Health care software provider Forian Inc. (Nasdaq: FORA) has sold its cannabis software subsidiary, BioTrack, to rising cannabis tech firm Alleaves Inc. for $30 million in cash.
The Feb. 10 deal confirms earlier reporting from Green Market Report about a potential play for Forian, which filed a 13-D form with the Securities and Exchange Commission the same day.
The price tag will consist of $20 million paid at closing and $10 million paid in 12 equal monthly installments, subject to any working capital adjustments.
“As a result of the transaction, Forian will focus on its health care information business and will no longer provide software solutions to the cannabis industry,” the company said in a statement.
Forian said that it will retain a license to certain cannabinoid-based data to enhance its health care information offerings.
“This transaction allows us to focus our efforts on our health care information business, which has been the key driver of our growth to date and will further accelerate our path to positive adjusted EBITDA,” Forian executive chairman Max Wygod said.
In November, Forian reported revenue for the third quarter of $7.2 million, with a net loss of $5.1 million, or $0.16 per share. The adjusted EBITDA for the quarter was negative $2.2 million, versus negative $4.1 million in the prior year. The company had $20.6 million worth of cash and marketable securities.
The deal effectively makes Alleaves the new track-and-trace system for the New York Office of Cannabis Management’s seed-to-sale tracking system after Forian announced in December that New York had selected BioTrack to be its provider. The software tracks cannabis from when it is first planted as a seed to when its sold to a consumer.
Alleaves said the purchase also includes multistate independent testing firm Cannalytics.
Alleaves has been looking to acquire or partner with complementary cannabis technology platforms to both expand its customer base and create an all-encompassing seed-to-sale software, transaction, and compliance platform. The tech firm has been on a shopping spree since it raised $40 million in a Series A funding round last July.
It recently joined forces with Alpine IQ to add components to the POS suite, such as new loyalty rewards and discounts features and waiting room queues.
The plays come during a time when cannabis tech appears to be a bit crowded, though the conditions provide an opening for those looking to consolidate value-adding pieces.
“The addition of BioTrack and Cannalytics will accelerate our mission to provide top-of-the-line ERP solutions to the cannabis industry,” said Alleaves founder Mike Beedles.
Daniel Barton stepped down as CEO and president of Forian as of last Friday. Forian’s co-founder and executive chairman Max Wygod has been appointed interim CEO and president.