It appears that CloudMD’s (TSXV: DOC) $60 million acquisition of VisionPros last year is already causing the company some headache. The firm this morning indicated it has been forced to deal with certain claims related to the company.
Evidently, the former management of the company elected to not pay certain suppliers in full. The firm this morning indicated that it has received claims for $3.73 million in unpaid rebates and reassessments from suppliers related to certain distribution agreements that had violations. The violations are related to business conducted prior to the firm being acquired by CloudMD.
As a result, the company is now in the process of reworking new distribution agreements to remain in good standing with the suppliers. Further, CloudMD’s audit committee is now being forced to conduct a review of both the claims as well as the business of the company. The company highlighted that it will be examining the amount of goodwill acquired in connection with the transaction, suggesting writedowns may already be on the way – just six months after the closing of the transaction.
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The company is also looking at possible means of recovering the funds owed from the former owners of the company, in addition to the holdback of $3.0 million conducted at the time of purchase.
CloudMD last traded at $0.81 on the TSX Venture.
Information for this briefing was found via Sedar and CloudMD Software & Services. The author has no securities related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
