THC Global Group (ASX: THC) will pay $3 million in shares and cash to acquire the Tetra Health network of clinics which provide access to legal medicinal cannabis.
Tetra’s network comprises over 630 referring and prescribing physicians, as well as dispensing pharmacies across Australia.
It generates revenue primarily from consultation fees charged to over 1,100 active and more than 10,000 prospective patients and from the supply of de-identified data and real world evidence supplied during patient on-boarding.
This data can assist in clinical trials and studies to advance the safety and efficacy of medicinal cannabis in Australia.
Total consideration for the acquisition is $2.5 million in THC shares and $500,000 in cash to be paid over six months to vendors Meta Growth Corp and Barcoo Holdings Pty Ltd, which own 30% and 70% respectively of Tetra’s sole shareholder Metra Holdings Pty Ltd.
Additionally, THC will issue 5 million unlisted options exercisable at $0.40 with a two-year expiry.
THC chief executive officer Ken Charteris said the acquisition will help broaden the company’s reach.
“It will allow us to rapidly increase the number of Australian patients who can access [medicinal] cannabis, including our own high-quality low patient-cost products,” he said.
“Going forward, we will look to further broaden the current network and potentially expand across the Tasman and other regions.”
He said Tetra and THC would increase accessibility to medicinal cannabis by simplifying the process of medical consultations and approvals required by the Therapeutic Goods Administration.
On completion of the acquisition, Tetra will be operating at cash flow break-even, with an expectation of near-term profitability as patient numbers increase through 2020.
The company will remain a product agnostic solution for patients and medical professionals accessing medicinal cannabis under the Australian regulatory scheme.
Tetra’s doctors currently prescribe products manufactured by companies including Althea Group (ASX: AGH), MGC Pharmaceuticals (ASX: MXC), Little Green Pharma (ASX: LGP) and Medlab Clinical (ASX: MDC).
It will introduce THC’s Canndeo medicines as they become available for prescription in the coming weeks.
At mid-morning, shares in THC were trading 8.33% higher at $0.325.