This morning, payments company Tyro Limited (ASX: TYR) announced it will acquire a Melbourne-based digital health payments business.
Tyro’s shares are up 5% this morning and have gained an even more impressive 53% since being the target of a short report issued by Viceroy Research in January this year.
TYR share price
Medipass acquisition
Tyro revealed this morning that it will acquire 100% of the shares in Medipass – a digital health payments business that aims to seamlessly link practitioners, funders and patients.
The deal comes with a price tag of $22.5 million, which will be comprised of around 60% cash and 40% Tyro shares.
It’s estimated that the transaction will be completed by May 2021, following the satisfaction of certain conditions.
About Medipass
Founded in 2016, Medipass acts as a unified solution for healthcare providers that allows them to receive payments from multiple insurers, including private health insurers, Medicare, Department of Veterans’ Affairs and more.
Medipass’ digital health platform removes the need for any hardware such as terminals.
However, due to healthcare providers and their patients wanting more flexible solutions which include card payments, the idea is that Medipass and Tyro’s existing terminal fleet will be integrated, resulting in a more unified solution that will ideally attract more healthcare providers to the one platform.
Since being founded, Medipass has grown to become Australia’s leading digital health payments platform. It currently integrates with over 17 cloud-based practise management and booking systems with over 4,400 partnered health care providers.
Tyro has around 9,300 merchants in its health vertical and has already been integrated with 42 practice management systems.
Tyro indicated that as Medipass is further integrated, more options for claiming payments will become available for its merchants including a range of state and federal based compensatory funds.
Medipass’ workforce of 20 will join Tyro’s existing health unit to create a new health business team that will be led by Medipass CEO Jonathan Davey.
On the acquisition, Davey commented “By joining forces with Tyro, we can create the new global benchmark in simple, transparent healthcare claims and payments. Patients, practitioners, health funds and statutory payers will be connected in one simple and secure platform bringing much-needed transparency and simplicity to the A$130 billion in payments and claims that are made every year.”
Summary
Given the strong overlap between Medipass’ offering and Tyro’s current presence in the health vertical, the integration will essentially mean that the business now has most bases covered where both card-based and non-card transactions are able to be facilitated.
In terms of revenue contribution to Tyro’s existing business, Medipass currently represents a fairly small chunk which is understandable given it’s only been up and running for the last four or so years.
Medipass achieved a revenue run rate for the last 12 months ending February 2021 of around $1.8 million and generated earnings before interest, tax, depreciation and amortisation (EBITDA explained) loss of $1.5 million across the same time frame.
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