Canadian telecommunications company Telus Corp. announced Thursday plans to acquire digital-health provider LifeWorks Inc. (formerly Morneau Shepell) for about $2.3 billion, branching further into health services as it pursues a diversification strategy.
Digital and telehealth services have become an important dimension of health care after the pandemic forced many patient interactions outside of hospitals and clinics. According to a statement by the two businesses, the takeover will allow the companies to form a global provider of primary and preventive digital health-care and wellness services.
Telus will also assume LifeWorks existing debt, making the total value of the transaction $2.9 billion. The Vancouver-based company will pay $33 for each LifeWorks share and is offering the option in cash or stock or a mix of the two. The offer is about an 80 per cent premium on LifeWorks’ closing stock price of $18.20 on Wednesday. Telus shares closed at $29.36 on Wednesday.
Telus has pursued a different strategy from major Canadian telecom rivals BCE Inc. and Rogers Communications Inc., eschewing ownership of media assets to expand into digital services and technology for companies and individuals.
“This transaction is financially compelling and strategically attractive to Telus, and a natural complement to Telus Health, significantly accelerating our vision of advancing employer-based health care, increasing access to high quality, proactive health care and mental wellness for employees,” chief financial officer Doug French said in a statement.
The deal requires the support of two-thirds of LifeWorks shareholders as well as court and other regulatory approvals. The companies hope to close the deal in the fourth quarter of 2022.
If successful, LifeWork’s approximately 7,000 employees and 25,000 clients will be transferred to Telus.
Telus Health has been the center of controversy in recent years after a data breach at two of its medical service providers and two reports from Alberta’s privacy commissioner found the company ignored the province’s health information privacy laws when it launched its health-care app in 2020.
Telus said at the time it was complying with other, global privacy standards.
“If I were working for a company that does use LifeWorks, I would certainly be asking my boss about what’s happening to the information that LifeWorks holds and whether it’s now the property of Telus,” said Hugh Gunz, a professor emeritus of organizational behavior and HR management at the University of Toronto Mississauga’s Institute for Management and Innovation.
The Toronto-based company says the types of information it collects depends on what products and services a sponsor organization selects for its employees, the products and services employees choose to participate in, and the information users choose to provide.
Any information is potentially sensitive, said Gunz, and employees must be assured that their data will be held securely.
“Telus, if they are responsible, will be getting in touch with each of LifeWorks’ clients to say, this is what’s happened and this is how (the takeover) could affect you. If Telus is not doing that, I’d be very surprised and I would be worried,” he said.
Neither Telus nor LifeWorks responded to questions relating to the transfer of client information to Telus.
“What’s happened over the last few years is that it’s dawned on people that a lot of companies hold a lot of very sensitive information about people, and they are not necessarily protecting it properly,” said Gunz.
However, Ontario’s former three-term privacy commissioner Ann Cavoukian stressed that while it’s understandable that some clients are concerned, given the size of the takeover and previous privacy breaches, Telus has one of the most stringent privacy protection policies of all telecommunication companies and digital health providers.
“Telus has consistently demonstrated a very strong commitment to privacy,” said Cavoukian, noting the company has been certified for privacy by design, a set of seven principles that ensure privacy is proactively embedded into the design and operation of IT systems, networked infrastructure and business practices. The framework was designed by Cavoukian in the 1990s.
Cavoukian said the privacy issues relating to Telus Health have since been resolved. Telus Health does not allow for any kind of analytics on patient information without their client’s consent, she said.
“If I was a patient of LifeWorks, I’d be really pleased that Telus has now assumed responsibility because they have an amazing background and they follow privacy by design, which is the strongest form of privacy protection,” Cavoukian said.
With files from Bloomberg and The Canadian Press
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