MONTREAL — Sun Life has agreed to acquire Montreal-based telemedicine startup Dialogue Health for about $277 million in cash. The deal, which is expected to close later this year after shareholder and court approvals, will see the insurance giant acquire Dialogue’s outstanding common shares at $5.15 a piece. Here’s what you need to know:

The deal: Sun Life’s offer represents a 43 per cent bump from Dialogue’s closing share price on Tuesday. But it’s significantly lower than the $12.61 a share it started trading at on its opening day on the Toronto Stock Exchange in March 2021. Sun Life is already a backer in the company, having invested $32.7 million for a minority stake in Dialogue in 2020.

The companies said Dialogue will continue to operate as a standalone entity with its headquarters in Montreal.

How it got here: Founded in 2016, the company was one of the earliest in the telemedicine space. CEO Cherif Habib and fellow co-founders Alexis Smirnov and Anna Chif saw how Quebec’s long-standing doctor shortage aggravated the province’s high rate of absenteeism, and developed an app-based solution allowing users to access medical professionals via smartphone.

Dialogue grew quickly, with the company quadrupling its workforce to 1,000 in 2020 amid the COVID-19 pandemic. Its revenue doubled or tripled nearly every year between 2016 and March 2021. 

The company garnered a $12-million Series A raise in 2018, led by White Star Capital with participation from Portage Ventures and Diagram, among other investors. In 2021, Dialogue raised a $115-million IPO on the TSX. “We’ve had virtually no churn,” Habib told The Logic on the day after the company’s market debut. It added more than 100,000 new clients and had 43 per cent year-over-year revenue growth in the first quarter of 2023.

What’s next: “It was very complementary to our employer benefits market. Demand [for employer digital health solutions] is growing,” Sun Life Health president Dave Jones said of the acquisition in an interview with The Logic. “It was just the right time to deepen our relationship and to continue growing it together.”

Under the terms of the deal, Dialogue’s executive management maintains a minority interest in the company. Jones said the current Dialogue executive team will continue to run the firm, which will retain the Dialogue brand.