PHM – Our Top 2015 Spec Play : Update / Trading Alert

PHM Announces Execution of Letter of Intent (LOI) to Acquire Another Large Regional Business in Tennessee With $20 Million in Revenue and $4 Million in Adjusted EBITDA

 

PATIENT HOME MONITORING CORP(PHM:TSXV, CA)

1.30CADIncrease0.09(7.44%)Volume: 
Above Average
As of 16 Mar 2015 at 10:51 AM EDT.

Management to Hold a Conference Call on Wednesday, March 18th to Review Acquisition Pipeline

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Jack A. Bass Managed Accounts average  $1.11

 

LOS ANGELES, CALIFORNIA–(Marketwired – March 16, 2015) –

 

NOT FOR DISSEMINATION IN THE UNITED STATES OR FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES AND DOES NOT CONSTITUTE AN OFFER OF THE SECURITIES DESCRIBED HEREIN.

Patient Home Monitoring (PHM) (TSX VENTURE:PHM), a profitable company with annualized revenues exceeding $55 million focused on rolling-up annuity-based healthcare service companies in the U.S. and Canada, announced it has executed a non-binding Letter of Intent (LOI) to acquire a company in Tennessee with unaudited approximate annualized revenues of $20,000,000 and Adjusted EBITDA of $4,000,000(1).

PHM’s Chairman and executive team will hold a conference call scheduled for 1 pm EST, Wednesday, March 18, 2015.

PHM also provided updated details on the cancellation of the small $2.25 million annual revenue Georgia business LOI.

 

The Tennessee Letter of Intent (LOI)

The Tennessee business is a large, regionally-focused company offering home-based medical equipment and services for patients with chronic pulmonary conditions. The business services over 40,000 active patients. After close, PHM plans to start immediately offering cardiology and mobility services to these patients with an eye toward increasing organic revenues and profits of the business.

According to the LOI, PHM will acquire 100% of the outstanding shares of the business for cash for a total consideration of $14,348,000. PHM has sufficient cash on the balance sheet to complete the acquisition. Closing the acquisition will be subject to final due diligence and a binding purchase agreement.

 

The Georgia LOI Cancelled

PHM was unable to reach an agreement on the final terms of the purchase agreement with the Georgia Company, particularly with respect to issues of indemnification.

 

Summary of Active LOIs

The table below summarizes the current status of PHM and the status of PHM after all LOIs are closed, Further, it summarizes the breakdown of the revenues and Adjusted EBITDA for each acquisition and the cash needed to close the acquisition. PHM plans to use $26,798,000 to close the acquisitions announced. PHM is expected to have over $10,000,000 in cash after all LOIs have closed, with revenues of $96,500,000(2) and Adjusted EBITDA of $19,450,000(2).

 

Annualized Revenue Annualized Adjusted EBITDA Cash Balance
PHM Today $ 55,000,000 $ 10,500,000 $ 37,000,000
PHM Post-LOIs closed $ 96,500,000 $ 19,450,000 $ 10,202,000
Summary of LOIs Cash To Close
Colorado $ 16,500,000 $ 4,000,000 $ 11,000,000
Oklahoma & Texas $ 5,000,000 $ 950,000 $ 1,450,000
Tennessee $ 20,000,000 $ 4,000,000 $ 14,348,000
Totals $ 41,500,000 $ 8,950,000 $ 26,798,000

“The Tennessee deal is another large acquisition for PHM and, when closed, we will likely have reached our 2015 goal of achieving $100 million in annual revenue earlier than planned,” said Michael Dalsin, Chairman of PHM. “Along with the acquisition, we plan to draw down on a line of credit to ensure we have plenty of cash for further acquisitions.

“In the coming quarters, we are poised to complete the several acquisitions announced this year, almost doubling our revenue, significantly increasing EBITDA, and perhaps most importantly, adding over 90,000 patients to our database,” continued Mr. Dalsin. “After we close all executed LOIs, I expect we will have a cash balance of over $10 million and we will be generating Adjusted EBITDA of close to $20 million per year(1). I expect these numbers will increase once we see the results of cross selling such a large patient database.”

“Considering the small size of the business in Georgia and the potential of significant trailing liabilities,’ concluded Mr. Dalsin. “We have decided that the risk-reward ratio was not in our favor.”

 

Conference Call March 18, 2015 to Review Acquisition Pipeline

PHM will host an interactive Q&A conference call at 1p.m. EST on Wednesday, March 18, 2015.

Participants from PHM will be Michael Dalsin (Chairman), Roger Greene (Vice Chairman), David Hayes (CEO) and Edward Brann (M&A Banker).

The details of the call are:

 

Wednesday, March 18, 2015 at 1p.m. EST

US & Canada Toll Free:

Dial In: (855) 886-8711

Meeting ID Number: 548 01 39

Financial professionals are invited to call in and ask questions. To pre-register as a qualified caller, please e-mail dwilson@myphm.com by 5 p.m. EST Tuesday, March 17th, 2015.

 

About PHM

The explosive growth in the number of elderly patients in the US healthcare market is creating pressure to provide more efficient delivery systems. Healthcare providers, such as hospitals, physicians and pharmacies, are seeking partners that can offer a range of products and services that improve outcomes, reduce hospital readmissions, and help control costs. PHM fills this need by delivering a growing number of specialized products and services to achieve these goals. PHM is a positive cash flow and profitable company that serves patients with heart disease and other chronic health conditions, this operation is a platform for acquisitions and organic growth. PHM is focused on a highly fragmented and developing market of small privately-held companies servicing chronically ill patients with multiple disease states caused mainly by age and obesity. Because of the new and highly fragmented nature of the market, PHM is actively working to identify and evaluate profitable, annuity-based companies to acquire their patient databases and technical expertise at favorable prices. PHM’s post acquisition organic growth strategy is to increase annual revenue per patient by offering multiple services to the same patient, consolidating the patient’s services and making life easier for the patient. The expected result is growing EPS with each acquisition and growing revenue and profits from the cross selling efforts.

 

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