Alternate Health Corp., a technology solutions company for the regulated cannabis industry, announced that the Company is entering the CBD-infused product market following an agreement to acquire Blaine Labs Inc., a leading manufacturer and distributor of FDA-approved and cGMP-certified dermatological products, with over 50 SKUs currently available in major retailers, including Walmart, Amazon, CVS and Walgreens.
“We are thrilled to announce our agreement with Dr. Blaine and Blaine Labs, a transaction we view as a true company-maker for Alternate Health and the Company’s future in CBD product manufacturing and distribution,” said Howard Mann, CEO of Alternate Health. “Building on Blaine Labs leading portfolio of products, we intend to transform Blaine Labs into an international CBD leader, starting with expansion throughout our own extensive physician networks.”
Based in Southern California, Blaine Labs has 23 years of operating history, producing and marketing medical grade products including treatments for psoriasis, scar-tissue, fungus and pain management. With audited financial statements indicating revenues in excess of US$14 million in 2018, and a net income of approximately US$8 million with no debt, management expects to open new revenue streams with a proprietary line of CBD-infused products, manufactured using existing equipment and distributed through the Company’s extensive database of physicians, clinics and patients already using Alternate Health’s software.
“Blaine Labs has built a leadership position in medical product manufacturing and distribution,” said Dr. Robert Blaine, founder of Blaine Labs. “Today, we start a new chapter as we look to enter new markets and release new products focused on the global CBD market.”
Licenses and Certifications
- Blaine Labs medical and pharmaceutical grade products are FDA-approved and cGMP-certified, based on proprietary formulas. These important certifications will be crucial in Alternate Health’s development of market-leading CBD-infused products.
Diverse Product Line
- From scar-tissue treatments to topical pain management creams, Blaine Labs manufacturers over 50 FDA-approved products SKUs available in major retailers. Blaine Labs’ 23 years of manufacturing experience will be key in the launch of a new medical grade line of CBD-infused products.
- Blaine Labs products can be purchased online or in stores from major retailers. Products are also available through an innovative, direct doctor-to-patient sales network, which complements Alternate Health’s existing relationships in the medical industry as a software provider. Alternate Health is targeting a massive rollout of new CBD-infused products through Blaine Labs existing distribution contacts.
OPPORTUNITIES AND SYNERGIES
Clinic Networks and EMR Technology
- Alternate Health’s EMR technology is already deployed in Canada and the US. By combining the Company’s software and database of physician contacts with the Blaine Labs doctor-to-patient network, management is targeting rapid deployment across key markets.
Hemp and CBD Extraction
- The Company’s expertise in cannabis and hemp extraction will provide a reliable, high quality source of CBD and cannabinoid extracts, ensuring potency and profitability throughout new product lines.
- With existing FDA-approved and cGMP-certified manufacturing, Blaine Labs has the production expertise needed to develop CBD products not only for distribution across the United States, but also for key international markets, including Mexico, Latin America and Europe.
Terms of the Agreement
On closing, as consideration for the sale, Dr. Blaine will receive (1) 7,145,000 AHC common shares plus the number of AHC common shares equal to US$2.5 million based on AHC’s closing share price on day of closing, and (2) US$ 5 million in cash payments (US$1 million payable at closing and US$4 million before the first anniversary of the closing date, and (3) US$10 million in deferred payments payable principally from future net profits derived from existing products sales to existing customers. Any outstanding deferred payment balance at the end of year three will be paid in AHC common shares. The agreement is expected to close by July and is subject to final due diligence.
Under the terms of the agreement, this is an arms-length transaction, with no finder’s fees. Alternate Health’s management and legal counsel views the transaction as a complementary transaction and not a fundamental change to the Company’s business.