SEB Signs LOA to Acquire 50% of Banyan Group

Banyan Adds Disability Management Expertise and Technology to SEB’s TPA Solutions

Aug. 20, 2014 – TORONTO, ON) - Smart Employee Benefits Inc. (“SEB”) (TSX VENTURE:SEB), is a technology company providing “business processes software solutions and services” to corporate and government clients with specialty practices focused on “managing group benefit solutions and health claims processing environments.” SEB is pleased to announce it has entered into a letter of agreement to acquire, through a wholly owned subsidiary, 50% of Banyan Work Health Solutions Inc, BITS Licensing Inc. and Banyan IT Solutions Inc. (“Banyan Group”). The Banyan Group operates as a full spectrum Disability Management (“DM”) TPA provider serving employers and disability insurers. Its offerings include claims management, field rehabilitation services and a full range of specialized assessments/interventions to support its holistic approach to DM. The Banyan Group is also a provider of Disability Benefit Technology solutions. The Banyan Group is now well established across Canada and extends into the United States, Australia & New Zealand.

TRANSACTION TERMS: The purchase price of the 50% equity interest of the Banyan Group is $3.0 million, $2.0 million paid in cash and $1.0 million paid in SEB shares. Additionally, 1,000,000 share purchase warrants will be issued as retention warrants to key Banyan Group employees. The cash portion will be paid at closing. The price of the $1.0 million of SEB shares will be determined based on the ten day weighted average trading price on the TSXV prior to the closing date. The shares will be issued on closing, subject to a 36 month escrow. The shares will be released from escrow in six-month intervals, the first release date being six months following the closing of the transaction. The allocation of the SEB shares to Banyan Group Shareholders will be pro rata with the allocation of the cash payment. The 1,000,000 retention warrants will be issued and allocated among the Banyan Group employees based on criteria to be agreed upon by Banyan executive management and SEB executive management and in accordance with the rules and policies of the TSXV. The transaction remains subject to completion of definitive documents between the parties and approval of the TSXV.

MANAGEMENT COMMENTS: States John McKimm, President/CEO/CIO of SEB, “Absence and Disability Claims cost Canadian employers tens of billions of dollars, annually. Absenteeism costs alone, based on recent Conference Board of Canada reports, exceed $16.0 billion: SEB’s business model includes “Disability” as a key growth area in the health claims benefits processing environment. The adoption of technology to automate business processes has been severely lacking in this area for decades. SEB has conducted extensive research on the disability area and believes Banyan to be both a technology leader and a thought leader in outcome oriented Holistic Disability Management. Banyan is an excellent fit within the SEB benefits strategy.

Banyan is unique in its adoption of technology to streamline, automate and drive outcome oriented disability business process. In addition to being a recognized leader in the re-invention of claims practices, Banyan has invested substantially in technology applications and solutions.

These solutions combined with the Disability Management “know how” are highly complementary to the SEB technology platform for administering, adjudicating and managing benefit environments. Banyan and SEB have been working closely for a number of months and are actively involved as partners in responding to government and insurer RFI’s and RFP’s in the industry. SEB and Banyan’s technology solutions, combined, provide the most unique combination of solutions for automating disability claims administration and adjudication in the market place today. The combination of service and technology solutions has rapidly gained significant traction, particularly with insurers in Australia and extending into New Zealand. Additionally, the partnership has made substantial progress with several very large government RFI and RFP opportunities. Banyan has a very successful history of profitable operations including a number of Canada’s most recognizable and largest corporations in its client base.”

States Maria Vandenhurk, founder and current COO of Banyan, “Banyan has been working closely with SEB on a number of opportunities, domestically and globally. SEB brings a strong base of technology expertise including claims, administration and adjudication technology solutions, specialty practice expertise in HRIS systems including PeopleSoft and a unique capability and proven solutions to tie legacy data systems to new technology systems in a way that allows real time accessibility and integration of legacy data with new technology solutions. This significantly enhances the value of Banyan disability applications to existing client and new client opportunities. The combination of SEB and Banyan expertise and solutions will allow Banyan to become an undisputed thought leader/innovator and technology leader in providing disability management and adjudication services in Canada and abroad. In combination with SEB, Banyan achieves a bench strength that enables it to dramatically expand its leading edge Disability Management practices, strategically embedded in advanced technologies.”

States Joseph Iannicelli, CEO of Banyan, ” We are very pleased to join SEB and move into our next stage of growth and the evolution that helps us leverage our expertise to a larger and more global customer base. I am also pleased to announce that Maria Vandenhurk, COO, will resume the position of CEO of Banyan effective September 1, 2014. John Jackson, who is also active as a consultant with SEB, will become Chairman of Banyan. John is a 25 year veteran of the employee group benefit business in Canada, having held many executive and operational roles in the industry. I look forward to continuing my work with Banyan and the entire SEB group as a current member of the board of directors for SEB as we continue to grow our business”.

