t lay off any staff.
“We just slowed down our hiring and rode it out,” he said. “I felt it was the right thing to do, but it also turned out to be a good business decision. Now it’s an absolute battle for talent.” After two quarters, momentum returned and the company beat its previous sales record in the fourth quarter. It now has 465 employees, up from 372 at the start of 2020.
“Not that there’s any silver lining to a global pandemic, but a lot of health systems have realized there’s a lot more that can be done in the home setting than they previously thought, so our customers are all in growth mode,” Mr. Schauer said.
Home care is going to explode as populations around the world age and it's the best way to ensure strong outcomes for caregivers and patients.
In fact, Alexandre Synnett, Executive Vice-President and Chief Technology Officer at CDPQ, is spot on:“With the sharp rise in home healthcare around the world, AlayaCare is well positioned to continue growing and consolidate the international market.”
In order to grow, AlayaCare needs financing, and that's why these big investors are all on board.
Below, take the time to watch some clips on AlayaCare to better understand its mission, operations and why it's going to experience exponential growth.
Also, CDPQ's CEO, Charles Emond, was recently interviewed by Gérald Fillion (in French) discussing sustainable finance. Good interview which you can listen to here.
Lastly, I wish all Quebecers "Bonne Fête Nationale!", hope you're enjoying our beautiful weather.
And remember, later today, GO HABS GO!!!! (watch a great clip below, h/t: Helen)