SAN FRANCISCO, CALIFORNIA--(Marketwired - Nov. 14, 2016) -
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Inspira Financial Inc. (TSX VENTURE:LND) ("Inspira") a company focused on providing a full range of financial solutions to the highly fragmented U.S. mental health and addiction services market, today announced it is declaring a one-time special dividend for $0.075 per share. The dividend will be paid in cash to all shareholders of record as of November 23, 2016. This special dividend is final and not subject to adjustment. Based on Inspira's business plan, including plans for and the expected financial results from its recently acquired software and billing acquisition, and its anticipated increase in revenues per client, the Board of Directors of Inspira has determined it has excess capital and therefore a special dividend to its shareholders is appropriate. Inspira plans to continue to use its lending profits to issue a regular dividend of $0.022 per common share annually, paid quarterly, on outstanding common shares as previously announced. Such quarterly dividends are only payable as and when declared by the Board of Directors and there is no entitlement to any dividend prior thereto.
Inspira also announced additional details on the operations of its recent acquisition and an update on its improved business strategy going forward.
Improved Business Strategy with Vertical Integration
Since inception, Inspira has sought to offer a solution to one major problem in the U.S. healthcare market: the timing of cash flow. U.S. healthcare providers suffer from a gap in cash flow due to the delay between billing and payment on the one hand, and the monthly expenses to run their business on the other.
This problem can be solved by lending against accounts receivables from Medicare and large insurance companies.
As a lender, Inspira interacts with three main sources of information to manage the A/R loan book: (1) EMR (electronic medical records) software that records the healthcare event (logged by a doctor or healthcare provider); (2) a billing company (an overwhelming amount of the U.S. healthcare providers use third party billing companies because of the complexity of billing claims); and (3) their commercial bank for deposits. Inspira has developed software to take data from these three sources to manage its A/R loan book.
Inspira's customers often pay an additional 5%-9% for third party billing services and thousands of dollars a month for software - all for the exclusive purpose of billing (creating accounts receivable) and collecting cash. Until now, Inspira did not offer these complementary services.
The acquisition has both software and billing services which is best described as vertical integration by Inspira. Inspira offers these services to the same clients, for the same business process (generating, submitting and collecting a medical bill from an insurance company), for the same business solution or outcome, namely solving the disparity between cash inflows and cash outflows in their business. Inspira is simply expanding its offerings to existing clients for the same business problem. To spur growth, Inspira has also adjusted its lending guidelines by lending on additional assets and attributes of a business in order to adapt to these fast growing companies.
"Since joining the Board, I have heard many concerns about the direction of this company," said Mr. Edward Brann, Executive Director of Inspira. "Our shareholders have asked about a number of items that I am working to address. First, we need to explain our overall strategy and how lending, software and billing are all part of the same business cash flow solution for behavioral health centers. This vertical integration strategy is an extension of our offering, not a change to it.
Second, it is important to note that the recent acquisition comes with a sizable amount of value, both financial and in people. The company comes with seven dedicated shareholders and has grown to a total of fifteen talented people who focus daily on technology development, customer service, sales and marketing, an attractive pipeline of potential clients at various levels of maturity, claims processing and insurance company relationships, four existing behavioral health providers with growing demand for our billing services, more than $100,000 in accounts receivable, expected revenue of more than $200,000 for the month of November, and sufficient cash for current and expected growth in operations."
"Because this strategy seems to have a superior return on equity profile, and because I am working to optimize the Inspira capital structure, the Board has declared a $0.075 special dividend," continued Mr. Brann. "With this improved strategy of offering three solutions for cash flow problems rather than just one, I believe we are over capitalized and should return the cash to our shareholders we don't expect to use for growth. Additionally, I am working to secure a more rational debt structure for our current loan book. Depending on the status of the debt and the pace of our growth, we will revisit the issue of returning additional capital to shareholders in the near future."
The declaration of dividends in any quarter and the amount of such dividends, if any, is subject to the discretion of the Board of Directors and may vary depending on a variety of factors and conditions existing from time to time. The payment of cash dividends to shareholders in the future is not assured or guaranteed and dividends may be reduced or suspended.
Certain statements contained in this press release constitute "forward-looking information" as such term is defined in applicable Canadian securities legislation. The words "may", "would", "could", "should", "potential", "will", "seek", "intend", "plan", "anticipate", "believe", "estimate", "expect" and similar expressions as they relate to Inspira, expected revenue from RBP of over $200,000 for the month of November, RBP's anticipated increase in revenues per client, Inspira potentially returning additional capital to shareholders, Inspira making additional quarterly dividend payments, the acquisition of RBP resulting in the increase of Inspira's revenue and RBP's existing contracts generating up to $3 million in annualized revenue, and statements regarding the sustainability of dividends, are intended to identify forward-looking information. All figures are in Canadian dollars. All statements other than statements of historical fact may be forward- looking information. Such statements reflect Inspira's current views and intentions with respect to future events, and current information available to Inspira, and are subject to certain risks, uncertainties and assumptions, including, the continued existence of RBP's contracts, that RBP is profitable, attempts to reverse the Inspira's acquisition of RBP not being successful, Inspira achieving, sustaining and/or increasing profitability, Inspira being able to fund its operations with existing capital and/or raising additional capital to fund operations, the demand for addiction treatment continuing to increase, the new service line being complimentary to existing Inspira clients, Inspira generating positive cash flow from operations, Inspira expanding its revenue and profit because of the acquisition, and Inspira being successful in its integration of RBP.
Material factors or assumptions were applied in providing forward-looking information. Many factors could cause the actual results, performance or achievements that may be expressed or implied by such forward-looking information to vary from those described herein should one or more of these risks or uncertainties materialize. These factors include changes in law, competition, litigation, the ability to implement business strategies and pursue business opportunities, state of the capital markets, the availability of funds and resources to pursue operations, dependence on debt markets and interest rates, demand for the lending products Inspira offers at interest rates higher than at which Inspira can borrow, a novel business model, granting of permits and licenses in a highly regulated business, difficulty integrating newly acquired businesses (including RBP), risks of performance by the target, new technologies, risk of billing irregularities by borrowers, low profit market segments, risks associated with the declaration and payment of dividends, including the discretion of Inspira's Board of Directors to declare dividends, as well as general economic, market and business conditions, as well as those risk factors discussed or referred to in Inspira's annual Management's Discussion and Analysis for the year ended February 29, 2016, filed with the securities regulatory authorities in certain provinces of Canada and available at www.sedar.com. Should any factor affect Inspira in an unexpected manner, or should assumptions underlying the forward- looking information prove incorrect, the actual results or events may differ materially from the results or events predicted. Any such forward-looking information is expressly qualified in its entirety by this cautionary statement. Moreover, Inspira does not assume responsibility for the accuracy or completeness of such forward-looking information. The forward-looking information included in this press release is made as of the date of this press release and Inspira undertakes no obligation to publicly update or revise any forward-looking information, other than as required by applicable law.
Any future-orientated financial information and financial outlook information (collectively, "FOFI") contained in this press release, as such terms are defined by applicable securities laws, is provided for the purpose of providing information about management's current expectations and plans relating to the future and is subject to the same assumptions, risk factors, limitations and qualifications as set forth in the above paragraphs. FOFI contained in this press release was made as of the date of this press release and Inspira disclaims any intention or obligation to update or revise any FOFI contained in this press release, whether as a result of new information, future events or otherwise, unless required by applicable law. Readers are cautioned that any FOFI contained herein should not be used for purposes other than those for which it has been disclosed herein.
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