ABOUT BANYAN GROUP: Banyan Group is a privately owned company founded in 1995. Banyan is both a practice and thought leader in providing a vast array of bilingual disability management services across Canada, assisting employees with stay at work (“SAW”) and return to work (“RTW”) solutions. Banyan’s goal is to assist disability insurers and employers in designing and implementing disability management programs that make business sense while returning employees to health and productivity.

Banyan brings a full spectrum offering including claims, rehab, vocational, behavioral and physical assessment/treatment services. The services are specifically tailored to meet the needs of the disability insurance market and have a legacy of outcome measures to support their effectiveness. The services are supported by innovative proprietary IT workflow tools that enable advanced metrics, quality assurance and insight into the work in flow. These workflow tools have been critical to Banyan’s success in achieving the best SAW and RTW outcomes in the industry.

Banyan’s case management software provides an innovative and secure, role-based workflow application that incorporates extensive automation, specialized quality assurance capability and valuable metrics to drive optimum case management behaviors at the optimum time. Banyan’s technology embraces predictive modeling analytics that are leveraged to optimize key elements of the case management process including case assignment, auto-adjudication and critical case management activities. This leading edge system securely stores all documentation on the case while tracking all activities associated with the case, ensuring a secure audit trail, essential to the management of sensitive personal information.

This platform allows Banyan to extract Key Performance Indicators as outlined below and flex properties enable the easy addition of new data points at any time:

  • Caseload volume
  • Outcomes and active caseload by demographics (age, diagnosis, gender, geography)
  • Resolution rates and types
  • Duration to claim closure
  • Expenditures per case
  • Non-medical and medical influencing factors
  • Other health indicators (Smoking Status, BMI, Activity Level)

Based on extensive experience in the absence management and return to work arenas, Banyan has also developed applications to support absence tracking and identify opportunities for early intervention. This software serves as a web portal providing a complete environment for the tracking of all employee absences, including casual, STD, LTD and workers compensation related absences. In addition, the system has the capacity to track and provide meaningful analytics on near miss and first aid related incidents that can inform employee health and safety programs to optimize prevention efforts. This unique platform also auto-populates all of the provincial WCB forms and provides timely notifications to ensure critical timeframes for reporting incidents and absences are not missed.

Banyan’s Absence Management software has comprehensive metrics, analytics and reporting capabilities to enable the information entered into the system to be examined to its most granular level to provide insightful reports to senior management.

A key part of this functionality is to highlight trends in absence and to identify areas of the organization where the cost of absence is high.

Banyan’s track record and unique capability in DM has made Banyan a sought after partner both locally and internationally to assist organizations in reinventing their claims practices. Banyan is a proponent of metrics-based iterative continuous improvement work culture, using tools like predictive modeling to continually inform and refine the claims approach. Banyan understands how smart technologies can both drive the right behaviours and provide deep and wide intelligence to inform positive change and to exponentially transform an organization’s claims experience, ultimately assisting workers back to suitable work more often and earlier on in their recovery process.

ABOUT SEB: SEB is a technology company providing software, solutions and services specializing in managing group benefit solutions and healthcare claims processing environments for corporate and government clients. Health Claims Processing alone is a $60.0 plus billion industry, of which over $37.0 billion is employee group benefit plans and over $25.0 billion of other healthcare benefit claims (e. g. workers’ compensation claims, travel benefits, various federal and provincial government programs, dental associations, drug associations, etc.). In the employee group benefits industry, SEB operates as a Third Party Administrator and Insurance Brokerage utilizing its software platform to provide “totally hosted PCI compliant supply chain solutions” for managing the complete group benefits business processes between insurers, clients, brokers, consultants, technology service providers and healthcare service providers. In healthcare claims processing, SEB also operates as a systems integrator utilizing its technology platform together with other technologies to provide customized, fully integrated solutions for specialized environments (e.g. travel claims, student benefits, hospitals, unique government applications etc.). The technology and expertise deployed in this area also allows SEB to provide other related supply chain, systems integration and human resource solutions and services to the same clients.

Forward-Looking Statements

This news release is intended for information purposes only. Statements made in this news release may contain “forward looking” information about the company’s future business prospects. These statements while expressed in good faith and believed to have a reasonable basis are subject to risk and uncertainties that could cause actual results to differ materially from those set forth or implied by such forward looking statements. Investors should consult a professional advisor before making any investment decision.

For further information about SEB, please visit www.seb-inc.com.

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