CareTech Holdings PLC (AIM: CTH), a pioneering provider of specialist social care services for adults and children in the UK, announces that it has completed the acquisition of a majority holding in Smartbox Assistive Technology Limited and associated subsidiaries, and Sensory Software International Ltd (collectively “Smartbox”).
As part of the aforementioned strategy for CareTech’s digital roadmap, the Group has identified diagnostic assistive technology and behavioural assessment solutions as priority areas for technology investment and adoption. The Smartbox investment represents an important first milestone on this buy, build and partner strategy and will further extend CareTech’s highly acclaimed Care Pathway to provide technology solutions alongside the Group’s existing specialist social care services.
Smartbox is a market-leading creator of software and hardware that helps disabled people without speech to have a voice and live more independently. It makes communication as quick, simple and effective as possible for those service users for whom speech difficulties can be a challenge. Its solutions include communication aids, environmental control devices, computer control technology and interactive learning.
It is estimated that more than 50 million people globally could benefit from augmentative and alternative communication (AAC). Smartbox is amongst the top four global companies to provide complete AAC solutions. Its flagship “Grid” software supports more than 10,000 children and adults with the use of AAC every year and is translated into over 30 different languages and is supplied into as many countries.
Smartbox is the clear market leader in the UK, with approximately 50% of revenues generated through NHS funding. CareTech and Smartbox both support service users with learning disabilities, autism and acquired disability for example, through stroke or brain damage following an injury. CareTech looks after more than 4500 service users and Smartbox offers a unique opportunity to introduce AAC solutions to improve outcomes for those in our care and extend Care Pathway solutions to commissioners.
Alongside technology adoption CareTech is prioritising international growth. Smartbox has a presence in the US which represents a significant growth opportunity as the largest funded market at the forefront of AAC adoption. Alongside a reseller programme it is developing direct sales channels to grow market share significantly over the next three-five years.
At the same time through CareTech’s presence in MENA Smartbox will accelerate engagement in a region that has significant population needs for care services and assistive technology. CareTech’s existing investments in the UAE and developing networks across the Gulf will fast track Smartbox’s access to these markets.
Smartbox is a strategic complement to Purple Zest Ltd (Purple), a 100% subsidiary of CareTech that is changing the disability conversation and bringing together both disabled people and businesses. Purple Tuesday, CareTech’s flagship disability brand has a strong track record in assisting organisations to become more disability accessible and to unlock the £274 billion “Purple Pound”, the spending power of disabled people and their families in the UK. Since its launch in 2018, Purple Tuesday has reached more than 13 million people and has supported 3,500 organisations to implement more than 5,000 practical improvements to positively change the experience of disabled customers. Through Purple, Smartbox will have even greater access to disabled people many of whom have entitlement to personal disability budgets and would benefit from assistive technology.
Background to the transaction and structure moving forwards
Smartbox, headquartered in Malvern, UK with offices in Bristol and Pennsylvania US, was acquired by Tobii AB in 2018. Following a full inquiry from the UK Competition and Markets Authority, Tobii was required to sell Smartbox on competition grounds, providing CareTech the opportunity to secure a majority equity stake in the innovative tech firm.
To facilitate the acquisition, CareTech has established a new subsidiary, Smartbox Holdings Ltd, which is 70% owned by CareTech, with the remaining minority ownership held by the Smartbox management team comprising Dougal Hawes, Jarrod Inott and Hannah Church as well as previous owners Paul and Alyson Hawes.
Smartbox Holdings Ltd will pay up to £10,600,000 comprising of an aggregate initial purchase price of £7,050,000, funded through an equity contribution and loan note from CareTech and equity contribution from the minority holders of Smartbox Holdings Limited. Earn-outs of up to £3,550,000 are payable over a two year period from completion. CareTech’s contribution will be funded from existing cash resources.
Smartbox generated revenue in excess of £10 million in 2019 and has a track record of profitability. It is expected that the acquisition will be earnings enhancing for CareTech in the first financial year of consolidation.
Farouq Sheikh, CareTech’s Executive Chairman, commented: “We have been discerning in selecting as an anchor digital investment a business that is not only a global assistive technology player but one that firmly shares CareTech’s values and social purpose to improve the lives of disabled people. The Smartbox team has done a great job at creating sector-leading communication solutions for people without speech. Smartbox becoming part of CareTech will enable more children and adults with complex needs to have access to the company’s flagship assistive technology solutions.
“This partnership opens up unprecedented opportunities to blend care and technology. This will benefit the service users supported by CareTech alongside disabled people more generally and enable the Group to offer innovative solutions to both NHS and LA commissioners. Smartbox becoming part of CareTech will accelerate the development of next generation technology-enabled service models for the specialist social care sector.
“We thank Tobii for entrusting the stewardship of Smartbox to CareTech, and we look forward to a shared journey to provide a voice for disabled people around the world. This anchor digital investment by CareTech is a first as we look to accelerate our buy, build and partner strategy that will see further announcements in the future.”
Dougal Hawes, Smartbox’s managing director said: “There were multiple bidders in the sale process but CareTech was clearly the best partner for Smartbox, with a shared commitment to delivering the best products and services for the people we serve. Both CareTech and Smartbox have been helping people with complex physical and cognitive challenges for over twenty years. The combination of clinical and care experience from CareTech with technical and creative expertise from Smartbox, will bring care and technology together in new meaningful ways so everyone can participate and flourish.
“In joining CareTech, we are thrilled that this new future will enable us to achieve more while continuing to do what we do best, putting disabled people at the centre of all we do. Smartbox will be able to reach more people around the world who need assistive technology, while supporting the CareTech purpose to improve service pathways for disabled people and those with complex needs.”
Mike Adams, CareTech Executive Director and CEO of Purple, said “COVID-19 has shone a very bright light on the increasing reliance of technology in every aspect of our individual lives and as a society. Every report – from the United Nations to ONS data – has shown disabled people have been disproportionately disadvantaged, and isolated, as the digital transformation has not been inclusive or accessible as it could or should. Assistive technology is the means to unlocking the digital world to millions of disabled people – from accessing information, purchasing products and services to engaging through social media. This is the optimal time to put the “tech” firmly into CareTech and address the needs of disabled people worldwide.”